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Transgender Benefits Revisited?

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In a series of tweets published on July 26, 2017, President Trump announced a ban on transgender service in the armed forces.  In the wake of this reversal of government policy, employers may question the current state of transgender benefits and whether additional changes are forthcoming.

On May 18, 2016, the Department of Health and Human Services (“HHS”) issued final regulations implementing the nondiscrimination provisions of the Affordable Care Act (“Section 1557”), which prohibit, in part, the categorical refusal of coverage to transgender participants and require that individuals be treated consistent with their self-selected gender identity.  As a result of these changes, many employer group health plans started covering an array of transgender benefits ranging from mental health counseling to gender reassignment surgery.

These regulatory protections have drawn sustained legal challenges, particularly from faith-based health care providers.  One such case, Franciscan Alliance, Inc., et al. v. Burwell, could precipitate an overhaul of the nondiscrimination rule.  In particular, the court in that case issued an injunction on the enforcement of the rule and has permitted HHS to review and revise the regulation.  To that end, the court instructed HHS to identify any adjustments to the rule and any rulemaking proceedings necessary to affect those changes before the court will consider whether to lift the injunction.

On a related note, employers may wish to remember Title VII.  Previous guidance issued by the Equal Employment Opportunity Commission (the “EEOC”) indicated that the EEOC views discrimination against transgender individuals as a form of sex discrimination barred by Title VII.  The EEOC reiterated this view in a recent Letter of Determination, finding that a health plan’s categorical exclusion of transgender benefits violated Title VII.

As it currently stands, many employer health plans are required to cover transgender services under Section 1557, but even those that are not subject to Section 1557 might decide to cover such services in light of the potential for discrimination claims under Title VII.

For additional information on the scope and application of the nondiscrimination rule (as it stands today) see our blog posts of June 22, 2016, “Transitioning to Coverage: Three Things to Know About the New Transgender Healthcare Regulations” and September 19, 2016, “A Deeper Dive: Employers Receiving Federal Funding May be Subject to ACA’s Nondiscrimination Rule and Need to Cover Transgender Benefits.”