Access to Fertility-Insurance Coverage for LGBTQ Employees Post-Bostock

Fertility benefits are on the rise in US employee benefits packages. In vitro fertilization (IVF) coverage has risen steadily over the past five years for both medium and large employers. In 2014, Facebook and Apple took the first step in covering egg freezing. Now, employers like Salesforce and Spotify offer surrogate coverage up to $80,000. However, LGBTQ couples found themselves excluded from coverage for the fertility treatments extended to their heterosexual counterparts.

The source of this exclusion comes from the requirement of many health insurance policies that an individual must be diagnosed as “infertile” to access coverage. Under many plans, infertility is defined as failure to conceive after 12 months of unprotected heterosexual sex or after 6-12 cycles of therapeutic donor insemination.

For same-sex couples, this definition leaves only one option: 6–12 cycles of insemination. Without insurance, these treatments are prohibitively expensive: A single intrauterine insemination (IUI) cycle can cost more than $5,000 while the average IVF cycle costs up to $25,000 with medication. In short, heterosexual couples can be eligible for insurance coverage after a year of trying to conceive—at no monetary cost. But under current insurance policies, same-sex couples must spend at least $30,000, and often more, before any coverage kicks in.

This is a growing source of concern for LGBTQ advocates. Some label it a “queer tax” and argue that fertility is still defined in heterosexual terms. In September 2021, advocates filed the first major lawsuit against an insurer for this policy: The National Women’s Law Center and civil rights firm Emery Celli Brinckerhoff Abady Ward & Maazel filed a class action lawsuit against Aetna for its discriminatory treatment of LGBTQ couples. Aetna quickly rejected the previous denials of coverage and announced that it would provide immediate coverage, under a recently passed New York law.

But, apart from legal action against insurers, what is the role of employment discrimination law in this legal landscape? Specifically, employees can now sue their employers under Title VII following the Supreme Court’s decision Bostock? There is reason to believe that a legal challenge could be viable. The Attitude of the EEOC and the Courts on Sex-Based Discrimination in Employee Health Benefit Packages Along with Recent Challenges Under Bostock can lay the foundation for successful legal action.

Title VII

Title VII of the Civil Rights Act of 1964 prohibits employment discrimination in “compensation, terms, conditions, or privileges of employment” on the basis of race, color, national origin, sex, or religion. This includes discrimination in fringe benefits, including employer-provided health care plans. In 2020, the Supreme Court ruled in Bostock vs. Clayton County that Title VII’s prohibition on employment discrimination “on the basis of sex” includes discrimination on the basis of sexual orientation or gender identity.

While attention was paid to Bostock‘s implications for mainstay employment issues such as hiring, firing and compensation, there are also implications for employee benefit plans. Employment lawyers and benefits advisers have warned against the overlooked “benefits implications” of Bostock, especially for employer-sponsored health care. Justice Alito, in his Bostock differences, anticipated this very impact: “Health care benefits could emerge as an intense battleground under the court’s holding.”

It is well established that Title VII prohibits sex-based discrimination in employer-provided health care benefits. The EEOC’s Compliance Manual instructs employers to ensure that health benefits are nondiscriminatory. Giving superior benefits to one gender over the other clearly violates Title VII (EEOC v. Fremont Christian School), including for employees’ spouses.

The Supreme Court has most directly addressed sex discrimination in health insurance plans Newport News Shipbuilding & Dry Dock Co. f. EEOC. In Newport News, the employer-provided health plan provided female employees with hospitalization benefits in the event of pregnancy-related medical conditions, but denied those same benefits to the spouses of male employees. First, the court ruled that fringe benefits, such as health care benefits, count as compensation under Title VII. Furthermore, the court found that the employer’s specific benefits policy discriminated against male employees in violation of Title VII. The court’s decision turned on the fact that a male employee at the company was treated in a way “that would be different to that person’s sex.” That is, access to the health benefit differed based on the gender of the employee. Newport News remains a widely cited authority on sex-based discrimination in health care plans.

The Landscape Post-Bostock

With Bostock now in place, the logic of Newport News can readily be extended to fertility benefits based on sexual orientation. Just as in Newport Newsit can be argued that, for purposes of fertility benefit coverage, an LGBTQ employee seeking fertility treatment is treated in a way that, but for their sexual orientation, would be different. Newport News also provides strong precedent for holding employers (other than insurers) liable for Title VII violations based on the coverage and eligibility requirements of their employee health benefit plans. The court’s stance on sex-based discrimination in health care benefits under Title VII, especially under Newport Newsmay support future challenges based on sexual orientation.

Following Bostock, there have been legal challenges to employee health care plans, although they have mostly focused on transgender health services. In 2020, a U.S. District Court in Arizona found that a state insurance policy that excludes gender confirmation surgery violates Title VII (See Fletcher v. Alaska). A trial is currently pending in the case of Toomey vs. Arizona State in which a public university professor was denied a hysterectomy as part of his sex-change treatment.

In April, a same-sex couple in New York filed what may be one of the first EEOC complaints on this issue. The couple, which includes a city employee, was denied IVF coverage for surrogacy because of the definition of infertility used by the New York City Employee Health Plan. The couple warned against a future class action lawsuit.

What is the solution for employers who want to ensure equal access? The most direct solution is to provide immediate coverage to individuals who cannot conceive due to sexual orientation. That was the solution adopted by New York state: a 2021 law mandates that insurers cover basic infertility treatments, especially IUI, to those who are “unable to conceive because of their sexual orientation or gender identity .” This does not come without challenges. Under Bostock, this change may be challenged by heterosexual individuals claiming discrimination based on sexual orientation, as they must wait at least another year before accessing insurance coverage. The New York law also allows insurers to first exhaust the “basic fertility treatment” of IUI before attempting IVF. This may not solve the problem for same-sex couples, depending on their family planning goals. (For example, if a lesbian couple wants to get pregnant with an egg from the non-birth partner, the only option is to do IVF followed by implantation).

The increasing prevalence of fertility benefits in employee benefit plans raises concerns about the discriminatory treatment of LGBTQ employees. This most recent EEOC complaint may be the first test case. It remains to be seen whether the court’s existing Title VII jurisprudence in a post-Bostock world will support claims of employment discrimination based on sexual orientation in employee benefit plans.

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