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December 8, 2025
The implementation and enforcement of the 2024 final rule under Section 1557 of the Affordable Care Act (ACA) remains in flux due to recent federal court rulings. Section 1557 prohibits discrimination based on race, color, national origin, sex, age or disability in certain health programs and activities.
Regulatory Background
The U.S. Department of Health and Human Services’ (HHS) Office of Civil Rights (OCR) issued the latest Section 1557 final rule on April 26, 2024. The rule was originally scheduled to become effective on July 5, 2024, with varied applicability dates for different provisions. The 2024 final rule expanded the scope of the previous Section 1557 regulations by providing, among other things, that sex discrimination includes discrimination on the basis of sexual orientation and gender identity, as well as sex stereotypes, sex characteristics, and pregnancy or related conditions.
Litigation concerning Section 1557 regulations has been ongoing since initial regulations were issued in 2016, primarily focusing on which health programs and activities are subject to Section 1557’s nondiscrimination requirements and whether sex discrimination includes discrimination based on gender identity, sexual orientation and termination of pregnancy.
Initial Legal Challenges
Prior to the final rule taking effect, federal district court judges blocked enforcement of certain provisions on July 3, 2024. The actions included the following:
- Nationwide Preliminary Injunction: A federal district court judge in Mississippi issued a nationwide preliminary injunction, temporarily preventing enforcement of the rule “in so far as [it is] intended to extend discrimination on the basis of sex to include discrimination on the basis of gender identity[.]”
- Florida Preliminary Injunction: A Florida federal district court judge blocked enforcement of OCR’s interpretation of discrimination “on the basis of sex” as it relates to gender identity and postponed the effective date of the rule regarding certain other provisions, but within Florida only.
- Texas and Montana Postponement: A Texas federal district court judge postponed the effective date of the rule in its entirety, but only as to Texas and Montana.
Subsequent Developments
On Oct. 22, 2025, the Mississippi district court, after a full review, permanently vacated the portions of the Section 1557 regulations that interpreted sex discrimination to include gender identity. The court concluded that HHS exceeded its statutory authority by implementing regulations that redefined sex discrimination and prohibited gender-identity discrimination. While enforcement of the gender-identity discrimination provisions had already been suspended, this ruling formally vacates them and narrows the scope of Section 1557’s protections. Plan administrators and issuers should continue to monitor all legal developments in consultation with benefits counsel and work closely with their benefits advisors in complying with their Section 1557 obligations.
SCOPE OF SECTION 1557
- While most employer health plans will not be considered covered entities, to the extent a group health plan receives federal financial assistance, it would be subject to Section 1557.
- A third-party administrator for a self-funded group health plan may be considered a covered entity where it is affiliated with a health insurance issuer that receives funding.
- Whether Section 1557 applies to a particular entity is a fact-specific analysis.
- Plan administrators and issuers should continue to track legal developments, consult with benefits counsel, and work closely with benefits advisors to maintain compliance with Section 1557 requirements.