HHS Releases Final 1557 Regulations while SCOTUS Rules on Title VII

On June 12th, HHS released final regulations dialing back previous regulations under ACA Section 1557, which prohibits discrimination in health programs and activities on the basis of race, color, national origin, sex, age or disability. This final rule essentially narrowed the entities who had to comply with 1557, dialed back the applicability of federal nondiscrimination rules and enforcement activity, and repealed notice and tagline requirements related to 1557. However, on June 15th, the Supreme Court ruled that employers violate Title VII of the Civil Rights Act of 1964 when they discharge an employee for being gay or transgender. Essentially, this ruling expanded the protected class of “sex” to include sexual orientation or gender identity. While the ruling focuses on employees discharged for being gay or transgender, it does not address other employment policies specifically or an employer’s religious convictions, including benefit plans. Therefore, the consequences for employer-sponsored benefit plans remain to be seen. As a result of the Section 1557 final rule and the SCOTUS ruling, employers should proceed with caution with eligibility or benefit terms based on sexual orientation or gender identity (such as blanket exclusions for treatment of gender dysphoria).