In May 2021, the Department of Health and Human Services reversed a Trump administration position on the ACA’s section 1557.


Under section 1557, health plans are prohibited from discriminating on the basis of race, color, sex, national origin, age and disability. Under the ACA, the definition of sex was clarified to include discrimination on the basis of sexual orientation and gender identity. Beginning in 2016, covered entities receiving funding from HHS under section 1557 would no longer be able to exclude treatment for gender dysphoria. Per 1557 a health plan is only a covered entity if it receives federal financial assistance from HHS or is principally engaged in the business of providing healthcare, insurers who participate in marketplace exchanges and their third party administrators.

In 2020, the Trump administration reversed the ACA 2016 rule and removed the language which expanded protections for sexual orientation and gender identity. Additionally, they changed the definition of covered entity by dropping the requirement that the rule apply to insurers who participate in marketplace exchanges and their third party administrators. At the same time that HHS under the Trump administration was making its changes, the U.S. Supreme Court decided in Bostock vs Clayton County (June 2020) that sexual orientation and gender identity were protected under workplace sex discrimination under Title VII of the Civil Rights Act. This clearly set up a conflict between these two rules.

Last month, HHS under the Biden administration reversed the Trump era rule and reestablished the ACA’s definition of sex discrimination under section 1557 to include sexual orientation and gender identity. The Biden administration, however, did not reverse the Trump era definition of a covered entity.

Implications for Employers

  • In light of Bostock vs Clayton, employers need to be aware of discriminatory practices within the workplace and specifically as to how their health plan may discriminate particularly around mental health parity;
  • Although the new regulations do not mandate coverage of any specific benefit, limits and exclusions of gender dysphoria treatment may put an employer subject to section 1557 at risk for discrimination claims;
  • Employers not subject to section 1557 may want to review their policies and practices, both in light of the Bostock decision and the recent DOL enforcement of mental health parity quantitative and non-quantitative treatment limits. Since there have been cases in the lower courts that have ruled in favor of coverage for gender dysphoria under Title VII of the Civil Rights Act; not being a covered entity may not be enough to prevent a discrimination suit.

Please reach out to your Diversified Group sales representative to discuss coverage or exclusion options for gender dysphoria treatment.

DG Compliance