Half of workers may struggle to obtain obesity drug insurance

Companies are increasing access to new blockbuster weight loss drugs for their employees, but the size of the employer can make a big difference in early access. Small businesses and their employees are often caught in the middle when it comes to this rapidly growing health insurance market.

Small businesses employ about half of the workers in the U.S. labor market and are adding jobs at a faster pace than large businesses. Since the first quarter of 2021, small business jobs accounted for 53% of the 12.2 million total net jobs created across all employers, consistent with long-term trends, according to the U.S. Bureau of Labor Statistics. We are doing so.

Blockbuster obesity drugs called GLP-1 agonists cost about $1,000 a month on average and are usually taken for long periods of time. Access to these weight loss drugs is coming from a growing number of sources on the market, with drug manufacturers ramping up production and clinical trials showing their benefits for conditions ranging from sleep apnea to heart disease risk. It has been shown in trials and use cases continue to grow. But many of America’s 100 million obese adults can’t afford drugs like Novo Nordisk’s Wegoby or Eli Lilly’s Zepbound out of pocket, so they turn to their employers for help.

A survey of 205 companies conducted last October by the International Employee Benefit Plans Foundation found that 76% of respondents offered coverage for GLP-1 drugs for diabetes, compared with coverage for weight loss. Only 27% of respondents said that However, 13% of plan sponsors said they were considering compensation for weight loss. However, covering these medications can be difficult for small employers, many of whom rely on off-the-shelf plans offered by insurance companies. Some plans cover GLP-1 drugs, but this can be cost-prohibitive for many small businesses.

There is a strong demand for coverage from employees and a desire for small employers to make it a reality, but there are trade-offs, said the National Health Care Purchasers Federation, a purchaser-led nonprofit organization. said Sean Greminger, chairman and chief executive officer. Businesses will need to consider the impact on wages and other benefits they wish to offer. “The company’s money has to come from somewhere,” he says.

In some cases, small employers may have to accept that even if they want to cover weight loss drugs, they are simply off-market and unable to provide the coverage they desire.

“Given the prices of these drugs, you have to do a cost-benefit analysis, and many small and even large companies are unable to do that,” Greminger said. “No matter how much they want it.”

Here are some issues small business employers and employees should understand when using expensive weight loss drugs as part of their employee benefits package.

Currently, annual benefit deals are being brokered. Although open enrollment season for health insurance doesn’t occur until the fall, employers are having renewal conversations with their benefits brokers or agents now, and those conversations should include weight loss drugs. Gary Kushner, chairman and president of Kushner & Company, said small and medium-sized employers tell brokers they want to be able to provide weight loss medications to their employees, and find the right carrier and the right plan. He said he should seek help. We are a welfare planning and management company.

The market is changing rapidly. Your insurance company may have said no when asked about coverage for weight loss drugs last year, but it’s worth asking again as you may have been forced to change your insurance product for competitive reasons. said Kate Moher, president of national employee health. Marsh McLennan Agency Benefits advises employers on plan design and benefits programs. “We should be asking this question every year,” she said.

Insurance premiums may increase. To obtain weight loss drugs, many small businesses may have to change insurance companies and possibly pay more premiums. “If one doesn’t cover drugs and the other does, the costs will most likely be higher,” Kushner said.

Employers also need to decide how much of these drugs they can reasonably pass on to employees without placing an undue burden on workers who may never need them. “If 20% of the population receives premiums, everyone’s premiums will go up by a percentage to cover the cost,” Gremminger said.

Small businesses should consider “captive health” plans. In general, businesses with 50 or more employees may consider using a captive health insurance plan like Roundstone, Pareto Health, Stealth or Amwins, Moher said. These businesses allow corporate groups that could not self-insure, the approach taken by most large corporations, to pool resources and jointly design group health plans.

This approach could give small businesses and their employees more flexibility, but business owners still need to consider costs and there are requirements to qualify, Moher said. Ta. It’s also not something a company can change every year, like when working with a traditional insurance company. “This is a long game. You can’t just jump in and out,” Moher said.

These plans are designed for the long term because, as member owners, all participants agree to spread the risk. This is an approach that can lower costs and reduce volatility over time. However, if a business owner is looking for a quick fix or wants to wait and see how the market develops over the next year, this is probably not the right model.

Coverage options for GLP-1 drugs alone may also work for some small businesses. Companies such as Vida Health, Calibrate, Found Health and Vitality Group offer these services separately from an employer’s primary carrier, Greminger said. Employers will need to do the math and decide whether it is more cost-effective and whether the option really suits their employees’ needs based on what is on offer.

Use your FSA to cover the cost of weight loss drugs. Even if insurance coverage options are not currently an effective solution, small employers may have some other ways to help employees pay for weight loss drugs. For example, you might consider contributing to an employee flexible spending account or health savings account. You may also consider a Health Reimbursement Arrangement (HRA), which is an employer-funded plan that reimburses employees for eligible medical expenses.

However, each of these options has strict rules and requirements. For example, for FSAs, the IRS limits employer contributions based on employee contributions, which may not be enough to cover the cost of these medications over the long term. “Will it help? Absolutely. Will it solve the problem? No,” Kushner said.

Also, this is not something you should do without first getting approval from an attorney. “Guidance from an ERISA attorney is required to ensure all standards are met,” Moher said. “This is a creative approach, but you need to make sure you meet all compliance requirements.”

At present, there are some 20 drugs in the approval pipeline, although the end result could be very discouraging for small businesses and their employees, given the cost and limited options. It’s also important to know. If approved, costs will likely come down, Moher said. “This may be short-term until more GLP-1 drugs are approved.”