Litigation, enforcement actions and regulatory initiatives at the federal and state levels continued to drive the second quarter of 2026, as our state law update highlights key legal and regulatory developments affecting employee benefits and healthcare access over the past three months.
Federal court decisions and agency actions targeting reproductive/abortion care and gender-affirming care continue to shape the landscape of these evolving areas while states remain active in advancing conflicting approaches to access, privacy and coverage standards.
Executive Summary
Abortion and reproductive care: Activity centered on federal litigation as the U.S. Supreme Court preserved access to mifepristone while litigation challenging access to the drug moves forward; states like Alabama and Illinois increasingly tested extraterritorial limits through actions targeting providers offering out-of-state telehealth and mail-order services.
Gender-affirming care: Federal enforcement efforts intensified through subpoenas, investigations and provider settlements, while courts delivered mixed rulings; multistate lawsuits challenging federal regulatory actions persist, including a lawsuit filed by New York and 16 other states, highlighting ongoing tension between federal policy and state-level protections.
Other benefit-related updates: Developments were incremental this quarter, including Massachusetts’ MCC thresholds for 2027 and Wisconsin’s newly enacted long-term care insurance assessment.
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. Nevertheless, employers should 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
Medication abortion access remains in place following Supreme Court ruling
On May 14, 2026, the U.S. Supreme Court blocked a Fifth Circuit ruling (covering Louisiana, Mississippi and Texas) that would have reinstated in-person dispensing requirements for mifepristone, a commonly used abortion medication. As a result, telehealth prescribing and mail-order distribution of the medication remain permitted nationwide (subject to applicable state law) while litigation proceeds. The Court’s order preserves the current access framework that has been in place since the FDA removed in-person dispensing requirements in 2023.
Current access is expected to remain in place at least until the Supreme Court declines to hear the case after it concludes in the lower courts or, if it does take the case, until it issues a final decision. The Court’s action effectively pauses any near-term disruption risk stemming from the Fifth Circuit ruling; however, the underlying case remains paused pending the outcome of the FDA’s mifepristone safety review.
LOCKTON COMMENT: No immediate action is required. Employers and plan sponsors can continue to rely on existing telehealth and pharmacy access to mifepristone but should remain aware that access could change depending on litigation outcomes and federal regulatory developments.
State developments and ongoing extraterritorial tension
Adding to the divide between states expanding abortion access and those restricting it, Alabama’s Attorney General recently issued cease-and-desist letters to six companies that advertise and ship abortion medications to Alabama residents. The state asserts that its near-total abortion ban applies to these activities, taking the position that out-of-state providers may not lawfully prescribe or mail abortion-inducing drugs into Alabama, even if those providers operate in states where such services are legal. The letters demand that the companies halt these activities and warn of potential enforcement actions, including those available under state consumer protection laws.
Illinois lawmakers passed HB 5295 this term, creating the Reproductive Health Privacy Act, which would allow patients to request that certain reproductive and related health information, including abortion services and gender dysphoria-related diagnoses, be separated from portions of their digital medical records. The new law also restricts access to that information, particularly by out-of-state entities, and requires patient consent for disclosure. The bill is intended to protect individuals from potential legal consequences when returning to states with abortion restrictions after receiving abortion services in Illinois, where the procedure is legal.
LOCKTON COMMENT: While reproductive care continues to be an active area of litigation and policy activity, relatively few finalized developments this quarter have direct implications for employer-sponsored health plans. This section highlights key federal litigation affecting medication abortion access along with state developments reflecting ongoing interstate conflict over telehealth, mail-order prescribing and data privacy protections. Employers should monitor developments, particularly as states take differing approaches to jurisdiction over out of-state providers and reproductive health data.
GENDER-AFFIRMING CARE
Federal developments
Federal activity related to gender-affirming care remains a fixture of 2026, with the Department of Justice (DOJ) pursuing both investigative and enforcement actions focused on providers treating minors. In one matter, a federal judge in Texas ordered a Rhode Island hospital to comply with a DOJ subpoena seeking extensive records related to pediatric gender-affirming care, marking an early enforcement win in one venue. Similar DOJ subpoenas have faced mixed results in other jurisdictions, with some court orders enforcing DOJ requests and others blocking disclosure of patient data based on privacy and procedural concerns. In June 2026, a federal district court declined to certify a nationwide class action seeking to block these subpoenas, meaning challenges will likely continue on a case-by-case basis rather than through a single nationwide ruling.
At the same time, the DOJ has escalated its approach through the use of grand jury subpoenas, including a May 2026 demand to NYU Langone Health seeking identifiable patient and provider information. These developments have prompted additional litigation, including lawsuits filed by families seeking to block disclosure of medical records on constitutional and privacy grounds.
Separately, a multistate lawsuit led by New York and joined by 16 other states and the District of Columbia challenging both the DOJ’s investigative efforts and the Trump administration’s seminal executive order seeking to restrict access to gender-affirming care for minors has been allowed to move forward as of June 2026. The states argue that federal enforcement actions and investigations targeting gender-affirming care unlawfully interfere with state authority to regulate the practice of medicine and exceed federal statutory authority. The case also alleges that the DOJ is improperly attempting to impose a nationwide restriction on gender-affirming care through federal enforcement rather than legislation. The district court held that the states may have a valid case that the DOJ adopted an unlawful policy in violation of the Administrative Procedure Act and interfered with states’ authority to regulate healthcare.
In parallel, federal courts have pushed back on the administration’s recent efforts to restrict access to care. In April 2026, a federal judge in Oregon vacated a federal directive that would have allowed the Department of Health and Human Services (HHS) to withhold funding from providers offering gender-affirming care to minors and barred the federal government from implementing similar policies in the affected states. The case, filed by a coalition of 19 states and the District of Columbia, alleged that federal officials lack authority to impose medical care standards overriding state law or penalize providers through federal funding mechanisms. While the court’s decision removed a significant source of pressure to discontinue gender-affirming care to minors, provider responses have been inconsistent. Some hospitals have resumed services after temporarily pausing care due to federal funding concerns, while others have not publicly committed to restarting services despite the ruling. At the same time, the DOJ has also announced settlements with certain providers, including agreements with Texas Children’s Hospital and Cleveland Clinic involving monetary payments and commitments to cease providing certain treatments to minors as part of case-specific resolution terms.
LOCKTON COMMENT: While these developments are primarily directed at healthcare providers, they underscore an ongoing federal focus on medical records, data access, and enforcement mechanisms related to gender-affirming care. Plan sponsors are not direct targets of these actions but should be aware that continued legal uncertainty, particularly at the intersection of federal enforcement activity and state-level protections, may affect network access, provider availability, and administration of gender-affirming care benefits over time.
State developments
The Colorado Supreme Court in May 2026 ordered Children’s Hospital Colorado to continue providing gender-affirming care services to minors while a case plays out. Like many other hospitals and health systems, Children’s Colorado discontinued puberty blockers and hormone therapy earlier this year for patients under the age of 19 in response to federal directives. Four families sued the hospital in January 2026, alleging that its decision to suspend such care for minors constituted unlawful discrimination under the Colorado Anti-Discrimination Act. The trial court hearing the case initially denied the families’ request that the minors be allowed to continue receiving care during litigation, which plaintiffs appealed. The Colorado Supreme Court ruled in favor of the families and ordered the hospital to resume care while the case proceeds. The decision was not a ruling on the merits, meaning the underlying discrimination claims have not yet been resolved.
Similarly, in Kansas, a state court temporarily blocked enforcement of the state law prohibiting gender-affirming care for minors, ruling that the ban likely violates the state constitution’s rights to personal autonomy and parents’ fundamental right to make medical decisions for their children. The court granted a preliminary injunction blocking enforcement of the state law while the case continues, allowing minors to continue receiving gender-affirming care while the constitutional challenge proceeds in court.
Oklahoma lawmakers passed SB 904 in May, which restricts the use of public resources for gender‑affirming care, including prohibiting the use of state funds and state‑owned facilities to provide such care. The measure applies to both minors and adults, and effectively limits access to services in settings that rely on state funding or infrastructure. Related legislation also addressed foster care standards, including provisions affecting placement decisions involving transgender youth, though those provisions do not directly regulate access to medical care.
In April, the Texas Supreme Court dismissed a lawsuit brought by several Texas families along with advocacy groups challenging the state’s policy of investigating parents of transgender minors for alleged child abuse after they sought gender-affirming care for their children. The case arose from a 2022 directive and related agency guidance directing child welfare authorities to investigate such families. The court found that the claims were moot because the underlying investigations had been closed or the minors involved had aged out of the state’s jurisdiction. The court’s ruling was procedural and did not address the legality of the state’s prior investigation policy, leaving broader questions about the scope of state authority unresolved.
LOCKTON COMMENT: State-level activity reflects a consistently fragmented legal landscape as some states expand access protections while others pursue tighter restrictions or indirect limitations on care. Although most measures are directed at providers and public funding, changes in provider availability, network participation and site-of-care restrictions may create operational challenges for employer-sponsored plans. Employers should monitor developments in states where they have covered populations, particularly where laws impact access to care, provider participation, or use of facilities supporting gender-affirming services.
OTHER BENEFIT-RELATED UPDATES
Massachusetts
Massachusetts requires most adult residents to maintain health coverage that meets Minimum Creditable Coverage (MCC) standards or potentially face a state tax penalty. For 2027, the Health Connector largely maintained existing MCC cost-sharing thresholds, with maximum deductible limits for in-network care remaining at $3,200 for individuals ($6,400 per family) and prescription drug deductibles capped at $400 for individuals ($800 per family). Out-of-pocket (OOP) maximums for in-network care for 2027 are set at $12,000 ($24,000 per family).
Additionally, the state has released updated individual mandate penalty guidance for tax year 2026, which continues to apply a tiered structure based on household income. Further details are available in the state’s Technical Information Release 26-1 (opens a new window).
LOCKTON COMMENT: From an employer perspective, there is no requirement to offer MCC-compliant coverage; however, these standards are relevant to determining whether coverage satisfies the individual mandate and for annual Form MA 1099-HC reporting obligations.
Wisconsin
Wisconsin enacted Assembly Bill 699 (2025 Wisconsin Act 227) on April 8, 2026, establishing a new long-term care (LTC) insurance assessment structure within the state’s Insurance Security Fund. The law creates a dedicated LTC insurance account within the Insurance Security Fund to strengthen protections for policyholders in the event of insurer insolvency. Historically, LTC obligations were addressed within broader health insurance funding structures, but the new law segregates LTC funding and explicitly authorizes assessments on insurers writing life, annuity and disability/health insurance business to support LTC-related claims.
Under the new framework, assessments are calculated based on insurers’ premiums and are generally split across life/annuity and health insurance lines, with insurer classification driven by their business mix in the prior year. The total annual assessment for any individual insurer is capped (generally at 2% of assessable premiums), and a corresponding state tax credit (typically equal to 20% of the assessment) may be claimed over a five-year period following payment. The law is intended to enhance the solvency of LTC coverage and protect policyholders.
LOCKTON COMMENT: The assessment applies to insurance carriers, not employers or plan sponsors. There are no direct compliance, reporting or contribution requirements for employers sponsoring group health plans (including self-funded plans). Any impact would be indirect to the extent that insurers incorporate assessment costs into premiums or pricing for insured products.
In summary
Overall, recent state and federal activity has been driven primarily by litigation, enforcement actions and ongoing interstate conflict rather than extensive new legislative measures. At the federal level, courts have temporarily preserved access to medication abortion while allowing challenges to proceed, and DOJ enforcement activity continues to muddy the waters for providers of gender-affirming care. At the same time, states remain embroiled in divergent approaches to privacy protections and continue to test the limits of their authority through extraterritorial enforcement efforts targeting telehealth, mail-order services and data sharing.
State-level updates to other programs included newly released Massachusetts MCC thresholds and Wisconsin’s long-term care insurance assessment, which have limited direct impact on employer plan design.
While most developments discussed in this update do not require immediate changes to employer-sponsored health plans, they highlight the importance of closely monitoring regulatory and litigation trends, especially for multistate employers navigating differing state requirements. Lockton will continue to track these developments and provide updates as courts, regulators and legislatures fine-tune the ultimate outcomes to these legal challenges.
