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Healthcare Reform

HHS Will Enforce Section 1557 in Accordance with Bostock Decision

On May 10, 2021, HHS announced that they would interpret and enforce prohibitions on discrimination based on sex under the ACA’s Section 1557 and Title IX to include 1) discrimination on the basis of sexual orientation; and 2) discrimination on the basis of gender identity. They updated their enforcement policy in light of the decision rendered in Bostock v. Clayton County in June of 2020.

In Bostock, the US Supreme Court ruled that discrimination based upon sexual orientation or sexual identity is prohibited under Title VII of the Civil Rights Act of 1964. The majority opinion resolved three cases involving homosexual and transgender plaintiffs alleging that they were fired from their jobs based upon their sexual orientation or sexual identity. The court reasoned that Title VII’s prohibition against discrimination based on sex was broad enough to include sexual orientation and sexual identity because those things are inextricably linked to sex. Accordingly, employers cannot rely upon traditional notions of gender when considering terminating someone’s employment.

However, the Bostock decision came only a few days after the Trump administration’s HHS issued a final rule amending Section 1557 of the ACA to scale back explicit protections based upon gender identity introduced by the Obama administration. At the time, the Trump administration argued that Bostock did not directly address Section 1557. This created a conflict between the judicial branch and executive branch that resulted in additional uncertainty in the area of benefits law. (We addressed the Bostock decision and Trump administration’s final Section 1557 rule in an article in the June 23, 2020, edition of Compliance Corner.)

HHS’ newest notice on this subject addresses this conflict head on and indicates their belief that the Bostock case and subsequent federal circuit decisions apply to ACA Section 1557 and Title IX. As such, HHS will interpret and enforce Section 1557’s prohibition of discrimination on the basis of sex, including discrimination on the basis of sexual orientation and gender identity.

HHS also clarified that in so doing, they will comply with all legal requirements, including the Religious Freedom Restoration Act. They will also comply with any applicable court orders that have been issued in cases concerning Section 1557.

While this decision returns HHS’ policy to the one furthered by the Obama administration and presented in Bostock, we anticipate additional challenges to Section 1557. Employers seeking to discriminate in their benefit plans on the basis of sexual orientation or gender identity should consult with legal counsel about their obligations under the law, as should any plans/entities that are subject to Section 1557.

Press Release »
Notification of Interpretation and Enforcement of Section 1557 of the ACA and Title IX »

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