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.

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. But the Biden administration has reverted to the Obama-era rules.

In 2020, the Trump administration finalized new rules that rolled back the Obama administration's rules. This came just days before the Supreme Court ruled that employers could not discriminate against employees based on sexual orientation or gender identity. The Trump administration's rule was subsequently challenged in various court cases.

And in May 2021, the Biden administration issued a notice clarifying that the Office of Civil Rights would once again prohibit discrimination by health care entities based on sexual orientation or gender identity.

The Biden administration subsequently issued a proposed rule in 2022 to update the implementation of Section 1557 and strengthen nondiscrimination rules for health care. The proposed rule "restores and strengthens civil rights protections for patients and consumers in certain federally funded health programs and HHS programs after the 2020 version of the rule limited its scope and power to cover fewer programs and services."

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 healthcare 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.

For private insurers, federal funding includes subsidies for their individual market enrollees who purchase coverage in the exchange (marketplace). In that case, all of the insurer's plans must be compliant with Section 1557, not just their individual exchange plans.

(Note that self-insured employer-sponsored plans are not subject to Section 1557 unless they receive some type of federal funding related to health care activities. The majority of people with employer-sponsored health coverage are enrolled in self-insured 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.

At that point, HHS and OCR clarified that gender identity "may be male, female, neither, or a combination of male and female." The rule explicitly prohibited health plans and activities receiving federal funding from discrimination against individuals based on gender identity or sex stereotypes.

But 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 reversed much of the Obama administration's rule. The new rule was issued in June 2020, and took effect in August 2020. It eliminated the ban on discrimination based on gender identity, sexual orientation, and sex stereotyping, and reverted 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."

The Biden administration announced in May 2020 that Section 1557's ban on sex discrimination by health care entities would once again include discrimination based on gender identity and sexual orientation.

And in 2022, the Biden administration published a new proposed rule for the implementation of Section 1557, rolling back the Trump-era rule changes and including a new focus on gender-affirming care (as opposed to just gender transition care).

Are Health Plans Required to Cover Gender Affirming Care?

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 healthcare 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 procedures, regardless of whether it affirmed the individual's gender. For example, a transgender man could not be denied treatment for ovarian cancer based on the fact that he identifies as a man.

But the issue remained complicated, and it's still complicated even with the Biden administration's proposed rule to strengthen Section 1557's nondiscrimination rules.

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.

However, the new rules proposed in 2022 by the Biden administration "prohibit a covered entity from having or implementing a categorical coverage exclusion or limitation for all health services related to gender transition or other gender-affirming care."

As of 2023, HealthCare.gov's page about transgender health care still states that "many health plans are still using exclusions such as “services related to sex change” or “sex reassignment surgery” to deny coverage to transgender people for certain health care services. Coverage varies by state."

The page goes on to note that "transgender health insurance exclusions may be unlawful sex discrimination. The healthcare law prohibits discrimination on the basis of sex, among other bases, in certain health programs and activities."

The page advises 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." (note that this language existed on that page in 2020 as well.)

State Rules for Health Coverage of Gender Affirming Care

Prior to the 2016 guidance issued in the Section 1557 final rule, there were 17 states that specifically prevented state-regulated 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 2023, the list of states that ban specific transgender exclusions in state-regulated private health plans has grown to 24, plus the District of Columbia.

Starting in 2023, Colorado became the first state to explicitly include gender-affirming care in its benchmark plan (used to define essential health benefits), ensuring that all individual and small-group health plans in the state must provide that coverage.

Do Health Insurance Plans Cover Sex 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—but not all—aspects of the gender transition process, and how medical necessity is considered in the context of gender-affirming care.

Since 2014, Medicare has covered medically necessary sex reassignment surgery, with coverage decisions made on a case-by-case basis depending on medical need. And the Department of Veterans Affairs (VA) has announced in June 2021 that it has eliminated its long-standing ban on paying for sex reassignment surgery for America's veterans.

But Medicaid programs differ from one state to another, and there are pending lawsuits over some states' refusals to cover gender transition services for Medicaid enrollees.

Over the last several years, many health plans and self-insured employers have opted to expand their coverage in order to cover sex reassignment surgery and other gender-affirming care. But although health coverage for transgender-specific services has become more available, it is still far from universal.

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

Summary

Many health plans in the U.S. are subject to ACA Section 1557, which prohibits discrimination based on gender. But this section is implemented via HHS rules, which have changed over time: The Obama administration issued rules to protect people from gender-related discrimination in health care, the Trump administration relaxed those rules, and the Biden administration has proposed changes to strengthen them once again.

A Word from Verywell

If you're in need of gender-affirming medical care, you'll want to carefully consider the specifics of the health policy you have or any that you may be considering. If you think that you're experiencing discrimination based on your gender identity, you can file a complaint with the Office of Civil Rights. But you may find that a different health plan simply covers your needs more comprehensively.