Coverage for gender identity treatment and services is an evolving issue.  Group health plans that exclude or limit coverage for gender affirming care (e.g., care related to gender identity or gender dysphoria) appear to be at legal risk for discriminating on the basis of sex in violation of the Constitution’s Equal Protection Clause, Title VII of the Civil Rights Act of 1964, and the Affordable Care Act (ACA) section 1557. In addition, such coverage exclusions or limitations may violate the Mental Health Parity and Addiction Equity Act (MHPAEA) and the Americans with Disabilities Act (ADA).

Court Decisions Prohibiting Employment Discrimination on the Basis of Sex

Title VII prohibits discrimination in employment and benefits for several protected characteristics, including on the basis of sex. The Supreme Court of the United States (SCOTUS) decision in 2020 (Bostock v. Clayton County) interpreted this to include an individual’s sexual orientation or gender identity. This even applies to churches, as they can only be exempt from discriminating on the basis of religion, not the other protected characteristics under Title VII.

Since Bostock, there has been no specific guidance indicating what type of coverage must be available, but several federal court cases have ruled discrimination for failure to provide equal or medically necessary coverage related to gender identity or gender dysphoria. Recent examples include:

  • Kadel v. Folwell (M.D.N.C. 2022)
  • Lange v. Houston County (M.D. Ga. 2022)

ACA §1557 Confusion

Section 1557 requires “covered entities” comply with specific nondiscrimination rules, which includes the health plan not discriminating on the basis of sex.

  • 2022 proposed rules define “covered entities” as those principally engaged in providing health programs or activities who also receive federal health funding.
    • Most employers are not covered entities unless they are health care providers accepting Medicare/Medicaid.
    • Most employer-sponsored group health plans do not receive federal health funding unless accepting a Medicare Retiree Drug Subsidy (RDS).
    • However, the insurance carrier or TPA often is a covered entity due to administering Medicare Advantage or Part D plans and/or a state’s Medicaid. These entities couldn’t safely administer plans that violate §1557.
  • 2022 proposed rules define discrimination on the basis of sex under the expanded Bostock definition, but court decisions since then have oscillated on the issue while we await a final rule.
    • Neese v. Becerra (N.D. Tex. 2022) – Court set aside the agencies’ broader interpretation of sex for purposes of applying §1557 nondiscrimination rules.
    • Doe v. Independence Blue Cross (E.D. Penn. Nov. 21, 2023) – Court allowed a §1157 claim to proceed for denied coverage for gender dysphoria (facial feminization surgery).
    • Hammons v. University of Maryland Medical System Corporation (D. Md. Jan. 6, 2023) – Court concluded that hospital’s refusal to perform a hysterectomy as part of gender transition violated §1557.
    • P. et al., v. Blue Cross Blue Shield of Illinois (W.D. Wash. 2023) – Court forbid BCBS IL as TPA from applying discriminatory exclusions based on sex (or gender identity) even when requested to do so by an employer, and provides no exception for religious employers.

Mental Health Parity Rules

Group health plans may be required to provide at least some level of coverage for gender dysphoria and other related conditions to avoid discrimination claims under the Equal Protections Clause, Title VII, and §1557.  If providing some level of coverage for gender dysphoria, then the plan must provide mental health and prescription drug coverage for the condition in parity with medical/surgical benefits.

ADA Rules

The 4th Circuit Court of Appeals (Williams v. Kincaid, 2022) ruled that the ADA’s protections extend to individuals with gender dysphoria. When treated as a disability, there may be risk of an ADA claim for an employer’s benefit exclusions or limitations tied to gender dysphoria, along with failure to engage in an interactive process to consider reasonable accommodations for an employee seeking treatment.


At this time, our recommendation is that group health plans avoid imposing exclusions or limitations related to gender identity or gender dysphoria until careful consideration with legal counsel who would defend the employer in a lawsuit. It would be extremely helpful if further clarification was provided indicating what type of coverage must be offered to avoid potential discrimination claims, but for now we can only suggest that employers consider providing the following:

  • Identical coverage for same-sex and opposite-sex spouses or domestic partners;
  • Preventive coverage as determined to be medically appropriate by the provider, regardless of sex at birth;
  • Coverage for both medical/surgical benefits and mental health benefits related to gender dysphoria, gender reassignment surgery, hormone therapy, etc.;
  • Broad family planning coverage; and
  • Good faith efforts to engage in an interactive process to provide reasonable accommodations for employees with gender dysphoria seeking treatment.

For fully-insured plans, it seems likely that most major carriers will adjust plan designs to decrease the risk of any discrimination claims in light of the numerous recent court decisions, but there is room for interpretation as to exactly what coverage is required. While employers have very little control over carrier plan design, employers could consider changing carriers if their current plan seems risky.

For self-funded plans, it may be necessary to do a more thorough review of plan definitions, exclusions, and limitations to understand if there is a discrimination risk. It may be helpful to look at what is being provided by insured plans in this regard. Some TPAs may make coverage recommendations but leave the final design decisions up to the employer as plan sponsor, while others may place restrictions on plan design to the extent the TPA may be subject to §1557 nondiscrimination rules.

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.