Reassigning Section 1557: Trump Administration Proposes Reversal of Transgender Benefits Rule

In 2016, the Department of Health and Human Services (“HHS”) Office of Civil Rights issued final regulations implementing the nondiscrimination provisions of the Affordable Care Act (“Section 1557”), which prohibit the categorical refusal of health coverage to transgender participants and require that individuals be treated consistent with their self-selected gender identity. These regulations drew sustained legal challenges and prompted HHS to withdraw, revise and reissue the Section 1557 regulations (the “Proposed Regulations”).

In short, the Proposed Regulations would repeal large portions of the original nondiscrimination rules and would redefine the scope of various protections under Section 1557. Specifically, the Proposed Regulations negate the provisions of Section 1557 covering nondiscrimination based on sex and gender identity. By amending these provisions, the Proposed Regulations would eliminate the prohibition on categorically refusing coverage to transgender participants and denying treatment that is inconsistent with self-selected gender identity.

As we have previously reported, many employer group health plans started covering an array of transgender benefits ranging from mental health counseling to gender reassignment surgery in response to the original Section 1557 regulations. The Proposed Regulations are not yet final and, even if finalized in their current form, do not require employers to roll-back any such benefits. Furthermore, employers should keep in mind the requirements of Title VII when considering how to react to the Proposed Regulations. In particular, previous guidance issued by the Equal Employment Opportunity Commission (“EEOC”) indicated that the EEOC views discrimination against transgender individuals as a form of sex discrimination barred by Title VII. Accordingly, many employers who have been offering transgender benefits under their health plans may very well do nothing in response to the Proposed Regulations, if adopted.

For more information about the original Section 1557 regulations and challenges to the same, see our blog post of August 10, 2017, “Transgender Benefits Revisited?”