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Funding gender-transition care

Key takeaways

  • There are no widely agreed-upon costs for gender-transition care, which leaves transgender people with sticker shock.
  • Insurance may cover some services but there are still many costs that will come out of pocket.
  • Health savings accounts (HSAs) may be a good option to pay for care for those who have access.

Jessica Slutsky started her medical transition journey in September 2021. The 34-year-old works as a consultant at a multinational accounting firm that provides ample medical coverage. And yet before the process is over, she will have paid tens of thousands of dollars out of pocket.

Why? For starters, the hormone therapy treatments that will help Slutsky develop breasts, among other appearance-altering effects, do little to change her voice or facial hair.

"I've had a lot of voice training that many insurances don't cover, and it can be very expensive," Slutsky explains. "Another example is laser hair removal. Many insurances don't cover it at all for your face or will only cover it after [taking] 18 months of hormones. But who wants to have facial hair for 18 months?"

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Halfway through the insurance plan year, Slutsky hit her $12,000 out-of-pocket maximum—which is the most you'll pay in a year for services your insurance covers. But since her surgeon isn't in network, she expects to pay a lot more. "Even with my good insurance I'm still paying a ton of money, and at this point my insurance company can't even give me an answer about how much they will reimburse."

Finding the right care

There are 1.6 million transgender Americans, according to a 2022 UCLA Williams Institute report.1 Even a decade ago, the cost of gender-affirming care—everything from top and bottom surgery to psychological counseling to cosmetic surgery—was all on the patient, says Loren Schechter, MD, a plastic surgeon and director of the Gender Affirmation Surgery practice at Rush University Medical Center in Chicago. Today, thanks to the Affordable Care Act (ACA), the ACA public marketplace is supposed to be covering much of the care.

"Although there are many challenges, we've made quite a bit of progress," says Dr. Schechter, who is also a member of the executive committee of the World Professional Association for Transgender Health. "Over the last 10 to 12 years, we've seen expanded access to care and expanded insurance coverage."

However, laws and administrative rules vary widely from state to state and are subject to change, stoking confusion and only adding to the challenges of getting care. Schechter points out that some states are introducing legislation that would remove coverage for gender-affirming interventions. For example, according to the Movement Advancement Project,2 only 24 states and Washington, DC, have insurance nondiscrimination laws and policies in place that prohibit state-regulated insurers to ban gender-related care. Private insurers are not always governed by such policies, and one state—Arkansas—has a law in place that gives private insurance companies and the ACA public marketplace the right to deny such coverage. "That's a big barrier to care for these medically necessary services," adds Schechter.

And it's a barrier that adds up quickly. A 2015 analysis by Johns Hopkins Bloomberg School of Public Health found that health care for a transgender person costs between $34,000 and $43,000 per year over their lifetime.3 This total can include mental health therapy, which can cost between $100 and $200 per session,4 as well as medication, lab tests, surgery, hair removal, and gender-transition equipment. More recently, in 2022, a bill in the Maryland State House noted that "Medicaid expenditures increase by as much as $52,743 per person for individuals transitioning from MTF (male to female) and by as much as $52,493 per person for individuals transitioning from FTM (female to male)." This estimate doesn't include fertility-preserving treatments such as egg and sperm retrieval and storage.5

Typically, insurance should cover mental health services, medications, surgery, and some equipment, but since gender-affirming care is so specialized, there's no guarantee providers will accept insurance, especially Medicare or Medicaid. That's why it's important to shop around if you're buying a plan through the ACA public marketplace or considering an employer-sponsored plan. Make sure you confirm what's covered before making a choice. Indeed, therapists and physicians who treat transgender people are in such short supply in the US that there are wait lists for care.6

Going forward, the process could become even more difficult if states reverse coverage for gender-affirming care, says Dr. Schechter. "While there may be covered services, it may not be easy to find a medical provider who's in-network."

Funding care with tax-advantaged accounts

Whether care is covered completely by insurance or not at all, there are ways to help fund these treatments. Anyone who has a high-deductible health plan, for instance, can take advantage of a health savings account (HSA) to save for qualified medical expenses tax-free.7

As such, you can use it for qualified medical expenses that are approved by the IRS. These include co-pays and deductibles, therapy, out-of-network or out-of-pocket surgery, and prescription drugs.

And because HSAs aren't tied to an employer, if you leave your company, all the funds go with you—even the money your employer might have contributed. Since HSAs are funded with pre-tax dollars, you get the tax savings immediately when you fund it. In 2024, employees are allowed to contribute up to $4,150 for individual coverage and up to $8,300 for family coverage.

There are other options for funding gender-affirming care too, such as a health care flexible spending account (HCFSA) or health reimbursement arrangement (HRA). However, unless you know you'll be getting care in the same year you're making contributions, these may not be the best option because the money doesn't always roll over from year to year like an HSA does.

Other financial options for gender-affirming care include negotiating a payment plan with the medical provider, crowdfunding sites, medical credit cards, personal loans, and grants.8 Online support site TransGender Pulse lists several local and national resources9 that can help.

Slutsky says she'll pay out-of-pocket for her bottom surgery, which she expected to complete in 2023. She chose a surgeon who has a lot of experience but doesn't accept insurance so she will pay for it with savings. "I didn't have to think about the money, but many trans folks I know are not in that privileged situation," she says. "I cannot see how anyone without insurance [or savings] would get surgery, or even do the other stuff I mentioned, like medically transition with hormones."

When insurance says no

You go to an in-network health care provider, and a few weeks later get a letter that your claim has been denied. Unfortunately, this isn't a rare occurrence.

According to a 2023 Kaiser Family Foundation survey,10 about 18% of in-network health insurance claims were denied over the previous year. Anyone who has an insurance claim denied—no matter what the claim was for—is legally entitled to appeal it.

The process: Once you receive a denial letter from your insurance company, look at the reason it was denied. The letter may have space for you to ask for an appeal and write a rebuttal. If it doesn't, you may need to call the insurer and tell them that you want to appeal.

Be as specific and detailed as you can when writing the appeal. For instance, if your claim for hormone replacement therapy is denied, explain that it is part of your medically necessary treatment, and back it up with a letter from your health care provider. Don't be afraid to ask your provider to advocate for you. They want to get paid too.

Still need help? Not-for-profit health care policy organization Aimed Alliance provides guidance on a state-by-state basis.

Consider a health savings account (HSA)

With an HSA, you can pay for qualified medical expenses in a tax-advantaged way.

More to explore

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1. Jody L. Herman, Andrew R. Flores, Kathryn K. O'Neill, "How Many Adults and Youth Identify as Transgender in the United States?" Williams Institute, June 2022. 2. "Healthcare Laws and Policies," Movement Advancement Project. 3. "Study: Paying for Transgender Health Care Cost-Effective," Johns Hopkins Bloomberg School of Public Health, December 2015. 4. "Top 10 Mental Health CPT Codes Billed in 2022," Simple Practice, January 22, 2023. 5. Senator Washington, et. al., Maryland Medical Assistance Program - Gender-Affirming Treatment (Trans Health Equity Act of 2022), Maryland General Assembly 2022 Session, 6. Sarah Dahlgren Allen, Michelle A. Tollit, Rosalind McDougall, Donna Eade, Monsurul Hoq, Ken C. Pang, "A Waitlist Intervention for Transgender Young People and Psychosocial Outcomes," August 1, 2021. 7.

With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.

8. "Trans in the South: Funding Your Transition," Southern Equality. 9. "US Surgery Funding Assistance Programs," Trans Pulse. 10. Karen Pollitz, Kaye Pestaina, Lunna Lopes, Rayna Wallace, and Justin Lo, "Consumer Survey Highlights Problems with Denied Health Insurance Claims," Kaiser Family Foundation, September 29, 2023.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

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