No Subsidies Act Blocks Tax Deductions, Medicaid, Medicare, and ACA Coverage for Gender Transition Procedures

The “No Subsidies for Gender Transition Procedures Act” is a major piece of legislation that systematically removes federal financial support and regulatory backing for a specific category of medical care. Simply put, this bill uses the federal budget—taxes, Medicaid, Medicare, and the ACA—to stop subsidizing or mandating coverage for almost all procedures related to gender transition.

The bill is incredibly detailed, defining a “gender transition procedure” broadly to include hormonal treatments (like puberty blockers or high-dose hormones meant to align appearance with a different identity), various surgeries (phalloplasty, vaginoplasty, mastectomy, etc.), and even cosmetic procedures like voice or facial feminization/masculinization surgery (SEC. 2). If enacted, these changes apply immediately to services provided and tax years beginning after the law is signed.

The Tax Break That Disappears

For anyone paying for these procedures out-of-pocket, the first major hit is on taxes. Currently, if your medical expenses exceed a certain percentage of your income, you can deduct them. This bill amends Section 213 of the Internal Revenue Code to explicitly state that costs related to these specified gender transition procedures are no longer considered “medical care” for deduction purposes (SEC. 2).

What this means on the ground: If you’re a working professional who paid $15,000 for a procedure this year, you can’t deduct any of that cost from your taxable income. This change significantly raises the effective cost of the procedure for middle-class individuals who rely on that deduction for financial relief.

Public Insurance Doors Slam Shut

This legislation takes a three-pronged approach to public health insurance, effectively removing federal funding streams for these services across the board.

First, for low-income adults and families, the bill bans federal matching funds to states for any money spent on these procedures under Medicaid (SEC. 3). States that still want to cover the procedures would have to foot the entire bill themselves, a move that is likely to cause many states to drop coverage.

Second, the bill prohibits federal reimbursement for CHIP funds used for these procedures for minors (SEC. 4). This blocks access for children in low-income families who rely on CHIP for their healthcare.

Third, the bill adds these procedures to the list of services Medicare won't cover (SEC. 5). This directly impacts older adults and disabled individuals who rely on Medicare for their medical needs.

The ACA Mandate Gets Rewritten

Perhaps the biggest change for the private insurance market comes from Section 6. This section amends the Affordable Care Act (ACA) to mandate that the Secretary cannot include gender transition procedures in the list of Essential Health Benefits (EHB).

What this means on the ground: The EHB defines the minimum set of services that all ACA-compliant plans (including those on the marketplace and most small group plans) must cover. By removing gender transition procedures from the EHB list, the federal requirement for private insurers to cover these services disappears. While some states might still mandate coverage, this change could lead to widespread denial of coverage in private plans across the country, significantly increasing out-of-pocket costs for anyone with marketplace or employer-provided insurance.

The Narrow Exceptions

The bill does carve out very specific exceptions where coverage or deduction would still be allowed. These include procedures for individuals born with a medically verifiable disorder of sex development (DSD), treatments for complications resulting from a previous transition procedure, and procedures necessary to save a life (SEC. 2, 3). For example, if a patient develops a life-threatening infection after a surgery, the treatment for the infection is still covered. However, the exceptions are narrow and strictly defined, centering mainly on biological disorders or immediate life-saving needs, not the transition procedures themselves.