Under Obamacare, Must Aetna Pay for Cosmetic Surgery for a Transgender Person That It Wouldn’t Cover for Anyone Else?

A man who identifies as a woman sued Aetna for refusing to cover his transgender facial surgery, claiming discrimination, even though Aetna says it would not cover cosmetic procedures for a woman who suffers distress from not looking feminine enough.

A three-judge panel on the U.S. Court of Appeals for the 2nd Circuit heard oral arguments on the case Wednesday after a district court judge had blocked Aetna’s policy, finding that the healthcare company engages in unlawful discrimination. The judge ruled that Aetna violated Section 1557 of the Affordable Care Act, also known as Obamacare, by discriminating against people over their gender identities.

Judge Matthew Schwartz, an appointee of President Donald Trump, asked a clarifying question.

“What about a woman who has a diagnosis that she’s distressed by the fact that she thinks she does not look feminine enough, and she wants to look more feminine?”

Charles McCloud, a partner at the firm Williams & Connolly who represented Aetna, said that the woman would “also be excluded” because her request would fall under Aetna’s policy for “cosmetic procedures.”

He noted that facial reconstruction surgery following a car accident “would be covered” because it might “restore function to the face,” but that surgery to alleviate distress over not looking feminine enough would not be covered for a woman or for a man who identifies as transgender.

“Anyone of any sex is able to get these procedures provided that they have a qualifying medical diagnosis,” McCloud said. “The only thing that this policy does is remove gender dysphoria from the list of qualifying diagnoses.”

Kelly Parry Johnson, senior counsel at the Advocates for Trans Equality who represented plaintiff Gennifer Herley, disagreed.

“What Aetna failed to mention is that it would—at least for the non-transgender woman—conduct an individualized medical review, whereas the transgender woman has the door shut in her face,” Johnson said. “They’ve created an additional barrier to transgender care that is not in place for non-transgender people seeking similar procedures.”

McCloud used part of his rebuttal to respond.

He said Aetna’s policy covering facial reconstructive surgery applies to anyone of any sex or gender identity “if you have a medical necessity because you’ve been in an accident” or if your face has been “impaired,” “even if the incidental result of that is you get sort of a glow-up.”

He said “a transgender man is eligible” and that “the dividing line is based on diagnosis.”

The case comes amid an ongoing legal debate over whether federal nondiscrimination laws require insurers to cover procedures sought as treatment for gender dysphoria. During the Biden administration, federal agencies generally interpreted Section 1557 of the Affordable Care Act as protecting access to transgender medical interventions, while the Trump administration has taken a narrower view.

The issue has drawn increasing scrutiny following the Supreme Court’s decision in United States v. Skrmetti (2025), which upheld Tennessee’s ban on certain transgender medical interventions for minors.

McCloud rejected what he claimed was the fundamental accusation in the case.

“The premise of the argument is Aetna has invidious discriminatory motives against transgender people and believes that they should conform to their sex assigned at birth,” he said.

“Aetna provides a wide variety of benefits to transgender people, including hormone therapy, top surgery, bottom surgery,” McCloud noted. “There would be no reason for Aetna to give all of those benefits to transgender people if it believed they shouldn’t be transgender. It’s just not credible.”

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