Trump Administration Takes Aggressive Steps Toward Prohibiting Gender-affirming Care for Children and Adults

May 1, 2025

Jason Sheffield, National Director, Benefits Compliance

Introduction

On January 20, 2025, newly elected President Trump signed an executive order titled “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to The Federal Government.” Despite the naming convention utilized in the executive order, the purpose and intent of the order was made clear – that it would be the social, scientific, and medical opinions of the new Administration that transgender people do not exist and that an entire community would be summarily dismissed with the signing of an executive order. Thereafter, the Administration issued a swath of additional orders and administrative memoranda. All the while, rescinding reams of Biden-era policies, orders, and other administrative guidance relative to gender ideology and sexual orientation. In fact, as late as April 18^th, Dr. Mehmet Oz, the new Administrator of the Centers for Medicare and Medicaid Services (“CMS”), sent a letter urging (obviously, not requiring) states to prohibit the utilization of Medicaid funding for gender-affirming care for minors, specifically gender reassignment surgeries or hormone treatments.

To be sure, treatment of the LGBTQ+ community is front and center for the Trump Administration. The President has signed multiple orders spanning a range of interrelated LGBTQ+ issues. For example, one executive order proposes to limit and/or end gender-affirming medical treatments for children and teenagers under the age of 19 throughout the United States, despite the fact that public policy related to personal medical issues should be reserved to the state legislatures and the voters (as was the articulated and endorsed national public policy respecting the right to have an abortion).

Another order attempts to ban transgender troops from serving openly in the military, and yet another order directs agency heads, in consultation with the Attorney General, to develop an “Ending Indoctrination Strategy” aimed at ensuring federal funds do not fund or support “gender ideology or discriminatory equity ideology.”

The Administration even went so far as to forward an uninvited Memorandum of Policy to the United States Supreme Court outlining the new Administration’s gender identity-related policies and preferences (despite that at that time, there were no related actionable controversies under the Court’s purview relative to any of Trump’s gender identity-related Executive Orders).

Gender-Affirming Care Takes Center Stage

Despite these and other activities of the new Administration, most of these orders are merely policy statements with little budgetary support or enforcement bite. However, on March 10, 2025, the Trump Administration took a quiet, yet significant, step towards the realization of its policy goals relative to LGBTQ+ people with one of the first proposed executive agency rules authored by the new Presidential Administration, and as issued by CMS.

In summary, the Proposed Rule seeks to modify the Affordable Care Act’s (“ACA’s”) marketplace coverage standards applicable to individuals and non-grandfathered small group plans. Specifically, if implemented as proposed, a Final Rule would change how individual and small group plans cover gender-affirming care services under the ACA, which the rule refers to as “coverage for sex-trait modification.” Further, the Proposed Rule articulates, and makes actionable, the Administration’s stated public policy goal of prohibiting insurance issuers and carriers from covering gender-affirming care as an Essential Health Benefit (“EHB”) beginning in plan year 2026.

Understanding the Concept of Essential Health Benefits

Pursuant to the ACA, non-grandfathered individual and small group health plans must provide coverage for a suite of EHBs which must be equal to the scope of benefits provided under a typical employer plan and which must be protected as to cost-sharing limitations (and as such, operating to impact the affordability and actuarial value of the underlying coverage). EHB packages vary by state and must include, at a minimum, covered treatments and services throughout a range of ten (10) categories of benefits, including:

• Ambulatory patient services (outpatient care provided without being admitted to a hospital);
• Emergency services;
• Hospitalization (like surgery and overnight stays);
• Pregnancy, maternity, and newborn care (both before and after birth);
• Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy);
• Prescription drugs;
• Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills);
• Laboratory services;
• Preventive and wellness services and chronic disease management; and,
• Pediatric services, including oral and vision care (but adult dental and vision coverage are not considered essential health benefits).

Essential health benefits are minimum requirements for all Marketplace plans. Specific services covered in each broad benefit category can vary based on each state’s individual requirements. Plans (states) may also require additional benefits for management of specific medical conditions (such as gender dysphoria). However, issuers and carriers are prohibited from covering within EHBs certain prohibited treatments and services, that presently include abortion, non-pediatric dental or eye exam services, long-term nursing care, and non-medically necessary orthodontia.[1]

The Intersection of Gender-affirming Care and Essential Health Benefits

Because states vary in how their EHB-benchmark plans treat gender-affirming care, there is a range of coverage and related exceptions existing across the United States. While some states explicitly cover or specifically exclude coverage for gender-affirming care in their EHBs, others are altogether silent on the matter. Across 24 states and the District of Columbia, plans are also specifically required to cover certain individually mandated benefits, including treatments and services for gender-affirming related care.[2]

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. That said, individual states may elect to require coverage for sex-trait modifications 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 then be required to absorb the cost of the medical treatments and services outside of, and in addition to, the state’s EHBs.

Specifically, the language of the Proposed Rule provides that, “[t]he agency makes this proposal independently of the [Presidential] executive orders [many of the provisions of which are currently enjoined by federal court 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 already issued preliminary injunctions relating to the gender identity related executive orders; however, CMS asserts that it does not rely upon the enjoined sections of the executive orders in making this proposal. Instead, CMS writes that they are proposing the prohibition “because coverage of sex-trait modification is not typically included in employer-sponsored plans, and EHB[s] must be equal in scope to a typical employer plan…” To be sure, CMS provides no support for this assertion, instead offering that they find that “0.11 percent of enrollees in non-grandfathered individual and small group coverage market plans utilized sex-trait modification during PYs 2022 and 2023.” Utilization of gender-affirming care services is expectedly low across the enrolled population overall because only a small share of the population is transgender, and not all transgender people seek gender-affirming medical care. Further, utilization reviews of services may be a poor proxy for how commonly they are covered.[3]

We are continuing to monitor the status of the Proposed Rule and will report additional details of any final rulemaking to the extent the proposal is finalized into a Final Rule by CMS.

Additional Resources

The published Proposed Rule is available for viewing at: 

• https://www.federalregister.gov//documents/2025/03/19/2025-04083/patient-protection-and-affordable-care-act-marketplace-integrity-and-affordability

[1] See Dawson, Lindsay, Kaye Pestaina, and Matthew Rae, KFF, New Rule Proposes Changes to ACA Coverage of Gender-Affirming Care, Potentially Increasing Costs for Consumers (Mar. 24, 2025). New Rule Proposes Changes to ACA Coverage of Gender-Affirming Care, Potentially Increasing Costs for Consumers | KFF.

[2] Id.

[3] Id.