Health Plan’s Exclusion of Gender Affirming Care Violates ACA Section 1557

A federal trial court has ruled in favor of transgender individuals who challenged a group health plan’s exclusion of coverage for gender affirming care based on the nondiscrimination protections of Affordable Care Act (ACA) Section 1557. A group of current and former state employees sued because the state’s group health plan denied coverage for medically necessary gender affirming care for themselves or their dependents, alleging that the plan’s categorical exclusion of coverage for treatments “leading to or in connection with sex changes or modifications” discriminated on the basis of sex and transgender status. In earlier proceedings, the court determined that the exclusion discriminated based on sex and transgender status in violation of the U.S. Constitution’s Equal Protection Clause and because of sex in violation of Title VII of the Civil Rights Act of 1964, but it declined to rule on claims alleged under Section 1557, pending the issuance of proposed regulations (see our Checkpoint article). The court permanently barred the plan from enforcing the exclusion and ordered it to provide coverage for medically necessary treatment of gender dysphoria.

In light of recently released proposed regulations (see our Checkpoint article), the court has now ruled on the Section 1557 claims. Rejecting the narrowed definition in the currently effective regulations (see our Checkpoint article), the court held that the health plan is a “health program or activity” subject to Section 1557. The court reasoned that under the plain language of Section 1557 and the ACA as a whole, the term “health program or activity” encompasses health insurance and health plans and, thus, the current regulations’ limitations are inconsistent with the statute. Based on the court’s previous determination that the plan’s exclusion “necessarily rests on a sex classification because it cannot be stated or effectuated without referencing sex,” the court held that the exclusion facially discriminates on the basis of sex and transgender status in violation of Section 1557.

EBIA Comment: Section 1557’s application to employer-sponsored health plans remains in flux (see, e.g., our Checkpoint article). As we wait for the proposed regulations to be finalized, plan sponsors, insurers, and TPAs should monitor developments and be mindful of plan provisions that could invite costly legal challenges. For more information, see EBIA’s Group Health Plan Mandates manual at Sections XXI.M.1 (“Interaction of Title VII and Section 1557”) and EBIA’s Health Care Reform manual at Section XXXIV.A (“Section 1557 Nondiscrimination: Grounds Prohibited Under Federal Laws”).

Contributing Editors: EBIA Staff.