Does Health Insurance Cover Transgender Health Care?

For transgender Americans, access to necessary health care can be fraught with challenges. Section 1557 of the Affordable Care Act (ACA) prohibits discrimination on a wide variety of grounds for any "health program or activity" that receives any sort of federal financial assistance.

Doctor giving patient prescription drugs
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But the specifics of how that section is interpreted and enforced are left up to the Department of Health and Human Services (HHS) and the Office for Civil Rights (OCR). Not surprisingly, the Obama and Trump administrations took very different approaches to ACA Section 1557. As of 2020, the Trump administration has finalized new rules that roll back the Obama administration's rules, but they are being challenged in court.

Section 1557 of the ACA

ACA Section 1557 has been in effect since 2010, but it's only a couple of paragraphs long and very general in nature. It prohibits discrimination in health care based on existing guidelines—the Civil Rights Act, Title IX, the Age Act, and Section 504 of the Rehabilitation Act—that were already very familiar to most Americans (i.e., age, disability, race, color, national origin, and sex). Section 1557 of the ACA applies those same non-discrimination rules to health plans and activities that receive federal funding.

Section 1557 applies to any organization that provides health care services or health insurance (including organizations that have self-insured health plans for their employees) if they receive any sort of federal financial assistance for the health insurance or health activities. That includes hospitals and other medical facilities, Medicaid, Medicare (with the exception of Medicare Part B), student health plans, Children's Health Insurance Program, and private insurers that receive federal funding (including subsidies for their individual market enrollees who purchase coverage in the exchange; in that case, all of the insurer's plans must be compliant with Section 1557, not just their individual exchange plans).

To clarify the nondiscrimination requirements, the Department of Health and Human Services (HHS) and the Office for Civil Rights (OCR) published a 362-page final rule for implementation of Section 1557 in May 2016. HHS and OCR clarified that gender identity "may be male, female, neither, or a combination of male and female." And the rule explicitly prohibited health plans and activities receiving federal funding from discrimination against individuals based on gender identity or sex stereotypes.

The rule was subject to ongoing litigation, and the nondiscrimination protections for transgender people were vacated by a federal judge in late 2019. And in 2020, the Trump administration finalized new rules which reverse much of the Obama administration's rule. The new rule was issued in June 2020, and takes effect in August 2020. It eliminates the ban on discrimination based on gender identity, sexual orientation, and sex sterotyping, and reverts to a binary definition of sex as being either male or female.

Just a few days later, however, the Supreme Court ruled that it was illegal for a workplace to discriminate based on a person's gender identity or sexual orientation. The case hinged on the court's interpretation of what it means to discriminate on the basis of sex, which has long been prohibited under US law. The majority of the justices agreed that "it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex."

Soon thereafter, Lambda Legal filed a lawsuit against the Trump administration in an effort to overturn the new rules for ACA Section 1557. That case is pending as of July 2020.

Does the ACA Require Insurers to Cover Gender Reassignment Surgery?

Even before the Obama administration's rule was blocked by a judge and then rolled back by the Trump administration, it did not require health insurance policies to "cover any particular procedure or treatment for transition-related care."

The rule also did not prevent a covered entity from "applying neutral standards that govern the circumstances in which it will offer coverage to all its enrollees in a nondiscriminatory manner." In other words, medical and surgical procedures had to be offered in a non-discriminatory manner, but there was no specific requirement that insurers cover any specific transgender-related health care procedures, even when they're considered medically necessary.

Under the Obama administration's rule, OCR explained that if a covered entity performed or paid for a particular procedure for some of its members, it could not use gender identity or sex stereotyping to avoid providing that procedure to a transgender individual. So for example, if an insurer covers hysterectomies to prevent or treat cancer in cisgender women, it would have to use neutral, non-discriminatory criteria to determine whether it would cover hysterectomies to treat gender dysphoria.

And gender identity could not be used to deny medically necessary, regardless of whether it matched up with the individual's preferred gender. For example, a transgender male could not be denied treatment for ovarian cancer based on the fact that he identifies as a male.

But the issue remained complicated and has become more complicated with the legal challenges to the Obama administration's rule and the Trump administration's new rules that roll back the health care nondiscrimination protections for transgender Americans. 

Under the 2016 rule, covered entities in every state were prohibited from using blanket exclusions to deny care for gender dysphoria and had to utilize non-discriminatory methods when determining whether a procedure will be covered. But that was vacated by a federal judge in 2019, and the Trump administration has issued new rules in 2020 that no longer prohibit these sort of exclusions.

But prior to the guidance issued in the Section 1557 final rule, there were 17 states that specifically prevented health insurers from including blanket exclusions for transgender-specific care and 10 states that prevented such blanket exclusions in their Medicaid programs. And as of 2020, the list of states that ban specific transgender exclusions in state-regulated private health plans has grown to 24.

As of July 2020, HealthCare.gov's page about transgender health care still states that "transgender health insurance exclusions may be unlawful sex discrimination. The health care law prohibits discrimination on the basis of sex, among other bases, in certain health programs and activities." The page goes on to note that "if you believe a plan unlawfully discriminates, you can file complaints of discrimination with your state’s Department of Insurance, or report the issue to the Centers for Medicare & Medicaid Services by email to marketconduct@cms.hhs.gov."

While Section 1557 was initially a big step towards equality in health care for transgender Americans, it does not require coverage for gender reassignment surgery and related medical care. And the implementation of Section 1557 has been a convoluted process with various changes along the way. Most recently, the Trump administration has eliminated nondiscrimination protections based on gender identity and sex stereotyping.

So Do Health Insurance Plans Cover Gender Reassignment?

It depends on the health insurance plan. This description from Aetna and this one from Blue Cross Blue Shield of Tennessee are good examples of how private health insurers might cover some aspects of the gender transition process, but not all.

Since 2014, Medicare has covered medically necessary sex reassignment surgery, with coverage decisions made on a case-by-case basis depending on medical need. The Department of Veterans Affairs (VA) has also proposed eliminating its long-standing ban on paying for sex reassignment surgery for America's veterans.

Over the last several years, many health plans have opted to expand their coverage in order to cover sex reassignment surgery. The Human Rights Campaign has compiled a list of employers that include coverage for at least one transgender-specific service in their employee health plans. This list has grown from just 49 employers in 2009, to more than 1,000 in 2020.

But although health coverage for transgender-specific services has become more available, it is still far from universal. In 2019, a county in rural Georgia refused to add coverage for transgender health care services to its employee health insurance plan.

This issue is likely to face protracted legal debate over the coming years, and coverage will likely continue to vary considerably from one state to another and from one employer or private health plan to another.

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