Federal Court Strikes Down Rule Excluding Gender-Affirming Care From ACA Essential Health Benefits

A federal judge in Massachusetts has permanently struck down a key provision of a Trump administration rule that would have allowed insurers to exclude gender-affirming care from the Affordable Care Act's essential health benefits. The decision marks a significant victory for a coalition of 21 states that sued to block the policy, preserving critical financial protections for transgender patients nationwide.[1][4][6][7]

The ruling, issued by Senior U.S. District Judge Nathaniel Gorton, a George H.W. Bush appointee, concluded that the Department of Health and Human Services (HHS) exceeded its statutory authority. Gorton ruled that the agency unlawfully modified the ACA's essential health benefit categories without following the strict procedural steps required by federal law. Specifically, the court found that HHS failed to submit a mandatory report to Congress justifying the changes before the rule's effective date.[1][4][5][7]

The vacated provision was embedded within the sweeping "Marketplace Integrity and Affordability" rule, which the Trump administration finalized in mid-2025. The administration heavily promoted the broader regulatory package as a necessary fiscal safeguard, designed to curb alleged ACA enrollment fraud and reduce federal spending on healthcare subsidies.[1][2][3][6]

However, buried within those administrative changes was a measure that would have removed certain forms of gender-affirming care from the ACA's ten essential health benefit categories beginning in 2026. The essential health benefits (EHB) mandate is a core pillar of the Affordable Care Act, requiring marketplace insurers to cover a baseline set of services, ranging from emergency care to prescription drugs.[1][4]

Inclusion in the EHB list is not merely about coverage; it is the mechanism that triggers the ACA's most robust financial protections. Services classified as essential are subject to strict federal caps on patients' out-of-pocket costs and are eligible for federal premium subsidies.[1][4]

If the rule had taken effect, insurers would not have been strictly forbidden from covering gender-affirming care. They could have continued to offer it voluntarily, or states could have mandated it locally. However, by stripping the federal EHB designation, the rule would have allowed insurers to bypass out-of-pocket maximums, potentially exposing patients to sudden, catastrophic medical bills for previously covered treatments.[1][4][5]

Recognizing the threat to both patients and state budgets, a coalition of 21 states filed a federal lawsuit in July 2025. The legal effort was spearheaded by Attorneys General Andrea Joy Campbell of Massachusetts, Rob Bonta of California, and Matthew Platkin of New Jersey.[6][7]

The state coalition argued that the rule was arbitrary and capricious. They contended that removing essential health benefit protections would cause widespread coverage losses and shift immense financial burdens onto state governments. If patients could no longer afford care on the federal marketplace, states warned they would be forced to absorb the fallout through increased Medicaid spending and emergency care costs.[2][8]

State officials celebrated the court's summary judgment on the gender-affirming care provision. Massachusetts Attorney General Campbell stated that the ruling successfully blocks an attempt to make such care "more expensive and less accessible," while Washington Attorney General Nick Brown accused the federal government of attempting to "illegally deny promised health coverage."[1][2][4]

The legal battle over the rule has been protracted and complex. In October 2025, Judge Gorton initially denied the states' bid for a preliminary injunction to halt the entire rule from taking effect. At that time, he ruled that the states had not adequately demonstrated imminent, irreparable harm across all nine challenged provisions, noting that the administration's projected coverage losses were concentrated in states not participating in the lawsuit.[8]

In his final ruling on the merits, however, Gorton took a highly targeted approach. While he vacated the gender-affirming care exclusion entirely, he sided with the Trump administration on four other parts of the rule challenged by the states.[4][5]

By upholding those four provisions, the court allowed the administration's stricter enrollment verification measures to stand. This split decision underscores the court's focus on the specific procedural failures surrounding the EHB modifications, rather than a wholesale rejection of the administration's authority to regulate the ACA marketplace.[4][5][8]

The immediate effect of the ruling is nationwide relief for transgender individuals relying on ACA marketplace plans. Without the federal essential health benefit designation, patients would have faced a fractured landscape of coverage, heavily dependent on their zip code. Only a handful of states currently maintain strict local mandates that would have fully insulated patients from the federal rule change.[5]

Despite the victory for the states, the legal landscape remains uncertain. The administration is widely expected to appeal the Massachusetts decision to the First Circuit Court of Appeals, setting the stage for a prolonged appellate battle over HHS's regulatory authority.[4]

The ruling fits into a much broader, coordinated legal pushback against the Trump administration's efforts to restrict gender-affirming care across all federal health programs. Beyond the ACA marketplace, the administration is currently facing separate, ongoing litigation over rules cutting off Medicaid and Children's Health Insurance Program (CHIP) funding for transgender youth, as well as federal subpoenas targeting hospital patient records.[4]