Recent Supreme Court Decision Might Require Changes to Your Benefit Plans – LGBT Coverage Issues

15 July 2020 Legal News: Employee Benefits Insights Publication
Author(s): Nick J. Welle

Takeaway Message

The United States Supreme Court recently ruled that certain federal employment protections against sex discrimination extend to employer discrimination based on sexual orientation or gender identity. In light of this ruling, employers should review their benefit plans to evaluate whether changes are required. For example, employers should evaluate whether their plans exclude same-sex spouses from dependent eligibility or whether their health plans contain a blanket exclusion for all gender-affirmation surgeries (further examples provided below).


As summarized in a previous Foley Insight, the Supreme Court ruled that Title VII of the Civil Rights Act of 1964 prohibits discrimination against employees on the basis of their sexual orientation or gender identity. While 21 states and a number of localities have laws prohibiting job discrimination on the basis of sexual orientation or gender identity, the Supreme Court’s decision expands federal protections to all U.S. workers for the first time. Title VII generally applies to employers with 15 or more employees. 

While the Supreme Court decision specifically addresses the hiring and firing of LGBT employees, the decision has benefit plan implications as well. Title VII protections apply to hiring, firing, compensation, and other terms and conditions of employment, including benefits. This means that these new protections generally apply to benefit plans too. 

Compliance Considerations

Given the Supreme Court’s decision to extend Title VII protections to sexual orientation and gender identity, employers might now be held liable for Title VII violations if the terms and conditions of their benefit plans discriminate against LGBT individuals. Potential coverage issues include:

  • A health plan categorically excluding from coverage all gender-affirmation surgeries (also known as “gender-reassignment” or “sex change” surgeries);
  • A health plan excluding from coverage all types of medical services and treatments related to gender dysphoria, including hormone therapy and mental health counseling;
  • A benefit plan’s eligibility criteria including opposite-sex spouses and domestic partners but excluding same-sex spouses and domestic partners;
  • A short-term disability plan not providing coverage for a temporary disability due to a gender-affirmation surgery;
  • A health plan’s network not containing any health care professionals with expertise in gender dysphoria issues, including gender-affirmation surgeons; and
  • A health plan limiting sex-specific care based on the plan member’s sex assigned at birth, gender identity, or recorded gender (e.g., a transgender male who has residual breast tissue is denied coverage for a mammogram).

Employers should consult with third party administrators, carriers, consultants, and other plan service providers to ensure that such issues are not present in their benefit plans. 

It is important to stress that the U.S. Equal Employment Opportunity Commission (“EEOC”) has already taken the position (prior to the Supreme Court’s recent decision) that Title VII’s prohibition on sex discrimination applies to discrimination based on sexual orientation and gender identity. With their position now supported by the Supreme Court, EEOC investigations on this issue might very well increase in addition to the increased litigation risk now present.  

Other Relevant Authorities

Other legal authorities might also require benefit plans to offer coverage that does not discriminate based on sexual orientation or gender identity. For example, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs enforces regulations that prohibit such discrimination in benefit plans (an overview can be found here). These regulations generally apply to businesses who have a federal contract, subcontract, or federally assisted construction contract. 

For fully-insured health plans, some state insurance mandates require that health insurance policies cover medically necessary services related to the treatment of gender dysphoria or prohibit blanket exclusions for gender-affirmation surgeries. 

The Patient Protection and Affordable Care Act and the Mental Health Parity and Addiction Equity Act also mandate specific types of coverage related to transgender individuals in certain situations.


The Supreme Court ruling technically takes effect immediately, so employers should evaluate benefit plans promptly to assess for compliance. 


Employee Benefits Insights  As part of Foley’s ongoing commitment to provide legal insight to our clients and colleagues, our Employee Benefits and Executive Compensation Group has a monthly newsletter we call “Employee Benefits Insights,” where we provide you with updates on the most recent and pressing matters concerning employee benefits and other related topics. Click here or click the button to the left to subscribe. 

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