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Section 1557: A Battleground for What’s Considered Discrimination on the Basis of Sex

  • Writer: Allison Martinez, née De Tal
    Allison Martinez, née De Tal
  • Sep 5
  • 4 min read

Section 1557 of the Affordable Care Act (“ACA”) provides individuals shall not be subject to discrimination on the basis of sex under a health program or activity that receives federal financial assistance or is administered by an Executive Agency.  (42 USC 18116(a)).  As discussed in our blog post regarding United States v. Skrmetti, the contours of Section 1557’s prohibition of discrimination on the basis of sex remain a hotly litigated issue.


In 2016, the Department of Health and Human Services (“HHS”) published a regulation interpreting Title IX’s prohibition of discrimination “on the basis of sex” to include discrimination on basis of gender identity (“2016 Rule”).  In 2020, HHS issued a new rule, which replaced the 2016 Rule, reversing course and repealing that interpretation (“2020 Rule”).  In Bostock v. Clayton County, the Supreme Court held an employer who fires an employee for being gay or transgender violates Title VII’s prohibition on discharging an employee because of his or her sex.  In the context of Title VII, the Supreme Court determined “it was impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”  (590 U.S. 644, 660 (2020)).  This resulted in an injunction prohibiting the enforcement portions of the 2020 Rule.  In 2024, HHS issued yet another interpretation of Section 1557’s—and Title IX’s—prohibition of discrimination “on the basis of sex” to include discrimination on the basis of gender identity, sexual orientation, and sex stereotypes (“2024 Rule”).  (42 CFR §92.101(a)(2)(iv)).


The 2024 Rule has been the subject of numerous lawsuits, and nationwide injunctions staying the enforcement of the 2024 Rule have been granted:


  • In Tennessee v. Becerra (n/k/a Tennessee v. Kennedy), the Southern District of Mississippi, relying on Loper Bright, declined to defer to the 2024 Rule, finding the Bostock holding did not apply to Title IX and Section 1557.  On July 3, 2025, the plaintiffs asserted the Skrmetti decision supports their pending motion for summary judgment to have portions of the 2024 Rule vacated and set aside, and their request for declaratory relief.


  • In Texas v. Becerra (n/k/a Texas v. Kennedy), the Eastern District of Texas granted Texas and Montana’s request to postpone the 2024 Rule’s effective date and preliminarily enjoin its enforcement.  Also relying on Loper Bright to deny deference to the 2024 Rule, the court looked to the meaning of “sex” in 1972 when Title IX was enacted—finding it meant only a person’s biological sex (i.e., male or female).  Further, the Court determined HHS was incorrect in applying the Bostock holding outside of the Title VII context.  On June 12, 2025, the parties submitted a Joint Status Report requesting a continued stay of the case “[i]n light of the recent change in Administration” and HHS’s reconsideration of the 2024 Rule.


  • In Catholic Benefits Association v. Becerra (n/k/a Catholic Benefits Association v. Kennedy), the Eastern District of North Dakota permanently enjoined HHS from interpreting Section 1557 or its regulations—including the 2024 Rule—against the Catholic Benefits Association’s current members “to require them to perform or provide insurance coverage for gender-transition procedures.”  On June 5, 2025, the court determined requiring the Catholic Benefits Association’s members to provide insurance coverage for gender-transition procedures was a violation of “their sincerely held religious beliefs without satisfying strict scrutiny” under the Religious Freedom Restoration Act. 


Because the injunctions granted in Tennessee v. Becerra and Texas v. Becerra are nationwide, the enforcement of the 2024 Rule is enjoined even in states where the 2024 Rule was not challenged.  At least 20 states—including California—agree that Section 1557 and Title IX’s prohibition of discrimination on the basis of sex includes a prohibition of discrimination on the basis of sexual orientation, gender identity, and sex stereotypes.  Further, the 4th Circuit, 7th Circuit, and 9th Circuit have all held Title IX’s prohibition of discrimination on the basis of sex must be construed consistently with Title VII—i.e., the Bostock standard applies to both Title VII and Title IX.  It is highly anticipated that the Supreme Court will ultimately be called on to decide whether Section 1557 prohibits discrimination on the basis of sexual orientation, gender identity, and sexual stereotypes.  This will require the Supreme Court to address an issue it declined to in Skrmetti— whether Bostock’s reasoning applies outside of the Title VII context.  


Further, the current administration continues to adopt policies aimed at testing the boundaries of Section 1557.  In mid-August, the U.S. Office of Personnel Management issued a notice to insurance carriers stating gender transition services will no longer be covered under the Federal Employees Health Benefits or Postal Service Health Benefits programs beginning in 2026.  This policy applies regardless of the participant’s age.  Counseling services for possible or diagnosed gender dysphoria, however, will remain covered.  Legal challenges to this policy are expected and provide yet another potential avenue for the U.S. Supreme Court to define what is prohibited by Section 1557.


As federal agencies and the courts continue to define the scope of Section 1557, employers should remain cautious when implementing plan changes that could be viewed as discriminatory and consult counsel for guidance.  Similarly, it is worth reviewing current policies to help avoid costly litigation.  We will continue to monitor this developing area of law.  If you have questions, please contact your Boutwell Fay LLP attorney.



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