Nondiscrimination Rules

Nondiscrimination rules specified by Internal Revenue Code Section 105(h), prohibiting discrimination in favor of the highly compensated in terms of eligibility or benefits, have long applied to self-funded health care plans. Provisions in the Affordable Care Act (ACA) extend similar nondiscrimination rules to nongrandfathered fully insured health plans. Although originally slated to be effective for plan years beginning on or after September 23, 2010, the effective date for the extension of these rules has been postponed until further guidance is released by the government agencies.

ACA Section 1557 prohibits discrimination on the basis of race, color, national origin, sex (including gender identity), age or disability, in any health program or activity that receives financial assistance from HHS or is administered by HHS. Insurers that participate in the public health exchanges, and therefore receive federal financial assistance would need to comply with these regulations for all of the health plans they insure or administer.

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