Potentially, your workplace could initiate coverage for weight reduction medications in the near future.
An increasing number of businesses are contemplating covering high-demand weight loss drugs, based on various studies. During open enrollment, employees will discover if they'll receive such coverage in the upcoming year at many companies, starting this month.
GLP-1 drugs, which are mainly used to manage diabetes and obesity, have gained immense popularity since their market introduction due to their ability to help people lose weight. While these medications are commonly covered by employers for diabetes, fewer do so for weight loss, partly due to their astronomical prices, which have also restricted their availability to the public.
For example, the list price for Wegovy is approximately $1,350 for a month's supply. About 40 million individuals with employer-sponsored insurance may be eligible for anti-obesity medications based on their body mass index, according to KFF, a health policy research organization.
"This could significantly impact premiums due to the drugs' high costs," remarked Matthew Rae, KFF's associate director of the Health Care Marketplace Program.
Over a quarter of businesses are considering including GLP-1 drugs for weight loss coverage in 2025 or 2026, as per a national survey conducted by Mercer, a human resources consulting firm.
Similarly, around the same proportion of companies are said to be somewhat or highly probable to provide these drugs for weight loss over the next 12 months, according to KFF's annual Employer Health Benefits Survey.
The likelihood of your employer covering an anti-obesity medicine depends on the company's size – larger organizations are much more likely to offer the benefit than smaller ones.
GLP-1 medications for obesity treatment are covered by 67% of large companies in the Business Group on Health's 2024 report, which surveyed primarily firms with more than 10,000 employees.
Mercer's report, which examined employers with at least 500 workers, found that only half of them are offering such coverage in 2023. However, only 18% of companies in KFF's survey, which includes those with 200 or more employees, provide GLP-1 drugs primarily for weight loss.
Even companies that offer coverage for anti-obesity drugs often institute safeguards, such as requiring employees to seek prior authorization or to try alternative weight loss methods first. Some have higher body mass index thresholds than the FDA's definition of at least 30 for adults or require employees to attend weight management programs.
"Even as more employers are adding coverage, more employers are also adding controls to specifically target it to those who need it the most and will benefit the most," said Beth Umland, Mercer's director of research, health, and benefits.
Despite the clamor for anti-obesity drug coverage from many workers, some companies find providing the benefit too challenging or expensive. Mercer's study found that 10% of the companies that covered the drugs in 2024 were considering dropping coverage, while 3% had recently discontinued it or intended to do so.
Earlier this year, Eileen Pabon, responsible for benefits and wellness at DSV Air & Sea US, was surprised to discover that the company's prescription drug expenses had increased by $400,000 over several months. She discovered that several employees without diabetes had started taking GLP-1 drugs. DSV, a global transportation company based in New Jersey, had not imposed any restrictions on its coverage.
As a result, the firm, which offers health insurance to around 8,000 people, began requiring a diabetes diagnosis.
"It wouldn't be financially wise for us to provide coverage just for weight loss," she explained. "It would cause us to raise the cost of health insurance coverage for employees."
Premiums surpass $25,000
The cost of family health insurance benefits at work approached $25,600 this year, an increase of 7% from the previous year, according to KFF's annual survey. This is the first time the total premium has exceeded $25,000.
Employees were responsible for about $6,300 of this amount, while employers paid nearly $19,300.
Over the past five years, family health insurance premiums have increased by 24%, approximately in line with the 23% increase in inflation and 28% growth in workers' wages, as per KFF.
The average annual premium for single coverage was nearly $9,000 this year, an increase of 6% from the previous year. Employees paid around $1,370, while employers covered nearly $7,600.
Costs are projected to continue rising in 2025, primarily due to escalating prescription drug expenditures and overall healthcare prices, according to surveys from various consulting firms. Inflation in the healthcare sector usually trails the general economy since insurers and providers often negotiate multi-year contracts.
The average total cost of health benefits per worker is expected to increase by 5.8%, on average, in 2025, even after employers implement cost-saving measures, according to Mercer. This is the third consecutive year that costs have climbed by at least 5%.
Due to the tight labor market, employers have been hesitant to pass on costs to their workers in recent years. However, fewer can continue absorbing the expenses, Mercer found. Nearly 53% said they would make cost-cutting changes to their plans – such as raising deductibles and increasing other out-of-pocket costs – in 2025, up from 44% this year.
Companies are contemplating cutting back on investment in prescription meds, mentioned Eric Miller, an actuary consultant at Segal, a firm specializing in benefits advice for big public sector employers and labor unions. The anticipated rise in outpatient drug expenses is estimated to reach 11.4% in the coming year, surpassing the 8% growth forecast for medical plan costs, as per Segal's latest survey.
The strategy involves revising the preferred list of brand name medications and promoting the utilization of biosimilars, which usually cost less than expensive biologic drugs, Miller explained.
However, some companies remain apprehensive about making their employees shoulder more healthcare costs. Marroquin Industries Corp, based in Hawthorne, California, for instance, employs nine individuals and provides machine automation and control systems. They anticipate their premiums to climb by 5-8% in 2025, akin to previous price increases.
Though the workers will witnesses a corresponding rise in their monthly premiums, Marroquin won't impose a greater share of the premium or escalate their deductibles or out-of-pocket expenses, nor will it curtail benefits. The fear of losing valuable employees to larger competitors motivates the company, stated Vicky Cathcart, Marroquin's business manager.
Instead, their only option is to jack up the prices of their goods and accept a smaller profit margin.
"Effectively, our consumers cover these additional costs," Cathcart acknowledged.
Companies may need to consider adjusting their budgets to accommodate the potential increase in health insurance premiums due to the inclusion of high-demand weight loss drugs like GLP-1 medications. As more employers explore covering these drugs, they should carefully consider the financial implications and potential impact on employee benefits packages.
With the rising popularity of GLP-1 drugs for weight loss, businesses should be prepared to navigate the complexities of cost management and accessibility, ensuring that decisions are informed by both clinical evidence and financial considerations. The collaboration between employers, insurance providers, and pharmaceutical companies could prove crucial in making these treatments more affordable and accessible to those who need them.
