The Shifting Landscape of GLP-1 Coverage: What Employers Need to Know
The rise of GLP-1 receptor agonists – medications like Ozempic, Wegovy, Mounjaro, and Zepbound – has dramatically altered the conversation around weight management and chronic disease. Initially used for Type 2 diabetes, these drugs have gained popularity for weight loss, creating a ripple effect through employer-sponsored health plans. But what does the future hold for GLP-1 coverage, and how are employers navigating this complex terrain?
The Current State of Play: Coverage Trends
Currently, around 20% of large employers (those with 200+ employees) cover GLP-1 drugs primarily for weight loss. However, this figure jumps to 43% among employers with 5,000 or more employees, representing a significant increase from the previous year. Despite this growth, the trend appears to be plateauing. A majority of employers who don’t currently offer this coverage are unlikely to do so in the next 12 months, with only 1% indicating a high likelihood of adding it.
Many employers are grappling with the high cost of these medications. A substantial 66% of the largest employers report that covering GLP-1s for weight loss has had a “significant” impact on their prescription drug spending. Some employers are even revisiting coverage decisions, tightening restrictions, or halting coverage altogether.
FDA Approvals and Off-Label Use
It’s crucial to understand that not all GLP-1 drugs are FDA-approved for weight loss. As of now, Wegovy and Zepbound are approved for chronic weight management in adults with obesity or who are overweight with weight-related conditions. Wegovy similarly has approval to reduce the risk of cardiovascular events in those with obesity and heart disease, and Zepbound is approved for treating obstructive sleep apnea in obese adults. Ozempic and Mounjaro, even as widely prescribed, currently lack FDA approval for weight loss, though clinicians may prescribe them “off-label.”
Navigating Legal Considerations: Discrimination and Indication-Based Coverage
Employers considering GLP-1 coverage must tread carefully regarding potential legal challenges. Indication-based coverage – covering the drugs for diabetes but not obesity – could raise concerns under the Americans with Disabilities Act (ADA), the Affordable Care Act (ACA), and other laws. While federal law doesn’t explicitly prohibit weight-based discrimination, the legal landscape is evolving, with some state and local laws offering weight as a protected class. Recent court decisions regarding obesity and disability have been mixed, and the EEOC has pursued cases on behalf of morbidly obese employees.
Several lawsuits have been filed against health insurers challenging obesity exclusions for GLP-1 medications, though these haven’t directly targeted employers yet. Employers should consult with legal counsel to ensure compliance and mitigate risk.
Alternative Approaches to Supporting Employee Wellness
For employers hesitant to fully cover GLP-1s for weight loss, alternative strategies exist. Offering consumer-driven health plans (CDHPs) coupled with health savings accounts (HSAs) or flexible spending accounts (FSAs) allows employees to use pre-tax dollars for eligible prescription medications. Employer contributions to these accounts can further support employees seeking weight loss solutions. Clear communication regarding eligibility and documentation requirements is essential.
State-Level Mandates: A Growing Trend?
North Dakota is currently the only state to mandate GLP-1 coverage. Beginning in 2025, the state requires its ACA-compliant individual and small group plans to cover these drugs for diabetes prevention, insulin resistance, metabolic syndrome, or morbid obesity. However, this mandate doesn’t apply to grandfathered plans or large group plans.
Whether other states will follow suit remains to be seen, but the trend suggests increasing pressure on employers to address the growing demand for these medications.
The Future of GLP-1 Coverage: What to Expect
The future of GLP-1 coverage is uncertain. While the initial surge in employer coverage may be slowing, the underlying demand for these medications isn’t diminishing. Employers will likely continue to explore strategies to balance cost containment with employee health needs. This could involve stricter utilization management, tiered formularies, and increased emphasis on preventative care and lifestyle interventions.
The development of oral GLP-1 medications could also influence coverage decisions, potentially making these drugs more accessible and affordable. Continued research into the long-term effects and broader applications of GLP-1s will further shape the conversation.
FAQ
Q: Are employers required to cover GLP-1 drugs for weight loss?
A: No, there is currently no federal mandate requiring employers to cover GLP-1 drugs for weight loss.
Q: Can employers offer different coverage based on the reason for prescribing a GLP-1 drug?
A: Yes, but indication-based coverage can raise legal concerns and should be carefully reviewed with legal counsel.
Q: What are some alternatives to covering GLP-1 drugs directly?
A: Employers can offer CDHPs with HSAs or FSAs, allowing employees to use pre-tax dollars for eligible medications.
Q: Is GLP-1 drug coverage likely to become more common in the future?
A: The trend appears to be plateauing, but demand remains high. Employers will likely continue to evaluate coverage options based on cost, legal considerations, and employee needs.
Did you know? Approximately 18% of adults in the US have used GLP-1 drugs for weight loss or to treat chronic conditions.
Pro Tip: Regularly review your health plan’s GLP-1 coverage policies with your legal counsel to ensure compliance with evolving regulations.
To learn more about navigating the complexities of employee benefits and healthcare compliance, contact Fisher Phillips’ Employee Benefits and Tax Practice Group.
