ACA Non-Discrimination Rules: Gender Identity Protections Withdrawn
- Jun 23
- 6 min read
The Affordable Care Act's (ACA) nondiscrimination rule, known as Section 1557, has been one of the most important legal frameworks affecting access to healthcare for transgender individuals. Over the last decade, however, the meaning and enforcement of Section 1557 - especially as it relates to gender identity and gender-affirming care - have shifted repeatedly through rule-making, court decisions, and agency guidance.
For employers, health plan sponsors, providers, and patients, the result has been a moving compliance target. The current landscape is best understood as a timeline of regulatory change rather than a single settled rule and has different implications for plan sponsors, health plan participants and medical providers.
Background on ACA Non-Discrimination Rules
Section 1557 of the ACA prohibits discrimination in certain health programs and activities on the basis of race, color, national origin, sex, age, and disability. Its application matters to health insurers, third-party administrators in some contexts, hospitals, clinics, and other entities that receive federal financial assistance or are otherwise covered by the law.
The main legal dispute has been how broadly the word sex should be interpreted. Specifically, regulators and courts have debated whether discrimination based on gender identity is a form of sex discrimination, and how that interpretation affects coverage decisions involving gender-affirming care.
What Are Gender Affirming Care and Gender Identity Issues?
Gender affirming care refers to medical, surgical, mental health, and supportive services that help individuals align their physical characteristics and gender expression with their gender identity. This care can include hormone therapy, surgeries, counseling, and other treatments.
Gender identity is a person’s deeply felt internal sense of being male, female, a blend of both, or neither. It may or may not correspond with the sex assigned at birth.
Past ACA Non-Discrimination Rules Impacting Gender Affirming Care
In 2016, HHS issued a final rule implementing Section 1557 that interpreted discrimination "on the basis of sex" to include gender identity and sex stereotyping. This marked the first major federal regulatory statement that Section 1557 protects transgender individuals in healthcare settings.
The rule was challenged in court, most notably in Franciscan Alliance v. Burwell. That litigation resulted in parts of the rule being blocked, particularly the portions addressing gender identity and termination of pregnancy. This meant the rule's legal force was limited even before the next administration formally changed course.
Trump Administration Roll-back (#1)
In 2020, under the first Trump administration, the 2016 rule prohibiting discrimination on the basis of gender identity was withdrawn. However, only days later, the United States Supreme court ruled, in Bostock v. Clayton County, that it is unlawful for employers to discriminate against employees on the basis of gender identity. As a result, in August 2020, multiple federal courts blocked parts of the Trump-era rule from taking effect, citing that HHS failed to consider the Bostock ruling.
Bostock was an employment case, not a healthcare case, but it immediately reshaped arguments under Section 1557 because that statute also prohibits discrimination "on the basis of sex." After Bostock, multiple courts questioned whether the 2020 HHS rollback could stand as written.
The Biden-era Rule (2023-2024)
2023 and early 2024, under the Biden Administration, the Department of Health and Human Services (HHS) finalized new regulations (the Biden Rule) that reinstated and strengthened protections enacted under the Obama administration 2016 Rule as follows:
1. Clearer Definition of Sex Discrimination to Include Gender Identity
The Biden Rule explicitly stated that discrimination based on gender identity is a form of sex discrimination. This was intended to remove ambiguity and align federal policy with the Bostock ruling that recognize gender identity as protected under sex discrimination laws.
2. Prohibition of Categorical Exclusions for Gender Affirming Care
The Biden Rule sought to prohibit health plans and providers from imposing blanket exclusions that deny coverage for all gender affirming treatments. For example, a plan cannot refuse to cover hormone therapy or surgeries solely because they are related to gender transition.
3. Requirement for Equal Coverage and Access
The Biden Rule changed the rules for providing health coverage by requiring that certain plan sponsors provide equal access to medically necessary care for transgender individuals. This meant that plans were required to cover gender affirming care when medically appropriate, just as they would cover treatments for other medical conditions.
4. Enhanced Enforcement and Complaint Procedures
The Biden Rule sought to strengthen enforcement mechanisms, making it easier for individuals to file complaints about discrimination. As a result, HHS became committed to investigating violations promptly and imposing penalties when necessary.
5. Provider Training and Communication Standards
The Biden Rule also required healthcare providers and insurers to ensure staff receive training on non-discrimination policies and respectful treatment of transgender patients. Communication materials from providers were required to be inclusive and avoid language that could discourage or confuse patients seeking gender affirming care.
Trump Administration Changes to ACA Non-Discrimination Rules
In 2024, the court in Tennessee v. Kennedy struck down specific parts of the Biden Rule claiming HHS had exceeded its authority under the Biden administration by interpreting discrimination on the basis of gender identity as a form of sex discrimination.
As a result, in 2025, HHS (under Trump-era leadership) rescinded the Biden Rule, signaling yet another change in enforcement posture. Moreover, on June 1, 2026, HHS issued a press release indicating the decision in Tenessee v. Kennedy, prevents it from investigating or enforcing the Biden Rule provisions against covered entities. HHS stressed that the rest of the rule's core protections remain in effect and it will continue enforcing Section 1557 protections against discrimination based on race, color, national origin, age, disability, and other sex-discrimination provisions not affected by the ruling.
These frequent change in enforcement posture have created confusion for constiuents that rely on these regulations, and has real implications for health care plan sponsors, participants and medical providers.
Implications for Plan Sponsors
For plan sponsors, the immediate takeaway is uncertainty, not total deregulation. The federal government has taken different positions across administrations, and court orders have limited enforcement of some gender-identity-related provisions. That may reduce immediate federal enforcement pressure in some situations, but it does not eliminate all legal risk.
Employers and plan sponsors still need to consider:
existing plan language,
potential litigation risk,
state insurance or nondiscrimination rules,
vendor and issuer practices,
and the possibility of future regulatory changes.
A plan sponsor may have more room to exclude gender affirming care than it otherwise had in 2024, but deny such coverage is not purely permissible under the law.
Implications for Health Plan Participants
For participants seeking gender-affirming care, the biggest effect is that Section 1557 may currently be a less predictable enforcement path for challenging exclusions or denials tied to gender identity.
That does not automatically mean all exclusions are lawful or that coverage protections have vanished. It means that one important federal avenue is less stable than it appeared during the Biden administration. Coverage disputes may now depend more heavily on plan wording, medical-necessity standards, state law, and developing case law.
Implications for Health Care Providers
For providers, the shift mainly affects the federal enforcement environment. Some providers may perceive lower immediate OCR risk in this area than they did under the 2024 rule. Even so, providers should be cautious about assuming that reduced federal enforcement equals no exposure.
Other sources of risk may still remain, including state law, accreditation standards, payer requirements, private litigation, and professional obligations tied to patient care and nondiscrimination.
The Bottom Line
Since 2016, Section 1557 has moved through a repeated cycle of expansion, rollback, judicial intervention, and partial restoration. The law's treatment of gender identity and gender-affirming care has not followed a straight line. Instead, it has been shaped by changing administrations, politcally motivated policy considerations, and the Supreme Court's reasoning in Bostock, combined with multiple injunctions limiting how far HHS can go in enforcement.
The safest current summary is this:
Section 1557 still exists, but its application to gender identity and gender-affirming care remains contested and unstable. Anyone making coverage, compliance, or treatment decisions should evaluate current federal rules, court orders, plan terms, and state law together rather than relying on any single agency position.
Because this area remains legally fluid, this post should be treated as a general overview rather than legal advice.
