The US Department of Health and Human Services (HHS) has rescinded several pieces of informal guidance, including its 2021 interpretation of Section 1557 of the Affordable Care Act (Section 1557), in response to executive orders and directives aimed at deregulating the executive branch. The 2021 guidance had extended sex-based nondiscrimination protections to include sexual orientation and gender identity, in line with the US Supreme Court’s decision in Bostock v. Clayton County. The HHS rescission of the 2021 guidance introduces renewed uncertainty for health plan sponsors subject to Section 1557 as they struggle to navigate the evolving regulatory landscape.
Section 1557 prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs and activities. The original implementing rule, issued in 2016 under the Obama administration, interpreted “sex” broadly to include gender identity and sex stereotyping and established robust protections for individuals with limited English proficiency.
The regulatory landscape shifted in June 2020 under the Trump-Pence administration, when HHS finalized a new rule eliminating the 2016 definition of sex discrimination and narrowing the scope of Section 1557 protections. The 2020 final rule faced legal challenges, and several courts enjoined its enforcement, leaving plan sponsors subject to Section 1557 in a state of regulatory limbo until the Biden administration reversed course in May 2021.
In May 2021, the Biden administration announced that HHS would again interpret sex discrimination under Section 1557 to include sexual orientation and gender identity, consistent with Bostock. This interpretation was codified in the 2024 final rule, which relied on Title IX regulations and required entities covered under Section 1557 to also take specific administrative actions, including appointing a Section 1557 compliance officer, developing written policies and procedures, and conducting workforce training.
The 2024 final rule was not yet effective when legal challenges emerged, and two lawsuits stayed portions of the 2024 final rule. Notably, the US District Court for the Southern District of Mississippi in Tennessee v. Becerra issued a nationwide preliminary injunction, staying the effective date of the 2024 final rule and prohibiting HHS from enforcing provisions related to gender identity, which may leave plan sponsors and healthcare providers subject to Section 1557 with a case of whiplash.
Following the 2024 US election, President Donald Trump’s administration signaled a policy reversal on transgender healthcare, issuing executive orders such as Protecting Children from Chemical and Surgical Mutilation and Defending Women from Gender Ideology Extremism. These orders laid the foundation for rescinding Obama- and Biden-era interpretations of Section 1557.
In February 2025, HHS issued a letter formally withdrawing its March 2022 guidance on gender-affirming care, civil rights, and patient privacy, stating that such interpretations no longer align with the administration’s position. Similarly, the deputy solicitor general issued a letter notifying the Supreme Court that the federal government no longer maintains that prohibitions on transgender healthcare violate the Equal Protection Clause of the Fourteenth Amendment.
On May 14, 2025, HHS announced the immediate rescission of four informal guidance documents pursuant to several recent executive orders issued by President Trump. These orders, including Unleashing Prosperity Through Deregulation and Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative, direct agency heads to reduce regulatory burdens by eliminating guidance deemed unlawful or overly burdensome.
In its announcement, HHS cited a need to reduce burdens on regulatory parties and to “refocus on its core mission to Make America Healthy Again.” Among the rescinded guidance is the Notification of Interpretation and Enforcement of Section 1557 of the Affordable Care Act and Title IX of the Education Amendments of 1972[1] (the 2021 Guidance). The 2021 Guidance interpreted Section 1557 to prohibit discrimination based on sexual orientation and gender identity—an interpretation informed by the Supreme Court’s holding in Bostock that such discrimination constitutes sex discrimination under Title VII of the Civil Rights Act of 1964.
The regulatory history of Section 1557 is a labyrinth of shifting rules, unexpected turns, and the constant need to retrace steps to move forward. What seems clear one moment is redefined the next, which may leave stakeholders navigating a regulatory puzzle with no single, stable path. Group health plans covered under Section 1557 face challenges in interpreting their obligations under a rule that has changed repeatedly over the last decade and is currently only partially enforceable.
While HHS has made it clear through its May 2025 announcement that it no longer expects covered entities to interpret Section 1557’s prohibition on sex discrimination as including sexual orientation and gender identity, there remains the question of the application of Bostock which, as noted above, held that discrimination based on sexual orientation or gender identity is prohibited under Title VII.
Furthermore, the 2024 final rule technically remains in place—albeit unenforceable in significant part. HHS has not yet rescinded or replaced the rule through formal notice-and-comment rulemaking. Practically, based on the current administration’s priorities, it seems unlikely that HHS will take enforcement action under the 2024 final rule. Notably, however, it has not issued a nonenforcement policy.
The future of Section 1557 remains uncertain. Further litigation and rulemaking are all but guaranteed. As judicial rulings continue to shape the regulatory framework of Section 1557, plan sponsors must be prepared to shift and adapt to changing federal and state requirements related to transgender care.
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[1] 86 FR 27984 (May 25, 2021)