hi, i'm dan kuperstein, and welcome to thisepisode of complianceminute. the focus for today's episode is going tobe on the new affordable care act "nondiscrimination" rules, and what they mean for employers. these new rules, which were published in afinal regulation on may 18, 2016, were designed to implement section 1557 of the aca, andthey've caused a lot of confusion, perhaps in large part because they weren't the acanondiscrimination rules that employers were expecting. these new aca nondiscrimination rules shouldnot be confused with the other highly-anticipated aca nondiscrimination rules, which would haveprohibited sponsors of fully-insured health
plans from discriminating in favor of highlycompensated employees under rules similar to rules that prohibit such discriminationby sponsors of self-insured health plans under section 105 of the internal revenue code. section 105 of the code generally prohibitsemployers from discriminating with respect to the value of the plan benefits offeredand the plan's eligibility terms. while these aca rules have not been releasedyet, fortunately for employers sponsoring fully-insured health plans, the irs has clarifiedthat employers will not be penalized for failing to comply with these rules until regulationsor guidance is issued. we're still waiting for that to happen.
so let's move onto the focus for today - thenew nondiscrimination regulations under section 1557 of the aca. the regulation prohibits health insurers,tpas and plan sponsors (called covered entities) receiving federal financial assistance fromthe department of health and human services (or hhs) from engaging in discrimination onthe basis of race, color, national origin, sex, age, or disability in certain healthprograms and activities, including in health plans and programs offered on the federaland state exchanges. the new regulation only applies to employersthat receive federal financial assistance from hhs, but federal financial assistanceis defined very broadly, and includes:
grants,loans, subsidiescontracts of insurance, and other types of assistance, and so it doesapply to a broad spectrum of federal contractors and other employers doing business with thefederal government. while the new regulation contains a long listof requirements that these covered entities must comply with, including quite detailednotice and access requirements, perhaps the most notable of the new rules is one thatinterprets sex discrimination very broadly, and prohibits covered entities that are plansponsors from designing their health plans in a way that may discriminate on the basisof gender identity.
specifically, the final rule adopts section92.207 of the proposed rule - which lists specific prohibited practices, including implementinga categorical coverage exclusion or limitation for all health services related to gendertransition and denying or limiting coverage for transgender individuals for any healthservices that are ordinarily available to non-transgender individuals. while the regulation does not provide examplesof discriminatory benefit designs, it does say that hhs' office of civil rights willanalyze "whether a design feature is discriminatory on a case-by-case basis" using the "factsand circumstances of a given scenario." the final regulation became effective on july18, 2016.
however, hhs, in recognizing that some coveredentities would have difficulty making changes to their plan's design in the middle of aplan year, permitted an exception, and allowed a delayed implementation for plan design changesuntil the first day of the first plan year beginning on or after january 1, 2017. the key takeaways here for employers doingbusiness with the federal government are: 1. if you're not sure if your organizationis a covered entity, definitely check all contracts and business transactions to clearlydetermine whether or not your organization has received any federal financial assistancefrom hhs; and 2. if you are a covered entity, make surethat your health plan does not have any provisions
that may discriminate against a protectedclass, including discrimination on the basis of gender identity. for more information on this and other topics,visit our knowledge center at corpsyn.com. thank you.
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