Kelley Winters

A Taxing Question of Medical Necessity

Filed By Kelley Winters | February 08, 2010 2:00 PM | comments

Filed in: Living, Transgender & Intersex

Many trans and especially transsexual Americans were relieved this week by the U.S. Tax Court decision to reverse earlier IRS positions and allow costs of hormonal and surgical transition care to be deducted as medical expenses. The ruling concluded:

Petitioner has shown that her hormone therapy and sex reassignment surgery treated disease within the meaning of section 213 and were therefore not cosmetic surgery. Thus petitioner's expenditures for these procedures were for "medical care" as defined in section 213(d)(1)(A), for which a deduction is allowed under section 213(a).

However, this recognition of the legitimacy of medical transition came at a cost to the dignity of transsexual women and men. It relied on the flawed diagnostic nomenclature of Gender Identity Disorder (GID) in the Diagnostic and Statistical Manual of Mental Disorders (DSM) and its implication of mentally "disordered" gender identity. Paradoxically, this case fueled opposition to medical transition access, based on the current wording of the very same GID classification and its more virulent companion diagnosis of Transvestic Fetishism. While the Tax Court decision underscored the utility of some kind of diagnostic coding for those who need access to hormonal or surgical transition care, it also illustrated the urgency of reforming the GID diagnosis and removing the Transvestic Fetishism category in the next revision of the DSM, published by the American Psychiatric Association (APA).

Ms. Rhiannon O'Donnabhain underwent corrective genital surgery in 2001 and claimed a tax deduction for surgical and hormonal treatment expenses as well as the cost of a breast augmentation procedure. Her courageous nine year battle with the IRS to affirm the medical legitimacy of her transition care took a tortuous off-again, on-again path among the potholes of politics and prejudice.

Although the IRS initially issued a full refund to Rhiannon, a tax examiner denied her deduction in July, 2002. He declared her surgical and hormonal care to be "cosmetic" and therefore excluded as a deductible medical expense under section 231(d)(9) of the Internal Revenue Code. She appealed, represented by Gay and Lesbian Advocates and Defenders (GLAD). Attorney Karen Loewy argued that,

Any notion that medical treatment for a transgender person is purely cosmetic is based on misunderstanding and prejudice, not medical science.

In November, 2004, the IRS reversed the examiner's decision and allowed Rhiannon to deduct her surgical expenses as medically necessary and professionally prescribed. However, political extremist groups responded by pressuring the Bush Administration to deny tax deductions for all medical transition care. They based their arguments on the same psychiatric classification of GID that GLAD cited to win the appeal. The following month, Rev. Louis Sheldon, chairman of the Traditional Values Coalition (TVC), wrote IRS Commissioner Mark Everson:

[B]y giving this tax deduction, your agency will be encouraging other mentally disturbed individuals to consider such surgery as an unneeded surgical procedure for what is a troubled mind--not a troubled body.

The IRS caved to political pressure in October, 2005. IRS Branch Chief Thomas Moffitt issued a Memorandum of Chief Counsel Advice that reversed the decision of the appeals officer and once again denied Rhiannon's deduction of medical transition expenses. Moffitt demeaned Rhiannon with maligning pronouns of her assigned birth sex and concluded,

In light of the Congressional emphasis on denying a deduction for procedures relating to appearance in all but a few circumstances and the controversy surrounding whether GRS is a treatment for an illness or disease, the materials submitted do not support a deduction.

Astonishingly, Moffit based his ruling, not on respected medical literature, but on a political magazine called First Things, published by the Institute on Religion and Public Life. He cited an article by psychiatrist Paul McHugh, known for employing false stereotypes of mental pathology to terminate gender confirming surgeries at John Hopkins Hospital in the 1970s . McHugh mocked post-operative transsexual women as "caricatures" and invoked the current classification of mental disorder to discredit medical transition care:

Once again I concluded that to provide a surgical alteration to the body of these unfortunate people was to collaborate with a mental disorder rather than to treat it.

Finally, Chief Moffit erected an addition political barrier, unprecedented for other minorities, to transsexual citizens seeking equal treatment under the tax code:

Only an unequivocal expression of Congressional intent that expenses of this type qualify under section 213 would justify the allowance of the deduction in this case.

Civil justice advocates were outraged at such tactics by the Bush Administration. Professor Lynn Conway noted,

To deny such people medical deductions for the medical correction of their bodies - people who often face extreme financial and employment difficulties during their transitions - is unfair and inhumane. The claim that such people require a special "act of Congress" before being treated fairly exudes not only ignorance and intolerance, but also open Executive Branch hostility towards gender variant people.

Berkeley tax attorney Donald Read commented in the San Francisco Chronicle

The IRS should not allow religious views to impact the administration of our tax laws... We all should be concerned about the politicization of the IRS, not only against gay and transgender people, but in all its forms.

Rhiannon's suit was heard by the U.S. Tax Court in July, 2007. She was again represented by the GLAD legal staff as well as co-counsel from the Boston firm of Sullivan & Worcester.

Senior IRS attorney John Mikalchus repeated the party line from the TVC and Paul McHugh that transition in itself represents psychopathology, citing the current GID diagnosis. He stated that surgery, hormones and other transition treatments do not cure cross-gender identification but "reinforce" it.

Mikalchus also invoked the second gender diagnosis of Transvestic Fetishism, speculating that many transsexual women seeking corrective transition surgeries are afflicted with a paraphilic sexual preoccupation with dressing as women. The APA fueled this false stereotype with publication of the DSM-IV in 1994, where TF was expanded to specifically include transsexual women who are attracted to other women. Mikalchus further belittled Rhiannon with the term, "autogynephilia," an unsupported derogatory theory promoted by Toronto sexologist Raymond Blanchard, associating male-to-female transition with a narcissistic sexual arousal at "the thought or image of oneself as a woman." Dr. Blanchard was largely responsible for the current Transvestic Fetishism diagnosis in the DSM-IV. As chairman of the APA's Paraphilias Subcommittee for the pending DSM edition, he has recently proposed
expanding the TF diagnosis with the title, Transvestic Disorder, and adding "Autogynephilia" as a diagnostic specifier.

Despite these barriers, the Tax Court ultimately rejected the IRS portrayal of transition as pathological and its associated medical care as "cosmetic." On February 2, 2010, the Court ruled that Rhiannon's hormonal and surgical transition treatments --

were for the treatment of disease within the meaning of § 213(d)(1)(A) & (9)(B), I.R.C. and thus not "cosmetic surgery" excluded from the definition of deductible "medical care" by § 213(d)(9)(A), I.R.C. [paraphrased]

A 69 page majority opinion, authored by Judge Joseph Gale, once again reversed the IRS denial and allowed Rhiannon to deduct her expenses for hormonal medications and corrective genital surgery (although it denied a deduction for her breast augmentation expenses). Their decision rested upon an interpretation of the GID diagnosis as "a serious, psychologically debilitating condition," rather than a demeaning indictment of "disordered" gender identity. Although political extremists and the IRS attempted to exploit conflicting and ambiguous language in the current GID nomenclature, the GLAD legal team and expert witness Dr. George Brown successfully clarified that severe persistent distress with current physical sex characteristics (often termed anatomical dysphoria.) is the true focus of medical transition treatment. In spite of the shortcomings of the current Gender Identity Disorder and Transvestic Fetishism diagnoses, they persuaded the Court that the necessity and efficacy of these treatments in relieving this debilitating distress is well established. Jennifer Levi, Director of GLAD's Transgender Rights Project, noted,

In this landmark ruling, the Tax Court affirmed the consensus position of the medical establishment that transition-related medical care is essential for many transgender people.

However, the political fragility of this ruling and the contradictory role of the GID and TF diagnoses in establishing the medical necessity of transition treatments are underscored by the dissenting opinion (p. 119-139) of Judge David Gustafson. Joined by four other judges, he opposed allowing a deduction for transition surgeries, stating:

One could analyze the GID patient's problem in one of two ways: (1) His anatomical maleness is normative, and his perceived femaleness is the problem. Or (2) his perceived femaleness is normative, and his anatomical maleness is the problem. If one assumes option 2, then one could say that SRS does "treat" his GID by bringing his problematic male body into simulated conformity (as much as is possible) with his authentic female mind.

However, the medical consensus as described in the record of this case is in stark opposition to the latter characterization and can be reconciled only with option 1: Petitioner's male body was healthy, and his mind was disordered in its female self-

In its present form, the diagnostic criteria and supporting text of the GID diagnosis can all too easily be inferred in Gustafson's second context of "disordered" gender identity, in contradiction to the medical necessity of hormonal and surgical transition treatments. If the intention of the Internal Revenue Service was to punish transsexual people for nonconformity to their assigned birth roles, the American Psychiatric Association, inadvertently or not, handed them blunt instruments of oppression with the current GID and TF diagnoses. Rhiannon herself said it best,

It's a Catch-22. I have to accept the stigma of being labeled as having a disorder [or] a mental condition ... in order to get benefits. I haven't liked this diagnosis from the very beginning. But I've got to play the game.

This week, on February 10, the American Psychiatric Association is scheduled to release draft diagnostic criteria for the Fifth Edition of the DSM for public review. In the DSM-V, the APA has an opportunity to correct the shortcomings and ambiguities of the GID diagnosis that pose barriers to civil justice and access to medical care: (1) clarifying distress as the diagnostic focus rather than nonconformity to assigned birth sex roles; (2) excluding from diagnosis those who suffer no distress or impairment with their bodies or ascribed social gender; (3) clarifying that transition is therapeutic and not pathological; and (4) removing maligning pronouns and terms that disrespect the affirmed identities of transitioned individuals. The APA also has an opportunity to remove the Transvestic Fetishism category that is purely punitive and defamatory to many transwomen.

An American hero in the struggle for dignity and equality, Rhiannon O'Donnabhain deserves better from mental health policymakers. We all do.

This essay is also posted at GID Reform Advocates.

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Kelly; the reality is that without a diagnosis there can be no medical treatment, for if there is no problem there is no medical necessity

Hi Maura,

The treatments are medical treatments. The need for the treatment is attested to by the outcomes of many thousands of people who have undergone them. As it stands, the way the tax court decision reads, it is based on the misunderstanding that transsexualism is the result of a disordered gender identity that is something akin to obsessive compulsive disorder. The way "gender identity disorder" can be and is interpreted by people whose agendas exist along a wide spectrum makes it a tool for abuse. The notion that there is a correct gender identity which is not possessed by the transsexual person is implicit in the term "gender identity disorder".

There is no proven etiology for transsexualism but there is plenty of literature to support its existence. If you compare who the researchers whose work is quoted in this case and compare their work to the studies quoted in the re: Kevin case from Australia, you might be able to begin to appreciate the different approaches that can be taken to understand transsexualism.

There is no question that people who are transsexual experience distress and for many there might be need for counseling. The problem for a transsexual person is being construed as someone deluded about their sense of self and the affect that has on them in their efforts to lead a life that is authentic .

I have long shared your concern, Maura. That's why I advocate reform, not removal, of the GID category in the DSM-5 to address dual issues of stigma and barriers to medical transition care (see The TF diagnosis, however, plays no constructive role. It only serves to punish and sexualize nonconformity to a male birth-assignment for many TS women as well as the MTF CD/bigender/dual gender/genderqueer communities. I invite you to join me in calling for the removal of Ray Blanchard's Transvestic Fetishism/Disorder category in the DSM-V along with his proposed addition of a new "autogynephilia" specifier. (See and Julia Serano's excellent essay at

I certainly hope a better definition is written for GID in the DSM-V. That is one step on the way towards de-pathologizing gender variance and finding a better, more honest way to accommodate transgender medical treatment in the system.

Great article, Kelley. I'm giving it a drop around (with link to Gidreform) here and there.

One of the problems that exists is the ongoing fear that in the effort to remove these difficult and often demeaning diagnostic tools and classifications we will suddenly cut our own throats by losing access and inclusion in insurance and so forth.

As I've pointed out, without a diagnostic code, there's no insurance -- and that includes malpractice and other medical insurance for the providers. If they don't have it, they won't do the procedures.

Kelley knows this, and she's not advocating removal of such, so please don't think she is. She's working to remove an *unneeded* stigma, one that causes additional grief on top of all the rest.

As she knows, my biggest concern is the sometimes ableist message that this fight can easily become subject too. Which is somewhat hypocritical of me given my own personal ableism.

In the end, transsexualism is not a mental illness, which is her point. It doesn't meet the criteria of one under current standards and many models, and the profession as a whole is undergoing a great deal of change as the models we use are being fought over. DSM rewrites are as much about the internal politics of schemata as they are about identifying and outlining treatments and diagnostics.

Transvestic Fetishism is not a mental illness either, for that matter.

And the reason that both of them are present in such a grouping or classification is, in the end, an aspect of cisprivilege and cisbias that still exists to a great degree in the psychiatry and psychology communities as a reflection of the wider world's understanding.

More simply -- its called a mental illness because people don't understand it and figure that if we're this way, then its gotta be because something is wrong with us.

And while there may be some things wrong with me (and I have plenty of detractors who will point them out), being a transsexual is not one of them.

Angela Brightfeather | February 9, 2010 9:01 AM

"Transvestic Fetishism is not a mental illness either, for that matter.

And the reason that both of them are present in such a grouping or classification is, in the end, an aspect of cisprivilege and cisbias that still exists to a great degree in the psychiatry and psychology communities as a reflection of the wider world's understanding."

I guess I shold wait at least one day to see who is going to jump all over this and start crying about the fact that TF is the reasons why TS is considered as it is by cispeople and the bad taste left in their mouths regarding any gender diverse person and having to deal with them on any basis.

Certainly this is one of the largest problems that our community has today, in not blaming the cause of the discrimination against Trans people, But instead, accepting that inequality, and distinguishing differences and degrees which that inequality should be foisted on Trans people.

The problem is all to often that we level our objections on individuals who suffer the inequality, rather than objecting to the source of the discrimination.

Great point, Angela. The defamatory TF diagnosis exemplifies the need for solidarity between TS and non-TS folks among gender transcendent people in the face of mutual oppression. Once again, the Transvestic Fetishism diagnosis is not just aimed at falsely stereotyping MTF CD/bi-gender/dual gender/genderqueer people as sexually deviant, it was expanded in the DSM-IV to specifically include many TS women as well.

Great point, Angela. The defamatory TF diagnosis exemplifies the need for solidarity between TS and non-TS folks among gender transcendent people in the face of mutual oppression. Once again, the Transvestic Fetishism diagnosis is not just aimed at falsely stereotyping MTF CD/bi-gender/dual gender/genderqueer people as sexually deviant, it was expanded in the DSM-IV to specifically include many TS women as well.

proposed DSM-V revisions to the GID and Transvestic Fetishism diagnoses by the American Psychiatric Association are posted at