ACA Final Nondiscrimination Rules: What Employers Should Know

Employees, regardless of which language they speak, should be able to understand their benefits

By Kim Buckey October 28, 2016
ACA Final Nondiscrimination Rules: What Employers Should Know

Update: No More 1557 Nondiscrimination Notice

On June 20, 2020, the Department of Health and Human Services finalized changes to the Affordable Care Act Section 1557 Nondiscrimination Rules with the key takeaways for employers being that the onerous notice requirement is gone, but the nondiscrimination rules still generally apply.

"The new final rules remove the notice requirement," according to compliance firm Hub International. "This is welcome news for employers that were required to create and maintain these complicated notices. In the preamble to the new final rules, HHS stated that the notices were costing employers and other entities hundreds of millions to billions of dollars, but were not, in HHS's view, providing meaningful additional help to individuals."

The Affordable Care Act's (ACA's) final Section 1557 nondiscrimination rules, which took effect on Oct. 16, 2016, are designed to provide equal access to health coverage. While the rules apply primarily to health care providers and insurers, of particular interest to employers—and causing some confusion at the moment—are the provisions addressing limited English proficiency (LEP).

These provisions require organizations subject to the new rules (i.e., "covered entities") to post notices that state that the organization:

  • Does not discriminate on the basis of race, color, national origin, sex, age or disability.
  • Provides appropriate and timely aids and services to individuals with disabilities, free of charge.
  • Provides language assistance services, free of charge, to individuals with LEP.

Although the notice need only be posted in English, the Department of Health and Human Services' Office of Civil Rights is encouraging publication of the notice in one or more non-English languages. Notices must be prominently posted by covered entities in significant publications or communications and conspicuous public locations, and must be included in a conspicuous location on the entity's website. Significant publications include education materials, applications and consent forms, and notices relating to rights, benefits and services—including summaries of benefits and coverage (SBCs).

Another requirement is that covered entities post taglines in the same locations and in documents stating the availability of language assistance services free of charge. These taglines are short statements written in languages other than English and must be written in the top 15 languages spoken by individuals with LEP in the relevant state. For smaller publications, only the top two languages are required.

[SHRM members-only HR Q&A: How Does the Affordable Care Act Affect Nondiscrimination Rules for Group Health Plans?]

What's a Covered Entity?

Section 1557 defines a covered entity as a health care provider that receives federal financial assistance of any kind, including hospitals, nursing homes, home health agencies, retail pharmacies, labs, and qualified health plan issuers such as insurance firms that participate in Medicaid or Medicare or receive grants, loans, subsidies, tax credits or cost-sharing reductions from the federal government.

In addition to self-insured employers that are hospitals and other health care providers, the regulations apply to self-insured employers that receive health care-related federal funds, including those that receive the retiree drug subsidy from the federal Centers for Medicare and Medicaid Services—intended to encourage employers to continue providing high-quality prescription drug coverage to their retirees—or those providing their retirees with a group Medicare Part D prescription drug plan option through an employer group waiver plan or a Medicare Advantage prescription drug plan.

However, Section 1557 does not otherwise generally extend to employers that provide a group health plan, even when that plan is administered by an insurance company or other third-party administrator that is itself subject to the new regulations.

[SHRM members-only Toolkit: Communicating with Employees About Health Care Benefits Under the Affordable Care Act]

What Employers Need to Know

Below are four key points employers should keep in mind if they are subject to the new regulations or want to ensure that their insurance firm or network health care providers are compliant:

  • Some states are developing their own taglines, posing challenges for multistate or national entities.
  • Several languages use fonts that are not readily available as part of the Microsoft Word software. Employers requiring these languages will need to pick up images of the taglines from the HHS site above.
  • Both the notice and taglines must accompany health plan SBCs that covered entities provide to their employees.

The notice and taglines do not need to be added to the SBC itself but can be a separate addendum accompanying the SBC and will not count toward the 8-page limit.

Consult with your legal counsel to determine whether and to what extent the LEP provisions apply to your organization. As with most newly applicable government regulations, new guidance is constantly being made available.

Kim Buckey is health care regulations expert and vice president of client services at DirectPath, a Birmingham, Ala.-based strategic employee engagement and health care compliance advisory firm.

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