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Baldwin Bulletin

Impact of the Religious Freedom Restoration Act (RFRA) on the ACA Sec. 1557 & Title VII of the Civil Rights Act (CRA)

The Baldwin Group
Updated: May 8, 2024
4 minute read

US District Court ruling in Christian Employers Alliance v. EEOC, et al. limits federal government enforcement of ACA Sec. 1557 and Title VII of CRA if they Interfere with the Religious Freedom Restoration Act (“RFRA”).

Employer Action Items

  • The U.S. District Court in Christian Employers Alliance v. EEOC, et al. has determined that plan sponsors may seek relief from Sec. 1557 and Title VII rules under the RFRA;
  • If a plan sponsor wishes to limit or deny payments for gender transition procedures they may do so; however, an individual must be able to show that they do hold sincere religious beliefs.


A decision published in the U.S. District Court for the District of North Dakota in March 2024 offers insights as to the interpretation and application of Section 1557 of Affordable Care Act (“ACA”) and Title VII of the Civil Rights Act (“CRA”), as well as tips related to the interplay of these laws with the Religious Freedom Restoration Act (“RFRA”). In the instant matter, the Court held that the U.S. Equal Opportunity Commission (“EEOC”) and the Department of Health and Human Services (“HHS”) may not compel businesses to cover surgeries and other procedures related to gender dysphoria to the extent covering such treatment or service “substantially burdens a sincere religious exercise or belief.”

The history of Section 1557 rulemaking rules sheds little light into the confusion employers face when determining how to administer employee health plans subject to the law’s requirements. In 2016, rules were published that extended nondiscrimination protections under Sec. 1557 based on gender identity, sex-stereotyping and specific health insurance coverage protections for transgender individuals. Those rules were amended in June 2020 to remove certain protections, but then amended and re-released yet again in 2024, re-applying the gender identity and pregnancy related discrimination protections excluded under the 2020 rules, and even expanding the scope of same.

The protracted procedural posture of Section 1557’s rulemaking makes it readily apparent that public policy motivations largely govern the design and drafting of Section 1557’s nondiscrimination requirements, and as such, these rules remain incredibly partisan in nature, as well as highly charged politically and socially, respecting both ends of the political spectrum. As each subsequent administration tries its own hand at crafting yet another round of Section 1557 rulemaking, it because all the more clear that these efforts are motived largely by the underlying social and political policy objectives of the then governing administration.

Shortly after the 2020 rule changes, the U.S. Supreme Court issued a decision in Bostock v. Clayton County, GA. In Bostock, the Supreme Court held that Title VII of the CRA protects employees against discrimination because of their sexual orientation and/or gender identity. Two federal district courts then issued nationwide preliminary injunctions preventing HHS from implementing parts of the 2016 Sec. 1557 final rule.

In January 2021, by Executive Order, the Biden Administration declared that “laws that prohibit sex discrimination . . . prohibit discrimination on the basis of gender identity or sexual orientation.” Federal agencies were thereby directed to “fully implement all statutes that prohibit sex discrimination” consistent with the Administration’s interpretation.

There have been multiple federal court cases questioning the limit of HHS’s reach under the revised Section 1557 rulemaking, and as a direct result of the 2021 Executive Order. In Franciscan Alliance v. Becerra and Sisters of Mercy v. Becerra, different U.S. District Courts held that HHS could not compel religious doctors and religious-affiliated hospitals to perform gender transition related health procedures upon any patient, as such a rule might infringe upon religious liberties (as defined by the RFRA). These decisions were both affirmed on appeal. Consequently, court within both the 5th and 8th federal appellate circuits have enjoined enforcement of the gender identity related nondiscrimination requirements under the Section 1557 rulemaking from 2020, while other district courts have specifically enjoined HSS from repealing the same disputed regulatory requirements, leaving HSS in a bit of a policy making quandary.

For now, these decisions have limited impact upon most employer-sponsored health plans because the bulk of employer sponsored plans provide at least some level of care for coverage related to the treatment of gender dysphoria (e.g., counseling, hormone therapy, occupational therapy, etc.). To be sure, relatively few employer sponsored plans maintain blanket restrictions against all gender dysphoria related treatments and services, including coverage of gender affirming surgical procedures.

Remember that a change in presidential administrations, as well as ongoing and future federal litigation activities, may serve to expand, or to further restrict, the nondiscrimination protections assured under Section 1557 and Title VII. Also, respecting the Biden’s administration’s April, 2024, publication of revised final rulemaking under ACA Section 1557, a fresh round of federal litigation is fully anticipated (notwithstanding the fact that the newest Section 1557 rulemaking largely maintained the prior administration’s religious conscious objections to compliance with the law’s requirements). 

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