Half of workers may struggle to get insurance coverage for obesity medications

Companies are working to increase their employees’ access to new weight-loss medications, but the size of the employer can make a big difference in early access. Small businesses and their workers are often stuck between a rock and a hard place when it comes to the booming health insurance coverage market.

Small businesses employ nearly half of the workers in the U.S. labor market and have been adding jobs at a faster pace than large companies. Since the first quarter of 2021, employment at small businesses has accounted for 53% of the total net 12.2 million jobs created across all employers, according to the U.S. Bureau of Labor Statistics, consistent with Long term trend.

Blockbuster obesity drugs, called GLP-1 agonists, cost nearly $1,000 a month on average — and they’re available now. It is usually taken for a long time. Access these weight loss medications It comes from a growing number of sources on the market, such as from drug makers Production intensificationCases of use continue to increase, as clinical trials show benefits for cases of Sleep apnea to Risk of heart disease. But many of the 100 million obese American adults can’t afford out-of-pocket drugs like Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, and they’re turning to their employers for help.

A survey conducted last October of 205 companies by the International Foundation for Employee Benefit Plans found that 76% of respondents offered coverage for the GLP-1 diabetes drug, versus only 27% who offered coverage for weight loss. But 13% of plan sponsors indicated they would consider covering weight loss costs. However, covering these drugs is more difficult for small employers, many of whom rely on off-the-shelf plans offered by their insurance companies. While there are plans that cover GLP-1 drugs, the cost can be prohibitive for many small businesses.

There is strong employee demand for coverage, and small employers want to be able to do it, but there are trade-offs, said Sean Grimminger, president and CEO of the National Alliance of Healthcare Buyer Alliances, a buyer-led nonprofit. Businesses need to take into account the impact on wages or other benefits they may wish to offer. “The company’s money has to come from somewhere,” he said.

In some cases, small employers, even if they want to cover weight-loss drugs, are simply priced out of the market and may have to accept that they cannot provide the coverage they desire.

“Given the price of these drugs, you have to do a cost-benefit analysis, and for a lot of small companies — even some of the larger companies — they can’t do that,” Greminger said. “No matter how much they want it.”

Here are some issues that small business employers and employees need to understand when accessing expensive weight-loss medications as part of job benefits.

Annual benefit deals are now being brokered. Health insurance open enrollment season doesn’t start until the fall, but employers should have renewal discussions with their benefits broker or agent now, and that conversation should include weight-loss medications. Small business employers should tell the broker they want to be able to provide weight-loss medications to employees, and ask for help finding the right carrier or plan, said Gary Kushner, chairman and president of Kushner & Company. Benefits of designing and managing a company.

The market is changing rapidly. Last year, I asked the insurer about covering weight-loss drugs and it probably said no, but it’s worth asking the carrier again because it may have had to make changes to its offerings for competitive reasons, said Kate Moher, national head of employee health. and benefits provided by Marsh McLennan Agency, which advises employers on plan and benefit program designs. “You should ask this question every year,” she said.

Insurance premiums may rise. To obtain weight loss medications, many small businesses may have to change insurance companies, and perhaps pay more. “It would probably be more expensive if one didn’t cover the drugs and the other did,” Kushner said.

Employers also have to decide how much can reasonably be passed on to employees, without unduly burdening workers who may never need these medications. “If 20% of your population takes it, everyone’s premiums go up whatever the percentage of cost coverage is,” Grimminger said.

Small businesses should consider a “captive health” plan. In general, any company with at least 50 employees might consider working with a health insurance plan like Roundstone, ParetoHealth, Stealth, and Amwins. These companies allow corporate groups that cannot self-insure — the approach taken by most larger companies — to pool resources and design a group health plan together.

This approach may allow small businesses and their employees more flexibility, but owners still have to balance costs and there are requirements to qualify, Moher said. It’s also not something companies can change every year like they would when working with a traditional insurance company. “It’s a long-term play, and you can’t jump in and out of it,” Moher said.

These plans are designed for the long term because the participants, as member-owners, all agree to spread the risk, an approach that can keep costs low over time and reduce volatility. But if business owners are looking for a quick fix or prefer to wait to see how the market develops over the next year, this probably isn’t the right model.

A stand-alone GLP-1 drug coverage option can also be appropriate for some small businesses. Companies like Vida Health, Calibrate, Found Health and Vitality Group offer these offerings separately from the employer’s primary carrier, Greminger said. Employers need to do the math to determine if it could be more cost effective, and if the option truly fits their employees’ needs based on the offerings.

Use your FSA to help cover the costs of weight loss medications. If insurance coverage options are not an effective solution today, small employers may have some other ways to help employees afford weight-loss medications. They may consider, for example, making contributions to employee flexible spending accounts or health savings accounts. They may also consider a health reimbursement arrangement, or HRA, which is an employer-funded plan that reimburses employees for eligible medical expenses.

However, there are strict rules and requirements for each of these options. For example, with the FSA, the IRS determines the employer contribution based on how much the employee contributes, and this is still unlikely to be enough to cover the cost of these medications in the long term. “Does it help? Absolutely. Does it solve the problem? No,” Kushner said.

It is also not a step that should be taken without first obtaining the approval of legal counsel. “You need the guidance of an ERISA attorney to make sure you meet all the criteria,” Moher said. “It’s a creative way to do it, but you have to make sure you meet all of your compliance requirements.”

Currently, the end result can be very frustrating for small businesses and their employees due to the limited costs and options, but it is also important to know that there are only 20 or so properties on the market. Approval pipeline. Once approved, costs will likely come down, Moher said. “This may be a short-term thing until we get approval for more GLP-1 drugs.”