As we close out the second quarter of 2025, the legal landscape across the United States continues to shift dramatically in the areas of abortion and gender-affirming care laws. This quarter has seen a wave of new state-level legislation and pivotal court rulings that are reshaping access to both abortion services and gender-affirming health care for minors.

In this edition of our quarterly overview of state laws affecting health plan compliance, we break down the most impactful legal changes and litigation trends, and what they mean for employers and health plan sponsors in this rapidly evolving regulatory environment.

NOTE: Self-funded ERISA plans are generally not impacted by state insurance laws and, therefore, no immediate action is required from employers on the information discussed below. We nevertheless recommend that employers review current benefits in conjunction with state mandates to ensure that plan offerings keep pace with market changes and continue to meet enrollee needs and expectations.

ABORTION AND REPRODUCTIVE CARE

Cross-Border Conflicts Heat Up

In an update to the civil suit brought by the Texas attorney general against a New York provider for prescribing and sending abortion pills there, the state of New York in March refused to enforce a summary judgment against the physician. The lawsuit was filed in December 2024, and, after the physician failed to respond, a Texas court issued a default judgment ordering the doctor to pay a penalty and stop providing telehealth abortion services in Texas. The New York county clerk’s office refused to file the Texas court judgment, citing the state shield law protecting providers from out-of-state prosecution. As a result, the doctor has avoided the Texas judgment for the time being, but the decision is sure to see further litigation. The same provider is facing criminal charges stemming from Louisiana for prescribing abortion pills to a patient there. New York’s governor announced in February that she rejected a request to extradite the physician to Louisiana for prosecution and would not comply with any subsequent requests.

New York subsequently passed a bill to strengthen its existing state shield law to include a provision allowing providers who prescribe abortion medications to request that the dispensing pharmacy print the name of their practice on the prescription labels instead of their personal name. Similarly, Colorado passed a bill expanding its existing state shield law in late April allowing providers to exclude their names from medication abortion prescription labels to protect their privacy. The Colorado bill went further than New York’s, also providing that any subpoena requests from other states include an affirmation that the request does not pertain to any reproductive or gender-affirming care information. Colorado passed another abortion bill at the same time, which requires public funding for abortion care for Medicaid and CHIP program recipients, and further mandates state employee insurance plans to provide abortion care coverage.

In another move to further bolster protections for physicians, New York’s attorney general led a coalition of 19 other attorneys general in May urging the American Medical Association (AMA) to overturn requirements that doctors attend in-person testing in order to become board-certified. The petition argues that requiring abortion and gender-affirming care providers to travel to states with restrictions on those services endangers their safety and freedom and puts them at risk for harassment or intimidation. The AMA earlier this year acknowledged such risks to providers and adopted a policy encouraging medical boards to provide alternative testing options, but the coalition of attorneys general argues that it does not provide enough guidance. The petition asks the AMA to recommend steps such as relocating test sites to non-restrictive states, using remote testing to eliminate the need for in-person travel or granting individual exemptions from in-person exams.

In Texas, the state attorney general filed a lawsuit in April against the city of San Antonio, alleging it unlawfully used public funds to subsidize out-of-state abortion travel, also termed “abortion tourism.” The suit is based on a gift clause in the state constitution that has been interpreted to require that state funds only be transferred to private entities for expenditures that benefit the public and serve a legitimate public interest. San Antonio had recently approved $100,000 toward the city’s Reproductive Justice Fund, which allocates funds to downstream services, including travel expenses for individuals seeking legal abortions.
Finally, an Alabama court held in early April that the state cannot prosecute those who help with out-of-state abortions using state criminal conspiracy laws. A district court judge ruled that such prosecution would violate both First Amendment rights to free speech and the constitutional right to travel.

Lockton comment: As noted in our last Quarterly Overview (opens a new window), we are seeing consistent clashes between states over which laws will apply in these cross-border conflicts over out-of-state care. As states push forward in testing the waters of a wide gamut of issues such as filing charges against providers, the reach of shield laws, travel to other states for care, referrals and telehealth care from out-of-state providers, we expect to see continued litigation in this space. Lockton will provide updates to clients in our State-by-State Guide to Abortion Laws as they arise.

State and Federal Disputes Over Abortion Laws Intensify

The Trump administration in early June rescinded guidance from 2022 in which HHS had clarified that, under the federal Emergency Medical Treatment and Labor Act (EMTALA), physicians had a professional and legal duty to provide stabilizing medical treatment, including emergency abortions, to patients with emergency medical conditions even if the state had an abortion prohibition. The rescission of that guidance states that the previous guidance does not reflect the policy of the current administration, however the Centers for Medicare & Medicaid Services (CMS) will continue to enforce EMTALA, which it affirms protects all individuals who present to a hospital emergency department seeking examination or treatment, including for identified emergency medical conditions that place the health of a pregnant woman or her unborn child in serious jeopardy.

This move is the final point in a series of actions effectively dismantling the previous administration’s guidance on emergency abortions. In January 2024, a federal appeals court ruled that the 2022 HHS guidance was not enforceable in Texas (see our discussion of that case in our November 2024 Quarterly Overview (opens a new window)) and in March this year, the government voluntarily dropped a lawsuit initiated by the Biden Administration challenging Idaho’s state abortion ban as preempted by EMTALA (more on that case in our March 2025 Quarterly Overview (opens a new window)). Legal challenges seeking EMTALA protections persist, however. Idaho’s largest health system, St. Luke’s Health System, LTD. filed a lawsuit replacing the administration’s now defunct case seeking emergency abortion protections under EMTALA despite the Idaho state ban. The court issued a temporary injunction in the case, which applies only to the St. Luke’s hospitals and its providers while the case continues.

Lockton comment: Stabilizing emergency care requirements remain in place under EMTALA, but the recission of previous guidance puts the legality of abortions when used as stabilizing emergency care in a state of uncertainty once again. While this change primarily impacts hospitals and providers, it also signals a continued focus on unraveling previous administrative guidance and indicates that we are likely to see ongoing instability in the abortion policy space, particularly where federal laws and state laws intersect.

In another state and federal mashup, a Texas district court has vacated a HIPAA privacy rule adding protections to reproductive health care data issued in 2024 (see our Alert (opens a new window)on that rule for more information). The underlying suit argued that the HHS rule exceeded the agency’s authority and limited states’ ability to report suspected child abuse. In December 2024, the court had blocked HHS from enforcing the rule against the Texas doctor who brought the suit, but the June 2025 ruling extends the injunction nationwide, meaning that HHS cannot enforce its 2024 rule to prohibit health care providers and insurers from giving information about legal abortions to state law enforcement agencies.

Lockton comment: We recommend employers review changes made under the previous guidance to ensure trainings, policies and procedures, and Notice of Privacy Practices are compliant with current guidelines.

Finally, Missouri, Idaho and Kansas filed a revised lawsuit against the FDA in Texas after an original case made it to the U.S. Supreme Court and was ultimately dismissed for lack of standing as we previously reported. (opens a new window) The suit requests reversal of several U.S. Food and Drug Administration (FDA) regulations that expanded access to Mifepristone, a commonly used abortion pill. The Texas court ruled in January 2025 that the group of states were not precluded from filing the new suit in Texas simply because they were outside of the state. In a surprising move, the Trump Administration in early May filed a brief with the Texas court urging it to dismiss the case, arguing that there is no reason the case should continue in Texas and that the case, which was originally dismissed for lack of standing, cannot continue with plaintiffs who have no connection to the district. The brief did not defend mifepristone itself or discuss the merits of the case’s requested relief.

Lockton comment: We continue to see an unraveling of previous rules and guidance by the new administration, and we expect this trend to continue where state and federal laws intersect. We encourage employers to remain apprised of changes to ensure state-specific compliance strategies are in place where appropriate.

Other Updates to State Abortion Laws

The U.S. Supreme Court in June ordered an appeals court in New York to reconsider a state mandate requiring employers to cover abortion in health insurance plans. The state mandate required employer-sponsored health plans to cover medically necessary abortions and allowed a narrow exemption only for religious groups that primarily teach religion and serve or employ individuals with the same faith-based beliefs. This exemption did not extend to many ministries that serve all people, and a coalition of religious groups filed lawsuit in 2017 alleging that the mandate violated First Amendment rights to free exercise of religion. After a myriad of court rulings over the past eight years, the New York Court of Appeals in May 2024 upheld the mandate, ruling that it did not violate constitutional protections for free exercise of religion. The U.S. Supreme Court disagreed, and its June decision ordered the appeals court to reevaluate its ruling in light of another decision it issued in June holding that Wisconsin had improperly denied a religious tax exemption to a charitable Catholic group in a state unemployment assistance tax case.

In May, a Florida appeals court held that a state law allowing minors to obtain an abortion without parental consent is unconstitutional. The ruling stated that the state’s judicial waiver law violates parents’ Fourteenth Amendment rights to due process and cited state parental rights laws.

A lawsuit filed in September 2023 challenged Idaho’s state abortion prohibition, alleging that its exception only to prevent the death of a pregnant patient was not enough and seeking clarification that physicians could provide abortion care to preserve the health of the patient as well, including when the patient has received a fatal fetal diagnosis. An Idaho district court in April ruled that the law’s medical exception should be interpreted broadly and could apply to numerous serious health conditions. The ruling did not, however, expand the exception to include fatal fetal conditions unless the condition also poses a risk to the life or health of the mother.

A federal judge in Illinois ruled in April that part of its state abortion law is unconstitutional. The decision held that the law violates constitutional rights to free speech by compelling medical professionals who have conscience-based objections to abortion care services to discuss risks and benefits of both childbirth and abortion. The court held that another section of the law, which requires providers to refer or transfer patients to other providers or give written information about other providers offering such services if requested by the patient, was not in violation of the constitution. The court clarified the distinction, stating that because the first provision mandated speech on benefits and risks of abortion, it violated free speech protections for providers, whereas the latter provision required action only when prompted by a patient’s direct request. The ruling further explained that the state has a legitimate interest in reducing the number of self-managed or self-induced abortions and requiring physicians to provide transfer of care or referral information is a rational means of achieving that goal. The decision will be appealed.

A bill clarifying Kentucky’s near-total abortion ban was vetoed by the state governor but was quickly overridden by the legislature and went into effect on March 28, 2025. The bill lists exceptions to the state prohibition, including removal of ectopic pregnancies and lifesaving miscarriage management, and directs providers to use “reasonable medical judgment” to decide when emergency abortions are needed. This new language replaces the previous law’s requirement that physicians should use “good-faith clinical judgment” to determine whether an emergency abortion is necessary. While the difference seems insignificant, critics of the bill argue that the new standard is less deferential to physicians, as the previous provision only required a physician to have a sincere belief that an emergency abortion was needed, whereas the new language requires that a reasonable doctor would agree with that decision.

Also in Kentucky, a lawsuit challenging the state prohibition on abortion has been dropped voluntarily by the plaintiffs. No further details were provided on the dismissal of the suit and the state ban remains in effect.
In the ongoing saga of Missouri’s abortion law, the state Supreme Court ruled in late May that a district court applied the wrong standard in rulings issued in December and February blocking state regulations on abortion. The state previously had a near-total prohibition, which was challenged in court after voters approved an amendment to the state constitution in November 2024, enshrining the right to abortion until viability in the state constitution. The lower court had blocked enforcement of certain regulations, including licensing requirements for abortion clinics and requirements for physicians who perform abortions to have admitting privileges at nearby hospitals. The new ruling orders the court to vacate those previous decisions and reevaluate the case using the correct standards, thereby reinstating the abortion prohibition for now.

On the same topic, a Missouri bill passed in late April and inspired by the above lawsuit gives the state attorney general the authority to challenge temporary injunctions effective immediately. The state attorney general quickly utilized his new authority to contest two preliminary injunctions issued by the lower court which had blocked state laws requiring a 72-hour waiting period for an abortion, a mandate that physicians performing abortions have admitting privileges at nearby hospitals and another that stopped enforcement of licensing requirements for abortion clinics. A lawsuit has been filed arguing that the new bill violates the constitution.

Finally, the South Carolina Supreme Court in May upheld its state ban, ruling that the state Fetal Heartbeat Protection from Abortion Act means abortions cannot be performed past six weeks in the state, rather than nine weeks as the lawsuit argued. The state law does not specifically identify what week during pregnancy the ban can be enforced, and Planned Parenthood challenged the prevailing six-week interpretation, suggesting that nine weeks would be more scientifically accurate. The court disagreed, stating that Planned Parenthood itself had previously stipulated that the ban meant six weeks in earlier court proceedings and that the legislative intent clearly indicated six weeks. As a result, the court said there was little chance that providers were left to guess at the meaning of the bill, and the six-week ban remains in effect.

Lockton comment: While state law is settled in most states regarding whether the state prohibits or permits abortion, litigation persists as plaintiffs tease out nuances of the state laws. We are seeing requests to clarify portions of the state laws, particularly with respect to emergency care and medical exceptions, as well as legislative action to close loopholes left open in original bills. We will continue to track these changes and keep clients informed as state laws are updated.

GENDER-AFFIRMING CARE AND TRANSGENDER BENEFITS

U.S. Supreme Court Upholds Tennessee Gender-Affirming Care Ban

In a long-awaited decision, the U.S. Supreme Court on June 18 upheld Tennessee’s ban on gender-affirming care for minors (U.S. v. Skrmetti). The lawsuit, brought by a group of transgender teens and their parents, claimed that the state ban violated the Fourteenth Amendment’s Equal Protection Clause because it restricted care for the purpose of treating gender dysphoria while the same treatments were available to minors with other conditions. The state law prohibits medical practitioners from providing puberty blockers, hormones or surgery for the purposes of “enabling the minor to identify with, or live as, a purported identity different from the minor’s sex” or “treating purported discomfort or distress from discordance between a minor’s sex and asserted identity.” Because the same treatments were permitted to treat minors with other conditions, plaintiffs challenged the law as discriminatory and therefore unconstitutional.

In a 6-3 decision, the court held that, because the law classified people based on age and medical diagnosis, it did not discriminate on the basis of sex or transgender status. The court avoided answering a key legal question of whether gender-affirming care laws prohibiting care for minors should be reviewed with “heightened scrutiny,” a higher level of review required by courts in determining the constitutionality of certain laws, including gender discrimination cases, than the lesser “rational basis” review.

Lockton comment: This ruling allows Tennessee’s state prohibition to remain in place and provides a basis for other states to maintain or enact similar prohibitions. As of June 2025, 27 states have laws in place that restrict or ban gender-affirming care for minors. Despite not weighing in on broader legal issues, the ruling still provides a framework for lower courts to resolve ongoing cases, and we expect to see significant movement on these in the coming months (see more on key cases below). For employers and plan sponsors, it is important to note that the ruling is not directed at employee benefit plans and does not prohibit an employer-sponsored plan from covering gender-affirming care. Rather, like the 2022 Dobbs ruling related to abortion, the ruling impacts the ability of health plan participants to obtain services in states with similar bans. Employers and plan sponsors should review whether, and to what extent, their plans will cover or not cover gender-affirming care benefits like medical services and prescription drug benefits, as well as coverage related to travel and lodging expenses to obtain care in states where such care is permitted. Additionally, because the high court’s ruling is likely to result in a swift resolution of many pending state cases challenging state prohibitions, we may see some changes to state protections and prohibitions in the coming months. Employers and plan sponsors will want to stay apprised of any changes to state laws, particularly regarding impacts to telehealth and prescription drug benefits.

Gender-Affirming Care Cases Stayed Pending Skrmetti Likely to Resolve in Short Order

Many lawsuits challenging gender-affirming care prohibitions had stayed proceedings pending the outcome of the U.S. Supreme Court’s decision in Skrmetti. With the high court’s ruling in hand, we anticipate a ripple effect leading cases to move quickly now towards resolution. Several key cases awaiting decisions include:

• An appeal pending in the Eleventh Circuit Court of Appeals (covering Alabama, Florida and Georgia) over a Florida district court’s overturn of the state prohibition of gender-affirming care for minors (Doe v. Lapado). The state ban is currently in effect despite the district court’s ruling, as the appeals court stayed the ruling during litigation. Arguments were heard on the appeal in January, but justices raised questions about whether to put the case on hold until the Skrmetti ruling was issued.

• Another Eleventh Circuit Court of Appeals (covering Alabama, Florida and Georgia) case, in which the court is rehearing a case it previously decided (Lange v. Houston County). The case focuses on whether a Georgia county’s employee health plan that excluded coverage for “sex change surgery: discriminated against transgender employees. The court initially held that the exclusion was discriminatory, but the ruling was vacated when it agreed to re-hear the case in September 2024. Note that this case centers on gender-affirming care coverage requirements, not the legality of care for minors, as in the Skrmetti case. However, the U.S. Supreme Court’s decision may still provide context to courts in ruling on gender-affirming care issues on a broader scale.

• A Florida case centered on whether Florida’s state employee health insurance plans’ exclusion of coverage for gender reassignment or modification services for transgender employees violates Title VII employee protections against discrimination on the basis of sex (Claire v. Florida Department of Management Services). This case has been stayed pending the outcome of the Lange case (above), as the court’s original ruling relied on the Eleventh Circuit’s first Lange ruling, which is now vacated. Again, this case is not focused on care for minors, but a decision may be influenced by Skrmetti.

• Several states have pending cases challenging state prohibitions of gender-affirming care for minors, including Arkansas, Florida, Georgia, Idaho, Indiana, Louisiana, Missouri, North Carolina, North Dakota and Oklahoma, and planned appeals in cases out of Montana and Ohio.

Lockton comment: While the U.S. Supreme Court ruling in Skrmetti left broader guidance for another day, the ruling still provides closure to the only case before the high court on transgender and gender-affirming care issues. As many state cases have stayed proceedings pending the outcome of Skrmetti, we expect that these will move quickly toward resolution in the coming months and that courts will uphold laws in states with gender-affirming care prohibitions for minors as a result of the new ruling. We will remain engaged and provide updates on these cases throughout the nation to Lockton clients in our State-by-State Guide to Gender-Affirming Care Laws when available.

Agencies Continue Taking Action Pursuant to Gender-Affirming Care Executive Orders

President Trump’s January executive order restricting access to gender-affirming care for minors is not enforceable as to the provisions requiring withholding of funds, as a nationwide preliminary injunction was issued in March 2025. However, the administration has appealed the injunction, and federal agencies meanwhile have begun implementing the other portions of the executive order not currently blocked.

On Feb. 20, 2025, HHS issued a memo immediately rescinding its March 2022 guidance on Gender-Affirming Care, Civil Rights, and Patient Privacy. The previous guidance outlined how federal civil rights should be applied to support gender-affirming care under Section 1557 of ACA as well as HIPAA privacy laws. The new memo clarifies that the 2022 guidance no longer reflects the views of the office under any of the previously outlined rationales.

In March 2025, CMS issued a proposed rule that would change how plans being sold on and off the Affordable Care Act (ACA) Marketplace can cover gender-affirming care services. The rule would prohibit insurers from covering gender-affirming care, or “coverage for sex-trait modification,” as an essential health benefit beginning in plan year 2026.

On April 22, 2025, the U.S. Attorney General issued a memorandum, “Preventing the Mutilation of American Children” directed to all Justice Department employees, outlining steps the Department will take regarding gender-affirming care, including investigating doctors who provide gender-affirming care to minors.

On April 28, 2025, the White House released another fact sheet titled “Report to the President on Protecting Children from Surgical and Chemical Mutilation Executive Summary.” The fact sheet summarizes the initial steps taken to implement the initial executive order, including tasking the Department of Justice with investigating providers and drug manufacturers that enable gender-affirming care for minors. The report also confirmed that HHS coordinated with a team to publish an evidence-based review of the literature on best practices to promote the health of children who assert gender dysphoria and would publish the review by the 90-day deadline outlined in the original executive order.

On May 1, 2025, HHS did publish that review and report, entitled “Treatment for Pediatric Gender Dysphoria: Review of Evidence and Best Practices.” The report opined that scientific evidence does not support providing gender-affirming care to transgender youth. It reviewed research on the outcomes of puberty blockers, hormone replacement therapy, social transition, psychotherapy and surgery on young adults diagnosed with gender dysphoria and concluded that the evidence for the benefit of pediatric medication transition is “very uncertain” while the evidence for harm is “less uncertain.” It further stated that the study found “sparse to no evidence” of harm from gender-affirming care. The report suggested the use of psychotherapeutic approaches instead of gender-affirming care procedures and medications. Critics argue that the study contradicts decades of scientific research and misrepresents the current medical consensus.

On May 28, 2025, both CMS and HHS sent letters to “select hospitals” that provide gender-affirming care as well as healthcare providers and medical boards requesting information about how they adhere to quality standards on medical interventions for gender dysphoria in minors and “complete financial data for all pediatric sex trait modifications” provided by the hospitals and paid, at least in part, by the federal government. The letters request information on informed consent protocols for children with gender dysphoria, planned changes to clinical practice guidelines and protocols in light of the department’s guidance, including HHS’s literature review report from May 1, and any adverse events related to gender-affirming care procedures. The institutions have 30 days to respond.

Lockton comment: As we outlined in our last Quarterly Update (opens a new window), executive orders direct federal agencies to undertake certain actions, but they do not override or change existing laws at either a federal or state level. However, as federal agencies take action on these orders, new guidance is issued and previous guidance is rescinded, leading to downstream effects on state laws, particularly where federal directives conflict with existing state protections. Employers do not need to take any current action as a result of these agency actions, but we nevertheless recommend that they stay informed and carefully weigh risks of making any changes to current benefit offerings.

Other Updates to State Gender-Affirming Care Laws

Plaintiffs in Alabama dropped a lawsuit challenging the state’s gender-affirming care prohibition for minors in early May, providing no details on the reason for the dismissal. The lawsuit, filed in 2022, initially led to an injunction that blocked the state law, but an appeals court lifted the injunction in 2024, allowing the law to go back into effect. The state prohibition remains in effect today.

Colorado passed a new bill in May 2025 that enshrines existing state public health rules about gender-affirming health care coverage into state law. The bill makes it unlawful for health insurers to deny or limit care deemed medically necessary by a doctor, which includes both hormone therapy and surgical procedures. It also removes testosterone from Colorado’s prescription drug monitoring program, safeguarding access to the drug for hormone therapies and reducing risks of privacy violations.

A Montana district court in May 2025 held that the state law prohibiting gender-affirming care for minors is unconstitutional and violated the state constitution’s rights to privacy, equal protection and free speech. The Montana Supreme Court upheld a lower court’s injunction of the state ban in December 2024, allowing minors to access care while the case continued in district court. The May ruling overturns the ban entirely, leaving minors’ access to gender-affirming care in place. The state plans to appeal the ruling.

New York’s City Council voted in late April to pass a package of bills impacting civil rights, healthcare access and well-being for transgender, gender non-confirming and non-binary and intersex (TGNCNBI) state residents. The bills require improved access to information on resources and support, increased legal protections for healthcare access and more inclusive administrative policies.

A federal court in North Dakota recently issued a ruling holding that federal agencies cannot require healthcare providers to fund gender-transition services if doing so would violate their sincerely held religious values and beliefs. Two federal regulations, one in place under ACA Section 1557 and the other under Title VII, prohibit discrimination on the basis of sex; those regulations were interpreted by HHS and the EEOC, respectively, to extend that prohibition to discrimination on the basis of gender identity. The HHS guidance further prohibited federally funded health programs from withholding medical care to someone because they are transgender, and the EEOC rule prohibited employers from denying coverage to a transgender employee that would otherwise be covered for other employees.

The court determined that the agencies’ interpretations of these regulations were in violation of the Religious Freedom Restoration Act of 1993, which says that the government can only limit religious exercise in service of a compelling government interest and must make every effort to be as minimally restrictive as possible. As a result of the ruling, HHS and the EEOC are prohibited from interpreting or enforcing those 1557 and Title VII regulations in a manner that would require an employer to perform or provide insurance coverage for gender-transition procedures (including by denying federal financial assistance because of a failure to provide coverage).

An appeals court in Ohio ruled in March 2025 that the state ban on gender-affirming care for minors is unconstitutional. The Tenth Circuit Court of Appeals decision overturns a 2024 district court ruling that allowed the law to take effect, holding that the state prohibition is both discriminatory and an unreasonable limitation of parents’ rights to care for their children. The ruling has been appealed by the state, and the Ohio Supreme Court in April agreed to stay the Tenth Circuit ruling while the appeal continues, which means the state ban is currently in place until the appeal is resolved.

Finally, a new bill passed in West Virginia in April closed a loophole in the state’s previous law, which prohibited gender-affirming care for minors with only narrow exceptions addressing specific hormone therapies and puberty blockers for minors diagnosed with severe gender dysphoria and considered at risk for self-harm or suicide. Those exceptions have been removed from the law under the new bill.

Lockton comment: Again, we expect to see a litany of rulings resolving outstanding gender-affirming care cases over the coming months as courts resume proceedings now that the Skrmetti ruling has been issued. Whether plaintiffs continue to find new arguments to challenge state prohibitions remains to be seen, but we anticipate current challenges to resolve with the U.S. Supreme Court’s guidance.

OTHER BENEFIT-RELATED UPDATES

Massachusetts

Massachusetts has a number of state reporting requirements and assessments that impact insurers. One notable change in 2025 has been a complete revamp of the previous Health Safety Net (HSN) surcharge, which was terminated in January 2025 in accordance with statutory changes adopted in its 2025 fiscal year budget. The HSN surcharge, which applied to payments made to acute hospitals and ambulatory surgical centers, has been replaced by the new Managed Care Organization Services Payor Assessment, which was formally approved by CMS in February 2025.

Surcharges under the new program continue to apply to services rendered in Massachusetts. Under the new program, however, the assessment percentage is lower at 1.18% but is now applied to a broader range of services, including all tier 1 Medicaid services. Acute hospital and ambulatory surgical center payments are still subject to the assessment, but the new program also applies assessments to payments made for professional services, behavioral health services, pharmacy and other services when rendered in a Massachusetts facility or from a Massachusetts provider. Surcharges are based on members who receive care in the state of Massachusetts regardless of the group’s situs or location.

Payments are due retroactively to Jan. 1, 2025, and the first retroactive payment was due March 31, 2025. Going forward, assessments are due the first business day of the month following the month assessed (for example, assessments for March 2025 are due April 1, 2025).

Lockton comment: This program was recently introduced and had a short runway from adoption to effective date. As a result, we anticipate further guidance as the state updates its informational materials and FAQs on this new assessment. For now, current guidance is available at mass.gov (opens a new window).

New York

New York’s Health Care Reform Act (HCRA) imposes two surcharges on health claim payors, including self-funded employer plans, to support hospital financial sustainability and access to health care for New Yorkers and funding graduate medical education. Surcharges apply to medical services and dental services provided at HCRA-designated facilities such as New York hospitals, surgical centers or extension clinics. An updated provider list effective May 1, 2025, is available here (opens a new window).

The HCRA also includes an Indigent Health Care and Health Care Initiatives surcharge, which applies to payments for New York hospital inpatient and outpatient services, comprehensive diagnostic and treatment centers and ambulatory surgical centers. Current rates are effective for services rendered through Dec. 31, 2026 and are available here (opens a new window).

Washington

On May 20, 2025, Washington’s governor signed a new law expanding Washingtonians’ options for accessing long-term care support through the WA Cares Fund. The law creates opportunities for Washingtonians to buy supplemental long-term care coverage from private insurers in the future, much like how Social Security and Medicare work. The public insurance will remain available to provide a foundation of financial security, and private options will be available for those who want more coverage. WA Cares would cover the deductible, meaning insurers will be able to offer supplemental plans at much more affordable rates.

The new law also provides an opportunity for those with private long-term care insurance exemptions to cancel their exemption and join the WA Cares program. This part of the law takes effect on Jan. 1, 2026, and the Employment Security Department (ESD) will contact workers with approved private long-term care insurance exemptions to provide more information at that time.

Finally, the law simplifies the ten-year contribution requirement to qualify for program benefits. The previous law required workers to meet contribution requirements through one of three pathways, including a lifetime access pathway which required workers to contribute for at least ten years without a break of five or more consecutive years. Under the new law, the requirement is simplified to apply to all workers who contribute for at least ten years. Workers who leave the workforce for an extended time will not have to restart their progress toward earning ten qualifying years once they return.