A new federal court ruling could provide clarity as to the reach of Affordable Care Act coverage.
A transgender woman (Jane Doe) sued Independence Blue Cross after it denied coverage for facial feminization surgeries. Blue Cross denied coverage based on its assessment that the surgeries were cosmetic and not medically necessary.
Doe filed sex and disability discrimination claims under the ACA, ADA, ERISA and a Pennsylvania state insurance bad faith law. Blue Cross moved to dismiss claims in a Pennsylvania federal court, but the court allowed her claim under the ACA to proceed.
Potential ACA Implications for Employers
Under the Employer Mandate portion of the ACA, organizations with 50 or more full-time employees and full-time equivalent employees must offer Minimum Essential Coverage (MEC) that is affordable and meets Minimum Value (MV) to at least 95% of their workforce and their dependents.
The Doe vs. Independence Blue Cross ruling wouldn’t directly affect employers under the mandate, but it could influence the scope of coverage that is considered essential.
Section 1557 of the ACA specifically incorporates non-discrimination provisions and enforcement mechanisms of Title VII, Title IX, the Age Discrimination Act of 1975, and Section 504 of the Rehabilitation Act for any health program or activity receiving federal financial assistance. Thus, sex and disability discrimination are actionable under the ACA.
Self-insured employer-sponsored plans are not subject to Section 1557 unless they receive some type of federal funding related to healthcare activities.
The court ruling could inform ACA compliance for these employers, however, as it deals with gender-affirming care. Medical and surgical procedures have to be offered in a non-discriminatory manner, but there is no specific requirement that insurers cover any specific transgender-related healthcare procedures, even when they’re considered medically necessary.
How the court rules in the Doe vs. Independence Blue Cross case could set a precedent that healthcare providers must cover gender-affirming procedures because not doing so is considered discriminatory.
Case Details
Doe suffers from gender dysphoria, a diagnosable condition found in the DSM-5. Medical experts recognize facial feminization surgeries and related procedures as medically necessary and part of the standard of care for treating this medical condition.
Doe claims she has experienced numerous instances of harassment and mistreatment because of her transgender status, which has caused her difficulty with social and occupational functioning.
Doe had employer-sponsored health insurance benefits provided by Blue Cross through an ERISA-governed health benefits plan. The policy covers medically necessary healthcare expenses and excludes cosmetic surgeries that improve appearance, but not physical function.
Blue Cross specifically covers some treatments for gender dysphoria that it deems medically necessary if certain criteria are met, and considers others cosmetic, such as facial feminization surgeries.
After Blue Cross denied her claim, Doe submitted additional evidence to show that her gender dysphoria was a functional impairment that FFS could help remedy. Blue Cross continued to deny coverage, claiming the procedures were cosmetic, Doe’s facial structure fell within the realm of a biological female, and her perception of herself was a mental rather than a functional or physical impairment.
First, Doe alleges sex discrimination under Title IX. Discrimination based on one’s transgender status is sex-based discrimination. Discrimination because of one’s gender dysphoria is also considered sex-based discrimination as a result.
Doe argues that Blue Cross’ denial of coverage for facial feminization surgeries was based on gender stereotypes of what a female’s facial structure should look like. In this case, Blue Cross’ determination of whether the surgeries were medically necessary relied on these stereotypes and the degree to which Doe conformed to them.
The court ruled that Blue Cross applied the policy to Doe in a discriminatory manner, which is why it allowed her sex discrimination claim to proceed.
Doe also argued that Blue Cross’ denial of coverage constituted unlawful discrimination based on disability under Section 504. She claims that Blue Cross never covers FFS for individuals with gender dysphoria but covers the same procedure for other disabled individuals. However, Doe had no evidence to support that claim, which led to the court dismissing her Section 504 claim.
Get Help with ACA Compliance
Affordable Care Act compliance is complex and subject to change based on relevant legal decisions.
Additionally, the IRS has cracked down on non-compliance in recent years, issuing Letter 226J penalty notices and ending good-faith transition relief.
Organizations can outsource their ACA obligations to a software service provider to ensure compliance and avoid costly penalties.
Trusaic’s ACA Complete® solution integrates with major HCM platforms, like ADP, Workday, and SAP to ensure a seamless flow of payroll and benefits information into the cloud-based solution, reducing time spent and human error with ACA reporting.
To understand your organization’s current level of ACA penalty risk, get your ACA Vitals score. The eight-question quiz can help you identify areas within your business that can complicate the ACA compliance process.
