RFK’s HHS Finalises Rule Targeting Insurance Coverage of Gender-Affirming Care

The latest attack on transgender rights has been unveiled.

Last week, the Department of Health and Human Services announced it had finalised its changes to Obamacare eligibility rules. Among these sweeping changes^¹ is the official prohibition of gender-affirming care being covered as an Essential Health Benefit (EHB) beginning next year. The HHS claims this will ensure, to paraphrase, “that federal subsidies stop going towards ‘sex-trait modification procedures,’” but there’s much more to it than just that. So what exactly will this new rule do?

A Small Change With Devastating Consequences

Essential Health Benefits are 10 categories of healthcare that must be covered by all individual and small group insurance plans. However, it’s left up to the states to determine exactly what qualifies under these 10 categories via their selection of a benchmark plan—a plan whose coverage constitutes the bare minimum for all other plans in the state. Before, this system served to ensure that all Americans could receive the healthcare they needed, but now, EHBs have been weaponised by the new Trump administration. In justifying its new rule, the HHS casts doubt on the medical necessity of gender-affirming care, echoing the flawed, ideologically charged reasoning put forward by their equivalent of the UK’s Cass Review and the Supreme Court in its most recent decision in Skrmetti.

Like all other actions by the Trump administration, this latest attack is a removal of federal protections. Except this one is much more potent. Not only does it place the insurance coverage of transgender Americans at risk, but it also seeks to burden the states that mandate gender-affirming care coverage. Buried deep in the rule is the following section:

There are some State EHB-benchmark plans that currently cover sex-trait modification as an EHB. Other State EHB benchmark plans provide coverage for sex-trait modification, but do not explicitly mention sex-trait modification or any similar term. If this proposal is finalized as proposed, health insurance issuers will be prohibited from providing coverage for sex-trait modification as an EHB in any State beginning in PY 2026. 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 as it would be considered in addition to EHB pursuant to § 155.170. However, if any such State does not separately mandate coverage of sex-trait modification outside of its EHB-benchmark plan, there would be no defrayal obligation. States may consider mandating coverage of sex-trait modification in the future, in which case defrayal obligations at § 155.170 would apply, and CMS would enforce the defrayal obligations appropriately. Further, issuers in States in which sex-trait modification is currently an EHB would also be prohibited from covering it as an EHB beginning in PY 2026. However, they may opt to continue covering sex-trait modification consistent with applicable State law, but not as an EHB.

This seems rather complicated, so I’ll simplify it: Essentially, it says that if states mandate gender-affirming care coverage through any means—like legislation or executive orders—other than the one benchmark plan they select (which all other insurance plans in the state must match), that state would be required to pay for the coverage from its own pocket. And according to the HHS, only the benchmark plans in California, Colorado, New Mexico, Vermont, and Washington explicitly cover gender-affirming care.

This means that starting in 2026, the governments of Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Virginia, Washington DC, and Wisconsin will be required to shoulder the cost of gender-affirming care unless they select a new plan that specifically includes it. Even worse, that selection must be made almost two full years before the plan year, so any potential changes wouldn’t even take effect until 2028.

What’s Next?

At its core, this change has two goals: to make it harder for trans people to get the healthcare they need and to test how far states are willing to go to defend us. It’s entirely possible that states like Montana or New Hampshire, where support for the transgender community is already low, may just opt to repeal their protections. In Republican-controlled states, many insurance plans could start charging a premium for gender-affirming care. Others might stop covering it entirely.

Although it’s important to note that these rule changes only directly affect the individual and small group markets (which enroll around 13% of the American population), that’s not to say it won’t have consequences outside this segment. It serves as yet another official endorsement of the idea that gender-affirming care is not a necessity, one that other insurance companies could seize on to shrink or completely eliminate their own coverage if it’s not mandated by state law. Because now, that idea has become the official legal position of two of America’s three branches of government.

The one piece of what could be considered ‘good’ news is that this change isn’t permanent. And unlike Skrmetti, it won’t be particularly difficult for the next administration to undo it. However, until then, all we can do is wait and see just how much progress the Trump administration will be able to erode.

1. See pages 267–274 for the section relating to gender-affirming care, and pages 274–313 for the justification relating to those changes