Here’s a little background regarding transgender benefits:

• Section 1557 of the ACA states specifically that gender identity “may be male, female, neither, or a combination of male and female.” This verbiage implies that transgender individuals have a right to care and coverage when part of a covered entity.

• The original guidance issued in 2016 by the previous administration indicated that blanket exclusions of gender reassignment medical services were no longer appropriate and that employers should instead follow a protocol to determine which procedures were medically necessary.

• Among group health plans in the U.S., over 20% of plans covered gender-reassignment surgery, mental health counseling regarding transition, and proscription drug therapy (e.g., hormone replacement therapy), per the International Federation of Employee Benefit Plans.

Over the last couple of years, there have been contradictory court cases on this topic. According to the publication Health Affairs, while a nationwide injunction was issued on 12/31/2016 to prohibit enforcement of the Obama administration’s interpretation of this rule, other courts have recently agreed with that same interpretation.

After the injunction, the rule was sent back to HHS and the Department of Justice to be revised.  It is expected that when HHS finishes the final rule, that blanket exceptions to transgender services, including gender reassignment, may again be considered acceptable. Employers, especially those who are partially self-funded, will want to keep an eye out for the final rule to decide how to approach this benefit going forward.

Throwing a wrench into all of this, President Trump recently made the announcement that his administration is considering defining gender as binary and fixed at birth. As a result, the definition as defined by Section 1557 could be nullified.

This raises natural implications for benefits. If “official” gender is defined as binary and defined at birth, then it is unlikely that plans will be required to cover gender reassignment surgery or any related services.  In this case, any reassignment surgery will likely be paid completely out of pocket unless the individual is on a plan that elects to cover the procedure.

The president’s suggested gender policy could also raise issues for employees on an employer plan who have already transitioned, and employers have recorded their new gender with their health insurer. Would that insurer now be allowed to deny for example cervical cancer screenings for transgender men, or prostate cancer screening for transgender women? The suggested policy raises far more questions than it answers.

Stay tuned to keep up on the changes allowed or required by any new interpretation of this regulation.  As always, please reach out to your Client Manager with any questions.