Court Finds Gender-Affirming Care Exclusion Violates ACA Section 1557
May 06, 2025
On April 18, 2025, a district court in Washington state held that a health insurer’s categorical exclusion of coverage for mastectomies for transgender youth discriminated on the basis of sex in violation of Section 1557 of the ACA.
The case involved a pair of parents who sued the insurer, Premera Blue Cross, after it denied coverage for the dependents’ mastectomies and reconstructive surgeries. Specifically, the plaintiffs claimed that Premera’s categorical exclusion of mastectomies for transgender youth qualified as discrimination on the basis of sex and age in violation of Title IX and the Age Discrimination Act, as incorporated by reference into Section 1557 of the ACA.
By way of background, Section 1557 prohibits discrimination on the basis of race, color, national origin, disability, age, and sex in federally funded healthcare programs or activities. Three administrations have expanded and contracted the application of this section through rules. In 2016, the Obama administration issued a rule that applied the section to entities that provided health-related services, health-related insurance coverage, or other health-related coverage (including group health plans and TPAs) that received any federal financial assistance. In 2020, the Trump administration narrowed the application of the section through revisions to the 2016 rule, stating that the administration would not consider health insurance issuers and TPAs to be a “health program or activity” subject to Section 1557’s antidiscrimination requirements. In 2024, the Biden administration issued a rule that expanded the section’s application back to what it was in 2016, including pharmaceutical care and health research and education for healthcare professionals.
While Premera argued the point of its various medical policies was to establish medical necessity criteria for insurance coverage, the court concluded that even if all other medical criteria were satisfied, mastectomies were not considered medically necessary for minor transgender patients, though they might be deemed medically necessary for cisgender male adolescents. Specifically, the court ruled that the policy discriminated based on sex by conditioning coverage of mastectomies for transgender individuals on having a gender dysphoria diagnosis while not imposing a similar prerequisite for covering mastectomies for cisgender individuals. The court also noted that Premera had actually granted 28 of 63 requests to cover gender-affirming chest surgery for minors, sometimes based on an undocumented list of exceptions, and questioned why the insurer had not formally included the exceptions in its medical policy. The court held it was not ruling that all gender-affirming surgeries for minors must be covered but that a categorical ban with secret exceptions would violate Section 1557.
The court rejected the defendant’s argument that Section 1557 only applied to those programs for which it received federal financial assistance. However, the court dismissed the plaintiff’s age discrimination claims under Section 1557 because the parents failed to meet the requirements regarding their age-related claim, which include 1) providing at least 30 days’ notice to HHS and the defendant before filing suit; and 2) before filing suit, submitting a complaint to HHS within 180 days of the date the complainant knew about the alleged discrimination.
Employer Takeaway
While the case highlights the degree to which plan sponsors may be held liable for categorical exclusions for gender-affirming care, it also demonstrates that the application of “exceptions” related to the exclusion of coverage for mastectomies for transgender youth could potentially trigger issues under Section 1557. Employers should continue to proceed cautiously when evaluating whether certain plan exclusions for gender-affirming care and related programs can be offered under Section 1557, and should consult with legal counsel if advice is needed regarding the application of the Section to their specific plans.
A copy of the court’s full decision can be accessed here