By: Erin Hussey, Esq.
Section 1557 under the Affordable Care Act (“ACA”) prohibits discrimination on the basis of race, color, national origin, sex, age, or disability with regards to certain covered entities’ health programs. A covered entity is one that receives federal funding as outlined in the ACA. The complicated issue is whether treatment for gender identity is a protected class under the category of discrimination based on sex. While Section 1557 does not specifically state that plans subject to it must cover gender transition surgery, the rules do state that the Health and Human Services, Office for Civil Rights (“HHS, OCR”) will investigate any complaints. With that said, the December 31, 2016, U.S. District Court injunction (applicable nationwide) was placed on certain parts of Section 1557, including the prohibitions against discrimination on the basis of gender identity and termination of pregnancy, and that injunction is still in effect. Recent guidance from the Department of Justice (“DOJ”), while Section 1557 is not specifically addressed, appears to hint that the current administration is not going to ask a federal judge to lift the current injunction.
The self-funded plans that are not directly subject to Section 1557, because of the lack of federal funds, must still comply with the ACA. There are no actual benefit mandates for transgender services under the ACA for self-funded plans that are not subject to Section 1557. Therefore, there does not appear to be a direct benefit compliance issue for plans that exclude treatment for gender identity. Regardless of whether there is a benefit compliance issue, there is the potential for a discrimination issue under Title VII of the Civil Rights Act of 1964 (“Title VII”) drawing unwanted attention from the Equal Employment Opportunity Commission (“EEOC”).
Thus, whether a self-funded plan is or is not subject to Section 1557, it would still be a plan’s best practices to cover gender identity services since employers are not shielded from liability under Title VII. Title VII prohibits employment discrimination based on race, color, religion, sex and national origin, and the EEOC’s interpretation of its prohibition on discrimination based on sex, includes discrimination based on gender identity and sexual orientation. The EEOC, as an independent commission, takes the stance that employees who undergo gender reassignment are protected under Title VII. For example, the EEOC filed an amicus brief on August 22, 2016, arguing that an individual’s gender dysphoria made gender reassignment surgery “medically necessary” and that the failure to cover this surgery was a sex discrimination violation of Title VII. The case for which this amicus brief was filed, involved a self-funded health plan that had a sex transformation surgery exclusion.
The above-noted case should caution Plan Administrators when excluding treatment for gender identity or dysphoria, even if the plan is not subject to Section 1557, because the EEOC may still have a discrimination claim under Title VII.