HHS issues final rule on ACA section 1557


Whether and to what extent group health plans, their carriers, and TPAs ​​may be subject to Sec. 1557, has evolved over the years of rulemaking. If Section 1557 applies to carriers and TPAs ​​acting as ASOs for self-funded group health plans, then the vast majority of these plans could be affected at least indirectly. This is because large ASOs are also licensed carriers that sell products in state markets and also sell Medicare Advantage plans and Medicare supplement policies. However, if Section 1557 applies only to carriers acting in capacity health insurance issuersand not as an ASO provider, the obligation to provide gender-affirming care would arise only under applicable civil rights law, not under s. 1557.

  • In May 2016, under the Obama administration’s final rule, group health plans were subject to Sec. 1557, and carriers and TPAs ​​were treated as covered entities. Therefore, if a carrier or TPA also sold policies in the state marketplace or offered a Medicare Part C product, it may be subject to Section 1557. This rule was challenged by a group of religiously affiliated health care providers and states, and a federal district court in Texas vacated most of the rules.
  • In June 2020, in accordance with the Trump administration’s final regulation, the scope of Art. 1557 has been significantly narrowed to exclude gender stereotypes, gender expression, and gender identity. The 2020 final rule also limited covered entities to those that received federal financial assistance and were primarily engaged in the business of providing health care, so that carriers and TPAs ​​offering coverage in the state marketplace would be subject to Section 1557 for their metal content plans, but it would not be the same carrier or TPA providing administrative services under a self-funded group health plan. Similarly, group health plans that did not receive federal financial assistance and were not primarily engaged in the business of providing health care were not subject to s. 1557. This rule was largely invalidated by the United States Supreme Court’s decision in the case Bostock v. Clayton County.
  • In August 2022, the NPRM expanded the scope of a covered entity to resemble the 2016 final rule. While the final regulations do not expressly include group health plans as covered entities in Section 1557, they do treat carriers that sell individual or group policies in the state marketplace or offer Medicare Advantage plans or Medicare supplement policies as Section 1557 covered entities when providing ASO services.


Relying on the majority of case law, including the Supreme Court’s 2010 judgment Bostockit appears that employers must either provide gender-affirming care or risk being forced to do so in the event of participant claims or government enforcement action.

Remedies for violations of federal civil rights and related laws typically include compensatory damages and injunctive relief. Punitive damages may be available where discrimination is intentional – which appears to be the case where a discriminatory feature is embedded in the design of the plan. Article 1557 changes nothing. Rather, it imposes additional substantive and procedural requirements, including establishing a set of robust notices and related requirements targeted at people with limited English proficiency (LEP) and people with disabilities. Additionally, aggrieved parties may challenge policies and practices that have a neutral appearance.


Under the final regulations, federally funded covered entities that limit an individual’s ability to receive medically necessary care, including gender-affirming care, from a health care provider solely on the basis of sex assigned at birth or gender identity violate section 1557. The final regulations regulations also define the “health program or activity” that must be included All activity of an entity whose main task is to provide or administer health services or health insurance.

The preamble to the proposed regulations contains the following comments and reservations regarding the application of Art. 1557 to noncovered entity group health plans managed by covered entity TPAs:

  • Most group health plans do not have entity coverage (exceptions to this rule include employer layoff plans and Medicare Part D programs). TPAs that receive federal financial assistance are covered entities.
  • The Office for Civil Rights (OCR) will conduct a case-by-case review of cases in which a carrier seeks to avoid the application of Art. 1557, e.g.providing TPA services through an affiliated entity.
  • OCR does not intend to enforce Section 1557 against a TPA managing a plan for which it is not responsible for the design of the plan (and therefore does not participate in the violation), but when reviewing complaints, it will conduct a “factual analysis,” an analysis to determine the source of the violation.
  • The TPA is responsible for ensuring that its actions do not violate Section 1557. If the plan is apparently compliant, but the alleged violation involves the administration of the plan (e.g., claims), OCR will attack TPA. (The preamble provides an example of a TPA using a flawed clinical standard to deny a claim for a service that must be covered by insurance).

OCR’s views create interpretive challenges (e.g.whether a TPA can manage a noncompliant plan design and simultaneously ensure its own compliance with Section 1557).

Although the final regulations do not apply to most group health plans, they do apply to most carriers and TPAs. As a result, Section 1557 will now apply at least indirectly to most group health plans. Plan sponsors and administrators should carefully review their plan designs and operations to ensure compliance with effective dates.


The final rule generally becomes effective 60 days after publication in the Federal Register. Covered entities must comply with the health insurance nondiscrimination rules and other health insurance provisions (non-benefit design) on or after the first day of the first plan year beginning January 1, 2025, for health insurance or other health benefits related coverage that at the time publication of the rule was not subject to non-discrimination requirements. Additionally, covered entities must comply with the Health Insurance Nondiscrimination and other health insurance-related regulations (Benefits Project) on or after the first day of the first plan year beginning on or after January 1, 2025.