Third quarter state law overview: A surge in activity affecting health plan compliance

Over the past quarter, federal and state actions continued to reshape the legal and compliance landscape for health plans in the areas of abortion and gender-affirming care. We have seen a surge in federal agency enforcement, new rulemaking and litigation, as well as ongoing state developments that both challenge and reinforce these federal efforts. In this edition of our quarterly state law overview, we highlight the most consequential legal shifts and emerging trends that health plan sponsors and employers should be tracking as they navigate an increasingly complex 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

Extraterritorial Battles Over Abortion Laws Continue as Mifepristone Challenges Resurge

On Sept. 17, 2025, Texas passed HB 7, which allows private citizens to sue those who manufacture, distribute, mail or provide abortion medication to or from Texas and takes effect on Dec. 4, 2025. Successful lawsuits would award plaintiffs at least $100,000 in damages, but plaintiffs not directly related to the fetus would only be entitled to 10% and would be required to give the remaining money to a charity of their choosing. The bill exempts women taking abortion pills, including for miscarriages, from liability, and maintains that the identities and personal health information of women who obtained or sought abortion pills would be protected. The bill further shields Texas-licensed hospitals, Texas-licensed physicians in the state and anyone who manufactures or distributes the drugs for “legitimate medical reasons” such as removal of ectopic pregnancies. Postal workers, transportation companies and other delivery people are also exempt. HB 7 expands on a previous Texas law from 2021 that banned most abortions in the state and created a civil liability, allowing anyone, even those outside of Texas, to sue an abortion provider or any other individual who assisted a person in obtaining an abortion after the six-week limit and seek damages of up to $10,000.

Lockton comment: HB 7 is similar to the 2021 law but this bill explicitly seeks to penalize out-of-state abortion manufacturers and providers, adding fuel to the fire of extraterritorial conflicts over abortion services, particularly related to telehealth services and mail-order prescriptions. Supporters of the bill maintain that it will end the influx of mailed abortion medication into Texas, where the procedure and medications are prohibited. Critics of the bill suggest that the provision allowing unrelated plaintiffs to collect 10% of the potential damages amounts to a “bounty hunter” provision that incentivizes private citizens, including those with no relation to the pregnant person, to file lawsuits, and that the bill would allow individuals to be punished for intent rather than just action. In any case, the attempt to apply even more direct liability on out-of-state actors is certain to draw legal challenges over whether (and which) state laws will be enforced in such conflicts.

Texas is still embroiled in several legal fights over extraterritorial shield laws regarding abortion medications. In yet another update to the civil suit brought by the Texas attorney general against a New York provider for prescribing and sending abortion pills to a Texas patient, the New York county clerk’s office in July refused a second request from Texas’s attorney general directing the clerk to reconsider its previous refusal. In response, Texas filed a lawsuit in late July seeking an order from the New York Supreme Court compelling the clerk to comply with the Texas court’s default judgment, which ordered the doctor to pay a penalty and cease mailing abortion medications into the state. In early September, New York’s attorney general announced her intention to intervene in the case, sending a letter to the New York Supreme Court defending the state shield law and arguing that New York has the legal right to safeguard against out-of-state overreach. The case is ongoing further proceedings, as is the Louisiana criminal case against the same New York provider.

In August 2025, Texas and Florida filed motions seeking to intervene as plaintiffs in the renewed lawsuit in Texas attempting to undo the FDA’s approval of expanded access to mifepristone through avenues like mail-order access and telehealth prescriptions. The suit, brought by Missouri, Idaho and Kansas in January 2025, argues that the FDA’s expanded access avenues undermine their state laws requiring parental consent, in-person medical oversight and telehealth bans, among other restrictions. Texas and Florida are seeking to join the suit now, arguing that the original plaintiff states could no longer adequately represent their interests due to potential loosening of abortion restrictions in those states (i.e., Missouri’s 2024 voter approval of an amendment enshrining abortion rights in the state constitution; Idaho’s potential overturn of its state ban due to an upcoming November 2026 ballot referendum; and the Kansas Supreme Court’s recent affirmation of a constitutional right to abortion). The court has yet to rule on the Texas and Florida requests. As we previously reported (opens a new window), the Trump administration also filed a brief in May urging the court to dismiss the case, not on the merits but on the argument that the plaintiff states have no connection to the Texas court in which it was filed. Further proceedings are pending.

Another case involving Texas was also filed in July against a California abortion provider for mailing abortion medication across state lines. This suit alleges the doctor’s actions were a violation of both the long-dormant Comstock Act, which bans the mailing of abortion-related materials, as well as the state penal code provision against felony murder and a number of other state-based regulations related to informed consent, mandatory ultrasounds and facility licensing requirements. In an undoubtedly related move, California has moved to pass a bill that, if passed, would allow abortion providers to mail medication abortion drugs labeled with the clinic’s name instead of the individual provider’s name to protect providers from out-of-state legal threats. Several other states have recently passed similar shield law protections including Colorado, Massachusetts, New York, Maine, Vermont and Washington.

Meanwhile, 15 states, including both Texas and Louisiana (the two states that have brought civil and criminal abortion charges against a New York doctor) urged Congress in late July to ban abortion shield laws. The coalition of states argue that the shield laws, which protect abortion providers from liability for violating other states’ abortion prohibitions, interfere with states’ abilities to enforce criminal laws and should be preempted by federal action. They also allege that shield laws conflict with the Constitution’s full faith and credit clause, which requires states to give legal recognition to the official acts and judicial decisions of other states, as well as the federal Extradition Clause, which requires states to extradite individuals accused of crimes to the state where the crime occurred.

In July 2025, we finally saw the outcome to a case that began in Washington in 2023, in which 17 states plus Washington, D.C. filed suit to block the U.S. Food and Drug Administration (FDA) from enforcing its Risk Evaluation and Mitigation Strategy (REMS) restrictions on mifepristone, an abortion medication. The states argued that the restrictions (including pharmacy and provider certification requirements, informed consent and patient counseling forms and retained patient monitoring), were medically unnecessary and burdensome and violated both the Administrative Procedure Act and Equal Protection Clause. On July 8, 2025, the Washington district court reversed its own earlier ruling from 2023 that had allowed Washington and the joining plaintiff states to continue dispensing the medications under relaxed access regulations, ultimately ruling that the FDA properly reviewed the issues and its REMS restrictions were not in violation of any federal laws. As a result, the FDA’s REMS restrictions remain in place for mifepristone in the plaintiff states.

In a direct follow-up to the July ruling, Washington’s attorney general in August 2025 joined 16 other states in filing a citizen petition to request that the FDA voluntarily remove the REMS restrictions on mifepristone, or, alternatively, to stop enforcement of the restrictions in states that already regulate mifepristone safely. Another petition brought by Massachusetts, California, New Jersey and New York in June 2025 also petitioned the FDA to remove the entire REMS program for mifepristone or minimally stop enforcing key elements such as prescriber and pharmacy certifications in the petitioner states. Both petitions were prompted by the FDA’s ongoing review of mifepristone ordered by Health and Human Services Secretary Robert F. Kennedy, Jr., in May 2025. The FDA has not yet responded to either the June or August citizen petitions, though it has acknowledged their receipt.

Hawaii also has a long-running legal challenge to FDA restrictions on mifepristone dating back to 2017. The district court heard arguments in August 2025 in which the plaintiffs, a Hawaii doctor and several healthcare associates led by the ACLU, argued that the FDA’s REMS restrictions on mifepristone are not scientifically justified and that they are legally excessive and disproportionately harmful to rural and low-income patients. The suit requests that the court declare the restrictions unlawful and give the FDA a chance to revise them voluntarily. A ruling is still pending.

Finally, a federal appeals court in July held that states can lawfully regulate access to mifepristone despite the FDA’s approval of expanded access. In this landmark ruling, the Fourth Circuit court (covering the states of Maryland, North Carolina, South Carolina, Virginia and West Virginia) ruled that federal law does not preempt state abortion restrictions and that states retain the power to regulate how FDA-approved drugs are used within their borders. The decision, which ultimately allows states to ban the use of an FDA-approved drug, is now binding precedent. While a petition for review by the U.S. Supreme Court has not yet been filed at the time of this writing, it almost certainly will as the topic is an issue of first impression and calls into question the balance of power between federal agencies and state governments.

Lockton comment: The legal landscape around abortion access is evolving at a breakneck pace, with state officials, legislatures and courts engaged in what increasingly resembles a high-stakes chess match. Each lawsuit, legislative bill or regulatory petition triggers a swift and often escalatory response from opposing jurisdictions. The resurgence of mifepristone litigation in particular highlights a deepening divide between state and federal authority over abortion access. This friction creates complex compliance challenges for healthcare providers and insurers as we continue to see federal rules clashing with state-level laws, leaving employers to navigate conflicting mandates and potential preemption disputes. These issues may soon return to the U.S. Supreme Court, which previously sidestepped these broader questions by declining to rule on the merits in a 2024 mifepristone case (see our July 2024 Alert (opens a new window)). For employers, this dynamic environment demands agile compliance strategies as the rules governing access and liability continue to shift across state lines. While no action is required for employers at this time, we recommend remaining engaged on state-level updates to keep pace with new developments as they arise.

In furtherance of its aim to prohibit logistical support for abortion, not just the procedure itself, Texas also passed SB 33 bill in August 2025, which prohibits any governmental entity from using taxpayer dollars to support abortion-related travel or planning outside the state. This move is directly connected to Texas’s lawsuit earlier in the year against the city of San Antonio (more on that case in our Q2 Alert (opens a new window)) and an identical suit against the city of Austin in 2024 to block local governments from supporting “abortion tourism.” Austin in early September announced that it shut down its out-of-state abortion travel fund, which had been established in 2024 and was allocated $400,000 during the city’s budget cycle last year.

The Department of Justice (DOJ) in July made a similar move by rescinding a 2022 legal opinion issued under the Biden administration that allowed federal funds to be used for ancillary services like transportation for unaccompanied minors seeking abortions. The original opinion interpreted the Hyde Amendment as permitting indirect expenses related to abortion access, even though it prohibits direct federal funding for abortion services. The new opinion explicitly bans the use of taxpayer funds to cover any services that facilitate abortion access, including transportation and any other logistical support.

Other Updates to State Abortion Laws

An Indiana appeals court upheld the state’s near-total abortion ban in August 2025, affirming an earlier ruling by a trial court judge. The decision specifically upheld provisions relating to medical providers and potential exemptions, which the law permits only for limited circumstances to protect the life or health of the pregnant person or in cases of rape or incest. Another challenge to the state ban centered on whether it violates the Religious Freedom Restoration Act (RFRA) is still ongoing.

Maryland passed a first-of-its-kind law in May 2025 (effective July 1, 2025) that establishes the state Public Health Abortion Grant Program and Fund to expand access to abortion care for uninsured, underinsured and marginalized individuals. The program is funded by unused insurance premiums collected under Section 1303 of the Affordable Care Act (ACA), which insurers have been required to set aside for abortion services not eligible for federal funding. Beginning in September 2025, the Maryland Insurance Commissioner will transfer these funds to the new grant fund, and grants will be awarded to eligible organizations that provide equitable abortion care.

Abortion services have resumed in Missouri following a series of legal reversals despite voter approval of a constitutional amendment protecting abortion rights until viability last November. Although the Missouri Supreme Court initially vacated lower court injunctions blocking abortion restrictions in May 2025 because the district court applied the wrong standard, the lower court has reissued the injunctions under proper standards in July 2025, thereby blocking existing state restrictions on abortion services once again. The Missouri Supreme Court rejected an immediate attempt by the attorney general to overturn the district court ruling that reinstated those protections. As a result, abortion remains accessible in the state for now.

Several other states are contending with similar issues, as most states with constitutional amendments protecting abortion access still have at least one abortion restriction in place, including Arizona, Michigan, Missouri and Ohio. Arizona, for example, also passed a constitutional amendment to protect a fundamental right to abortion in 2024 and, as a result, the state’s 15-week ban was permanently enjoined; however, the state still has laws restricting telemedicine and imposing waiting periods. These state laws continue to be challenged by abortion advocates and proceedings are still pending.

Also in Missouri, a proposed constitutional amendment will appear on the November 2026 ballot seeking to reinstate Missouri’s abortion ban with limited exceptions; repeal protections for abortion, IVF and contraception approved by voters in 2024; ban gender-affirming care for minors; and require all legal challenges to reproductive health to be heard in Cole County, Missouri. The ACLU of Missouri filed suit in July 2025 alleging that the first version of the amendment was misleading, deceptively named by titling it Amendment 7 (i.e., the same title as the 2024 amendment that enshrined abortion rights into the state constitution) and violated the state’s single-subject rule (requiring ballot measures to include only one subject that is clearly expressed in the title). On Sept. 20, 2025, a district court ordered revisions to the ballot language, ruling that while combining abortion and gender-affirming care provisions was permissible, the language must clearly state the amendment’s intent to repeal the 2024 amendment.

The U.S. Supreme Court in July declined to review a case stemming from Montana centered on the state’s 2013 Parental Consent for Abortion Act. The law required notarized parental consent before a minor could obtain an abortion and was challenged by Planned Parenthood as unconstitutional. A state court blocked the law, which was affirmed by the Montana Supreme Court in August 2024 holding that the law violated the state constitution by infringing on minors’ fundamental rights to privacy and equal protection.

An Ohio case challenging restrictions on which providers can dispense abortion medications through telemedicine will most likely head to the Ohio Supreme Court after a series of rulings from a county judge blocked state laws limiting access to the medications. The court held that Ohio regulations banning nurse practitioners, physician assistants and certified nurse midwives from prescribing abortion pills likely violate the 2023 state constitutional amendment protecting reproductive freedom, including access to abortion.

On July 18, 2025, a federal judge permanently blocked enforcement of a key provision in Tennessee’s “abortion travel” ban that made it a felony to “recruit” a minor for an abortion without parental consent, even if the procedure was legal in the other state. Like the recent Idaho case we reported on, the court held that the law’s vague use of the term “recruit” violated the First Amendment by criminalizing speech that encourages lawful out-of-state abortions while allowing speech that discouraged them. Tennessee has filed an appeal in the case.

Finally, in a 4-3 decision, the Wisconsin Supreme Court issued a landmark ruling on July 2, 2025, striking down the state’s 1849 abortion ban by concluding that it had been “impliedly repealed” by decades of more recent abortion legislation. The court held that the state legislature had regulated virtually every aspect of abortion, including where, when and how it could be performed, which showed clear legislative intent to supersede the decades-old ban. The ruling affirms a lower court decision and ensures that abortion remains legal in Wisconsin for up to 20 weeks of pregnancy with exceptions for medical emergencies.

Lockton comment: For employers and health plans, these escalating interstate legal battles raise critical questions about coverage, compliance and risk exposure, particularly when plan participants seek care across state lines. As states continue to test the limits of shield laws and extraterritorial enforcement, employers should monitor developments closely to assess potential implications for plan design, provider networks and fiduciary obligations under ERISA. Lockton will continue to monitor updates to state laws that may impact employer plans and provide updates to clients in our State-by-State Guide to Abortion Laws.

GENDER-AFFIRMING CARE AND TRANSGENDER BENEFITS

While this quarter saw continued activity around gender-affirming care at the state level, many of the meaningful developments this summer were federal in nature. The U.S. Supreme Court’s June decision in U.S. v Skrmetti, which upheld Tennessee’s ban on gender-affirming care for minors, provided a legal framework that has already begun influencing lower courts and state legislatures, but swiftly moving federal agency actions have also had an immediate impact on provider behavior and health system policies. Because federal directives increasingly influence how states regulate care – and whether federal and state inconsistencies surface – staying apprised of both levels of regulation is essential for anticipating enforcement risks and aligning policy strategy. As a result, this quarter’s alert focuses both on federal and state actions, enforcement trends and regulatory shifts that are shaping the national landscape for gender-affirming care.

Federal Actions on Gender-Affirming Care Continue

Although the portion of the administration’s executive order from January 2025 relating to withholding federal funds remains blocked under a nationwide preliminary injunction, federal agencies continue to restrict gender-affirming care procedures and access to the extent allowed, including the following recent actions:

On June 25, 2025, CMS announced in an ACA Marketplace Final Rule that coverage of gender-affirming care (referred to as “sex-trait modification”) as an essential health benefit (EHB) is prohibited for all beneficiaries, not just minors, starting in plan year 2026. CMS noted that this does not prohibit health plans from voluntarily covering such care as a non-EHB nor prevent states from requiring such coverage.

On July 28, 2025, the Federal Trade Commission (FTC) launched a formal Request for Information (RFI) to investigate whether gender-affirming care for minors involves unfair or deceptive trade practice under Sections 5 and 12 of the FTC Act. Specifically, the FTC is seeking public input on “false or unsupported claims” about gender-affirming care; material risks that may not have been disclosed to consumers; potential consumer harm; and evidence such as advertisements, social media posts, disclosures and research. The public comment period closed on Sept. 26, 2026.

The RFI followed a workshop hosted by the FTC earlier in the month titled “The Dangers of Gender-Affirming Care for Minors,” which featured testimony from doctors and medical ethicists, whistleblowers, detransitioners and parents of affected minors. Topics included allegations that some providers may be actively deceiving consumers, failing to disclose risks and overstating benefits of gender-affirming care.

On the same day as the FTC’s all-day workshop, the DOJ announced that it had subpoenaed more than 20 clinics and physicians who offer gender-affirming care to minors pursuant to a memo it issued in April stating that it would investigate and prosecute those providing gender-affirming care to children. The DOJ’s subsequent probe into major pediatric hospitals, including a sweeping subpoena to the Children’s Hospital of Philadelphia for patient and provider records, reflects an aggressive strategy to advance the administration’s priority of restricting gender-affirming care for youth. These actions raised privacy concerns and prompted ongoing legal challenges as hospitals and states push back against what they describe as “uniquely invasive” federal demands for sensitive information, including patient-identifying protected health information (PHI) protected under HIPAA such as social security numbers and addresses, as well as “every writing or record of whatever type” from doctors providing transition-related care to minor patients. The DOJ sent a similar subpoena to Boston Children’s Hospital, which was blocked by a federal court in September; the decision stated that the subpoena was issued in bad faith and that its true purpose was to interfere with Massachusetts’s right to protect gender-affirming care and dissuade patients from seeking care.

The DOJ also issued a Civil Division Enforcement Priorities memorandum in July directing DOJ staff to investigate and pursue enforcement actions against providers, pharmaceutical companies and hospitals involved in gender-affirming care for minors. The memo states that it will use “all available resources” to pursue potential violations of the Food, Drug and Cosmetic Act (FDCA) and False Claims Act (FCA), including allegedly fraudulent Medicaid claims using false diagnosis codes to bypass federal and state bans. Additionally, the DOJ is reportedly scrutinizing CPT and ICD-10 codes used to disguise gender-affirming care as unrelated treatment (e.g., precocious puberty).

In early August, the Centers for Medicare & Medicaid Services (CMS) proposed a new rule called “Medicare and Medicaid Programs: Hospital Condition of Participation: Prohibiting Sex Trait Modification for Children.” The rule is currently under review by the White House Office of Management and Budget (OMB), but if finalized, would ban Medicare and Medicaid reimbursements to hospitals that provide gender-affirming care to minors. This is the next in a series of moves by CMS to restrict access to gender-affirming care pursuant to the January executive orders. In April 2025, CMS instructed state Medicaid agencies to stop covering hormone therapies and gender-affirming procedures for individuals under 18, and, in May, the agency launched investigations into hospitals offering such care.

As a result of these federal actions, at least 20 hospitals and health systems across the nation have paused or restricted access to gender-affirming care programs and services for minors, including large hospital systems such as Stanford Medicine, Kaiser Permanente, UChicago Medicine, Advocate Health Care, the University of Michigan and Children’s Hospital Los Angeles. The White House issued a fact sheet on July 25, 2025 confirming that numerous hospitals, many of them named in the publication, have ended gender-affirming care services due to the executive orders issued earlier this year.

Lockton comment: Actions taken by hospitals and health systems to end gender-affirming care services, though made directly in response to the administration’s executive orders, may conflict with state-level protections. Michigan’s state attorney general made a public statement suggesting that the University of Michigan’s decision to discontinue transgender care for minors may amount to violation of the state’s nondiscrimination laws. Five adolescents in Pennsylvania have already filed a discrimination lawsuit against UPMC Children’s Hospital of Pittsburgh for discontinuing treatment, alleging that the denial qualifies as both sex- and disability-based discrimination because the same treatments, including puberty blockers and hormone therapy, continue to be offered to cisgender youth.

On Aug. 20, 2025, the Office of Personnel Management (OPM) issued a directive eliminating coverage for gender-affirming care under the Federal Employee Health Benefits (FEHB) program starting in plan year 2026. This applies to individuals of any age, not just minors, and stems from the administration’s executive orders earlier in the year. Narrow exceptions are included for mental health counseling, ongoing treatment and hormone therapy unrelated to gender transition.

Finally, on Sept. 2, 2025, the DOJ announced its “Victims of Chemical or Surgical Mutilation Act (VCSMA),” a federal bill that would prohibit gender-affirming care for minors and create a private right of action for children and parents to sue providers for providing such care. The legislation aims to formally codify the administration’s broader policy goals under the January executive orders. Previous DOJ actions have relied on existing laws like the FDCA and FCA to pursue enforcement against providers of gender-affirming care, but this new proposal would explicitly criminalize gender-affirming care for minors as opposed to interpreting and enforcing existing legislation. The bill, if passed, would conflict with several state shield laws and other protections in states that explicitly permit or protect access to such care.

In response, California announced in August that it has filed its 37th lawsuit against the administration, joined by 16 other states and Washington, D.C., alleging that the January executive order unlawfully blocks necessary medical care for transgender minors and oversteps federal authority by interfering with state laws. The suit claims that federal agencies, including HHS, the DOJ and the FBI, are overstepping their authority by targeting gender-affirming care and imposing burdensome data demands on providers. It also alleges that the administration is trying to effectuate a national ban on gender-affirming care despite Congress not enacting such legislation.

Lockton comment: As federal agencies move forward with implementing directives from the January executive order that restrict access to gender-affirming care, legal and operational uncertainty mounts for providers and plan sponsors. Importantly, executive orders do not override existing federal or state laws; however, agency actions taken pursuant to these orders can result in new guidance, rescission of prior guidance and enforcement priorities that conflict with state protections, creating compliance challenges. For example, CMS’s ACA Marketplace Final Rule prohibits coverage of gender-affirming care as an essential health benefit starting in 2026, while some states continue to mandate such coverage. We advise working closely with legal counsel and benefits consultants to assess whether any plan design changes are necessary and to ensure compliance with both federal and state requirements.

Other Updates to State Gender-Affirming Care Laws

The U.S. Court of Appeals for the Eleventh Circuit ruled in September that an employer's health plan that does not cover treatment for gender dysphoria, including gender-affirming surgery, does not violate the federal civil rights law (Title VII) that bans discrimination on the basis of sex. This ruling in Lange v. Houston County, Georgia is now binding precedent and controlling law in Alabama, Florida and Georgia. The ruling is a reversal of the court's previous ruling from May 2024, which held that the plan's exclusion was discriminatory on its face because the employer intentionally treated an employee in a protected class worse than other similarly situated employees. Shortly after that decision (and after the U.S. Supreme Court issued its Skrmetti gender-affirming care decision), the court in September 2024 vacated that decision and agreed to re-hear the case. The new ruling clarified that the health plan’s exclusion of gender-affirming surgery does not violate Title VII, as the exclusion applies to all participants regardless of sex or transgender status and is considered a medical-use classification. Notably, the court relied on the U.S. Supreme Court’s Skrmetti decision, distinguishing statutory claims under Title VII from constitutional challenges, while also noting that similar exclusions may still face scrutiny under Affordable Care Act (ACA) Section 1557 in other jurisdictions.

Lockton comment: The ruling signals that future cases attempting to challenge gender-affirming care exclusions under Title VII may face significant hurdles, especially where plans apply exclusions uniformly and frame them as medical-use classifications rather than targeting a specific class of member. However, courts remain divided, and similar exclusions could still be found unlawful in jurisdictions that adopt a broader interpretation of nondiscrimination standards. For employers, this ruling means that those who previously may have had to make changes to plan coverage offerings can now reevaluate those changes if they prefer. Employers wishing to continue providing gender dysphoria coverage are free to continue to do so. Broader impacts will include the resolution of litigation that had stayed proceedings pending the outcome of Lange, and we may see other states emboldened to reinstate or defend similar coverage exclusions as well.

On Aug. 22, 2025, the Alaska State Medical Board unanimously approved a draft regulation that would classify gender-affirming care for minors as unprofessional conduct and expose physicians to potential disciplinary action. The rule is not yet final, as it still has to go through legal review and a public comment period before final approval. The proposal notably excludes nurse practitioners and other non-physician providers from potential penalties because they are not subject to the board’s jurisdiction.

On Aug. 12, 2025, the Eighth Circuit Court of Appeals upheld Arkansas’s Save Adolescents from Experimentation (SAFE) Act, which bans gender-affirming medical treatments for minors, including puberty blockers, hormone therapy and gender-affirming surgeries. The court, relying heavily on the U.S. Supreme Court’s Skrmetti decision, reversed a lower court’s earlier ruling that had blocked enforcement of the law, stating that Arkansas has a legitimate interest in regulating medical procedures for children and that the law did not violate constitutional protections. As a result, the Arkansas state prohibition remains in effect.

New Hampshire became the first northeastern state to ban gender-affirming care for minors as the state governor signed two bills into law on Aug. 2, 2025. HB 337 prohibits doctors from prescribing puberty blockers and hormone therapy to transgender minors under 18 effective Jan. 1, 2026, although it allows minors already receiving care to continue treatment for now. HB 712 expands existing restrictions on gender-affirming surgeries by banning procedures like facial feminization and masculinization and chest surgeries for minors. New Hampshire lawmakers cited the U.S. Supreme Court’s Skrmetti ruling as precedent for its new legislative actions.

An appeals court upheld Oklahoma’s gender-affirming care ban in August 2025, holding that the law does not discriminate against transgender minors. The court’s decision was unanimous and relied heavily on the U.S. Supreme Court’s Skrmetti ruling, which upheld Tennessee’s similar prohibition. As a result, the Oklahoma law, which prohibits puberty blockers, hormone therapy and surgeries for minors under 18, remains in place.

On Aug. 13, 2025, a district court in Washington reaffirmed its ruling from April that Premera Blue Cross unlawfully discriminated against transgender adolescents by denying coverage for gender-affirming chest surgery under age 18, regardless of medical necessity determinations. The court concluded that this was a violation of Section 1557 of ACA, which prohibits sex-based discrimination. The court pointed out that the U.S. Supreme Court’s decision in Skrmetti did not affect its rulings, as Skrmetti involved constitutional issues while this case was based on statutory protections.

Lockton comment: For employers and health plans, these escalating interstate legal battles raise critical questions about coverage and liability. A key takeaway is that coverage decisions for gender-affirming care benefits are increasingly subject to both state and federal restrictions that carry stronger legal backing, but some state litigation outcomes are still showing a propensity to find discrimination claims valid through other avenues (i.e., using sex-based discrimination claims as opposed to gender identity-based discrimination allegations). Plan sponsors are encouraged to review benefit offerings in light of these updates, especially where coverage intersects with travel benefits and shield law protections. Additionally, multi-state employers may need to reassess how uniform their coverage can remain across jurisdictions with diverging legal standards. Lockton will continue to monitor updates to state laws that may impact employer plans and provide updates to clients in our State-by-State Guide to Gender-Affirming Care Laws.

OTHER BENEFIT-RELATED UPDATES

California

The San Francisco Health Care Security Ordinance, a law requiring most San Francisco employers to spend a minimum amount on health care for employees who work eight or more hours per week, has released its expenditure rates and exemption threshold for 2026. For large employers (all employers with 100+ workers), the 2026 rate is $4.11 per hour, up from $3.85 in 2025. For medium employers (businesses with 20-99 workers and nonprofits with 50-99 workers), the 2026 rate is $2.74, up from $2.56 in 2025. Small employers (businesses with 0-19 workers and nonprofits with 0-49 workers) continue to be exempt in 2026. Starting January 1, 2026, managerial, supervisory, and confidential employees who earn more than $128,861 per year (or $61.29 per hour) are exempt; the threshold is a slight increase over the 2025 amount, which was $125,405 annually, or at least $60.29 per hour.

Also in California, the statewide minimum wage will increase to $16.90 per hour beginning January 1, 2026, triggering a new exempt salary threshold of $70,304 per year (or $5,858.67). However, under Los Angeles’s Living Wage Ordinance (LWO) and Hotel Worker Minimum Wage Ordinance (HWMO), exempt hotel managers at covered properties must earn $83,200 per year to maintain exempt status. Additionally, the ordinance mandates a $7.65 hourly healthcare benefit (excluding overtime) beginning July 1, 2026, to be paid as a direct employee payment or via health benefits which are categorized as health coverage, dental, vision, mental health or disability income. If the value of the paid benefits is less than the healthcare payment mandate, the difference is to be paid directly to the employee. If any employee waives coverage because of existing alternative coverage, employers must still pay an additional $100 per month for full-time employees or $50 per month for part-time employees. These increased amounts match the health benefit rate already required for employers servicing the Los Angeles International Airport (LAX). Employers should review compensation and benefits policies to ensure compliance with both state and local wage laws.

Illinois

Illinois passed a new update to its commuter benefit mandate to include part-time workers that takes effect on January 1, 2026. The new law allows part-time employees of covered business to use pre-tax payroll deductions for transit expenses and will require that part-time employees be counted to determine whether the employer is subject to the commuter mandate (i.e., has 50 employees within one mile of a fixed transit stop). An additional provision in the law excludes workers in the construction industry under a collective bargaining agreement from this benefit.

Washington

The Washington Partnership Access Lines Fund (“WAPAL”), an assessment program providing funding for behavioral health care, has increased its assessment rates for 2026. Some employers, including self-funded plan sponsors, providing coverage to Washington residents are subject to reporting requirements on covered lives and payment of covered-lives assessment to help cover the costs of provider management of patients’ psychiatric needs. The covered lives assessment rate for fiscal year 2026 is $0.07, a slight increase over the 2025 rate of $0.06 per covered life per month.

Not legal advice: Nothing in this alert should be construed as legal advice. Lockton may not be considered your legal counsel, and communications with Lockton's Compliance Consulting group are not privileged under the attorney-client privilege.

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