United States: HHS Final Rule Finds Categorical Exclusions For Health Services Related To Gender Transition Are Generally Unlawful

Last Updated: June 29 2016
Article by Denise M. Visconti

The U.S. Department of Health and Human Services (HHS) recently published its Final Rule1 implementing Section 1557 of the Affordable Care Act (ACA), which prohibits discrimination on the basis of, among other grounds, sex in certain health programs and activities.  According to HHS's press release, the Final Rule and Section 1557 outline individuals' rights, as well as the responsibilities of health insurers, hospitals, and health plans administered by or receiving federal funds, in order to advance protections for underserved, underinsured, and often excluded populations.   

Section 1557 is the first federal civil rights law to explicitly prohibit discrimination on the basis of sex in federally funded health programs.2  Importantly, as outlined in the Final Rule, Section 1557 prohibits the denial of health care or coverage based on gender identity and sex stereotyping.  The Final Rule goes into effect on July 18, 2016, unless changes to a health insurance plan or group health plan benefit design are required (in which case the effective date is on the first day of the first plan year beginning on or after January 1, 2017), and is expected to have broad implications for the provision of transgender- and gender transition-related medical treatment.    


Many health insurance plans, including Medicaid programs, historically have categorically excluded coverage for any medical treatment related to gender dysphoria or associated with a gender transition.  Plans, owners of those plans, and insurance carriers offering health insurance plans often have justified these exclusions, either explicitly or implicitly, by classifying treatments related to a gender transition as cosmetic, elective or experimental in nature.  At the same time, the same treatments that were categorically denied for transgender individuals frequently were provided to non-transgender individuals – and covered by most health insurance plans – when prescribed by their physicians.

Insurance carriers and plan administrators traditionally have used two methods to deny coverage for gender transition-related treatment.  Prior to the enactment of the ACA, insurance carriers used prior diagnoses of gender dysphoria or Gender Identity Disorder – with which some transgender individuals were diagnosed – to deny such individuals' application for health care coverage outright.3  Insurance carriers also traditionally included exclusions for transition-related treatment in all health care contracts.  Unless a company requested that such exclusions be removed, these blanket categorical exclusions routinely were included in all health care plans and used to deny coverage for treatments related to a gender transition.

Prior to the enactment of the Final Rule and Section 1557, no federal law explicitly prohibited discrimination in healthcare on the basis of sex and there was no explicit federal legal requirement for group or individual insurance plans to cover care related to gender transitions, gender reassignment surgery or related procedures.  Likewise, no court had issued a ruling finding either that health insurance plans were required to cover gender transition-related treatment, or that the inclusion of categorical exclusions for medical treatment related to gender dysphoria or associated with gender transition in a healthcare plan violated federal law.

On the state level, following the passage of the ACA, 11 states explicitly prohibited private health insurance plans sold in the state and Medicaid coverage from including exclusions for transition-related care.  An additional six states clarified that their state Medicaid program covered transition-related care.  But, the remainder of states remained silent on the issue. 

In recent years, numerous medical organizations, including the American Medical Association and the World Professional Association for Transgender Health, have issued statements on the medical necessity of gender transition-related health care treatment.  In addition, several courts have issued decisions finding transition-related care to be medically necessary.  To date, however, such categorical exclusions largely have remained in many health insurance plans unless specifically excluded by state law.

The Final Rule on Nondiscrimination in Health Programs and Activities

In the proposed rule, HHS sought comments on a number of aspects of the Final Rule, including: (i) the proposal that "sex discrimination" include discrimination based on gender identity, (ii) whether there should be an exemption for religious organizations and, if so, the scope of that exemption, and (iii) the appropriate coverage of the Final Rule and whether it should include all issuers participating in the ACA Marketplace or the Marketplace itself, and/or hospitals and other health care providers.  The Final Rule addressed comments on each such issue.

"Sex Discrimination" Includes Discrimination Based On Gender Identity.  In the Final Rule, HHS made clear that the provisions prohibiting discrimination on account of "sex" include "gender identity," which it defines as "an individual's sense of gender, which may be male, female, neither, or a combination of male and female, and which may be different from an individual's sex assigned at birth."  The definition also includes "gender expression," i.e., the way an individual expresses their gender identity, whether or not it conforms to social stereotypes associated with a particular gender, as well as those individuals whose gender identity is different from the sex assigned to that person at birth, often referred to as "transgender."  According to HHS, this position is consistent with the position taken by courts and federal agencies.4  Moreover, in response to those comments suggesting that such legal interpretations were misplaced or erroneous, HHS stated as follows:

The fact that there may be circumstances in which it is permissible to make sex-based distinctions is not a license to exclude individuals from health programs and activities for which they are otherwise eligible simply because their gender identity does not align with other aspects of their sex, or with the sex assigned to them at birth.  The Department has a responsibility to ensure that health programs and activities of covered entities are carried out free from such discrimination.

As a result, the Final Rule specifically provides that to deny or limit coverage, deny a claim, or impose additional cost-sharing or other limitations or restrictions on coverage of any health service, is impermissible discrimination when the denial or limitation is due solely to the fact that the individual's sex assigned at birth, gender identity, or gender otherwise recorded by the plan or issuer is different from the one to which such services are ordinarily or exclusively available.  Instead, under the Final Rule, coverage for medically appropriate health services must be made available on the same terms and conditions under the plan or coverage for all individuals, regardless of sex assigned at birth, gender identity, or recorded gender.  The Final Rule goes further by stating that all health-related insurance plans or other health-related coverage (including Medicaid programs) that currently have explicit categorical or automatic exclusions of coverage for all health services or care related to gender dysphoria or associated with a gender transition are unlawful on their face; in sum, by singling out the entire category of gender transition-related services, such an exclusion or limitation systematically denies services and treatments for transgender individuals and is, by definition, prohibited discrimination on the basis of sex.

No New Exemptions for Religious Organizations.  After inviting comment on whether the Final Rule should include a religious exemption for health service providers, health plans, or other covered entities with respect to the requirements related to sex discrimination (and in particular with regard to the nondiscrimination provisions relating to gender identity), HHS decided against including a blanket religious exemption in the Final Rule and Section 1557.  In so doing, HHS wanted to ensure the Final Rule appropriately protected sincerely held religious beliefs to the extent that those beliefs conflicted with the nondiscrimination provisions of the Final Rule.

In declining to incorporate an exemption for religious organizations, HHS stated the Final Rule would not displace the protections afforded by provider conscience laws, the Religious Freedom Restoration Act (RFRA), or regulations issued under the ACA related to preventive health services.  HHS further addressed any concerns raised by religious organizations by stating that application of RFRA was the proper means to evaluate any religious concerns about the Section 1557's requirements.5  Since RFRA required an individualized and fact-specific inquiry, any requests for exemption from Section 1557 would be made "on a case-by-case basis, based on a thorough analysis and relying on the extensive case law interpreting RFRA standards."

Coverage of the Final Rule is Broad.  The Final Rule contains a number of definitions that outline the scope of its coverage.  As HHS stated repeatedly in the Final Rule and its accompanying explanations, the nondiscrimination provisions outlined in the Final Rule and Section 1557 of the ACA apply to "every health program or activity, any part of which receives Federal financial assistance provided or made available by [HHS]," as well as "every health program or activity administered by [HHS] and every health program or activity administered by Title I" of the ACA.  Those health programs and activities included within the purview of the Final Rule and Section 1557 include all entities engaged in the provision or administration of health-related services, health-related insurance coverage, and other health-related coverage.  Such entities include, but are not limited to, hospitals, health clinics, group health plans, health insurance issuers, physicians' practices, community health centers, nursing facilities, residential or community-based treatment facilities, State Medicaid programs, Children's Health Insurance Programs, and Basic Health Programs, to name a few. 

Included within the Final Rule – and of particular import to employers – are the health benefits and health insurance coverage provided to employees and/or their dependents that have been "established, operated, sponsored or administered by, for, or on behalf of one or more employers, whether provided or administered by entities including but not limited to an employer, group health plan third party administrator, or health insurance issuer," as well as employer-provided or sponsored wellness programs, health clinics, and long-term care coverage.  Moreover, to the extent employers contract out their health care plans and coverage to third parties, such contracts will not insulate employers from abiding by the Final Rule.  In sum, whether an employer's health insurance benefits plan is self-funded, an ERISA plan, or is self-managed or managed and administered by a third-party administrator, the plan may come within the purview of the Final Rule and Section 1557.

Recommendations for Employers

In light of the Final Rule and Section 1557, employers should consider taking the following steps:

  • Review the provisions of the Final Rule and Section 1557 to determine whether and to what extent employer-provided health plans and programs are covered by the nondiscrimination provisions issued by HHS;
  • Evaluate whether such employer-provided health plans and programs contain blanket, categorical, or automatic exclusions of coverage for health services or care related to gender dysphoria or is associated with a gender transition; and
  • Consult with their benefits group, Plan Administrator, and counsel to determine whether and how to bring any employer-provided health plans and programs into compliance with the Final Rule and Section 1557.


1 U.S. Department of Health and Human Services, Nondiscrimination in Health Programs and Activities, 81 Fed. Reg. 31375 -31473 (May 18, 2016).

2 Section 1557 incorporates other federal laws that explicitly preclude discrimination based on "sex," including Title VII of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972, and provides that no one may be excluded from participation in, denied the benefits of, or subjected to discrimination under: any health program or activity, any part of which is receiving federal financial assistance; any program or activity that is administered by an Executive Agency; or any entity established under Title I of the Act or its amendments.  Any violations of Section 1557 may be redressed using enforcement mechanisms provided for and available under Title VII and/or Title IX.

3 The passage of the ACA invalidated the existence of pre-existing diagnoses as a basis upon which to deny coverage as of January 1, 2014.

4 The Final Rule cited to a number of decisions in support of this assertion, including:  Rumble v. Fairview Heath Servs., Civ. No. 14–cv–2037, 2015 WL 1197415, at *10 (D. Minn. Mar. 16, 2015) (Section 1557); Schroer v. Billington, 577 F. Supp.2d 293, 303 (D.D.C. 2008) (Title VII); Macy v. Holder, EEOC Appeal No. 0120120821, Agency No. ATF–2011–00751, 2012 WL 1435995, at *7 (Apr. 20, 2012) (Title VII).

5 In so stating, HHS provided that RFRA's requirements – i.e., requiring an evaluation of whether a legal requirement substantially burdened the exercise of religion and, if so, then an evaluation of whether that requirement furthered a compelling interest and was the least restrictive means to further that interest – adequately would protect any assertion by a covered entity that Section 1557 burdened its exercise of religion and, if so, whether there were less restrictive means available.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Denise M. Visconti
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.