On March 19, 2025, the Department of Health and Human Services (“HHS”) issued a Proposed Rule that would eliminate the current requirement that certain health insurance issuers must provide coverage for sex-trait modification as an Essential Health Benefit (“EHB”).
Background. HHS previously ruled that Section 1557 of the Affordable Care Act (the “ACA”), prohibits discrimination on the basis of race, color, national origin, sex, age, or disability. These nondiscrimination rules apply to any health program or activity, including EHB determinations, based on sexual orientation or gender identity. Under HHS’s prior ruling, a prohibition on gender-affirming care that is determined to be medically necessary (i.e., an EHB) was presumed to be discriminatory.
NOTE: Small employer group health insurance coverage and individual health insurance coverage are subject to the ACA requirement to provide EHBs, and the determination of whether certain benefits must be covered depends on the applicable State’s EHB benchmark plan. Large plans and self-insured plans are not required to offer EHB or comply with EHB benchmarks.
The Proposed Rule. If HHS’s Proposed Rule is finalized, health insurance issuers will be prohibited from providing coverage for sex-trait modification as an EHB in any state beginning in 2026. However, states may opt to continue covering sex-trait modification consistent with applicable state law, but not as an EHB. If any state separately mandates coverage for sex-trait modification outside of its EHB-benchmark plan, the state would be required to defray the cost of that state-mandated benefit since it would be considered in addition to the EHBs.
HHS added that, “The agency makes this proposal independently of the [Presidential] executive orders because sex-trait modification is not typically included in employer health plans and therefore cannot legally be covered as an EHB. The agency acknowledges that two courts have issued preliminary injunctions relating to the executive orders described above, and the agency does not rely on the enjoined sections of the executive orders in making this proposal.”
The Proposed Rule is available at: https://www.federalregister.gov//documents/2025/03/19/2025-04083/patient-protection-and-affordable-care-act-marketplace-integrity-and-affordability