HHS’ Withdrawal of 2022 Guidance Raises Questions about Coverage for Gender-Affirming Care

Seyfarth Synopsis: In a move with potentially significant implications for entities subject to the Affordable Care Act, the Department of Health and Human Services (HHS) has reversed course and now contends that Section 1557 of the Affordable Care Act does not prohibit discrimination on the basis of gender identity.

In response to President Trump’s directives under an Executive Order that focused on gender-affirming health care to minors (EO 14187), which we wrote about here, HHS rescinded its guidance titled “HHS Notice and Guidance on Gender Affirming Care, Civil Rights, and Patient Privacy” (2022 Guidance). The 2022 Guidance outlined federal civil right protections and privacy laws applicable to gender-affirming healthcare.  The key takeaways and implications of the withdrawal of this guidance for employee benefit plans subject to ERISA, are summarized below.

The 2022 Guidance

Section 1557 of the Affordable Care Act (the “ACA”) prohibits discrimination on the basis of race, color, national origin, sex, age, or disability under any health program or activity that receives federal financial assistance. Under the 2022 Guidance, and subsequently codified by the Biden administration’s final rule on Section 1557, a covered entity’s refusal to provide or cover medical treatment based on gender dysphoria is prohibited discrimination if the same treatment is covered for other conditions.

The 2022 Guidance also suggested that gender dysphoria qualifies as a disability, and that restrictions on medically necessary care to treat gender dysphoria may violate Section 504 of the Rehabilitation Act and Title II of the American with Disabilities Act.

Basis for the Recission

While EO 14187 seems to be the primary reason for withdrawing its 2022 Guidance, HHS also cites to federal court rulings that challenged the issue of whether the prohibition on sex discrimination found in Section 1557 of the ACA extends to discrimination based on gender identity. Of note, it points to the rationale of a Texas district court that vacated the 2022 Guidance, ruling that the Supreme Court’s interpretation of “sex” discrimination that was adopted in Bostock does not prohibit discrimination based on gender identity in health care settings. In withdrawing the guidance, HHS does not cite or reference the body of cases that have affirmed the need for gender dysphoria coverage based on the 2022 Guidance.

In addition, HHS in rescinding the guidance noted that gender dysphoria is not a disability under Section 504 of the Rehabilitation Act, and instead falls under the exclusion for “gender identity disorders not resulting from physical impairments.”

HHS intends to issue new guidance “protecting whistleblowers who take action related to ensuring compliance” with EO 14187.

Practical Impact

At present, it is uncertain if HHS’ forthcoming guidance (or other forthcoming guidance) will prohibit coverage related to gender dysphoria or will clarify that the provision of gender dysphoria related medical plan coverage is permissive, not mandatory. Group health plans and other entities subject to Section 1557 of the ACA, which we covered here, should work with their counsel to assess the relevant  guidance as it is issued and to ensure that they keep abreast of the legal challenges to this guidance.