New GLP-1 Medications and Medicare's Impact on Employer Coverage

As new GLP-1 medications enter the U.S. market and Medicare enhances coverage, most employers still refrain from including these drugs in their weight loss benefits. Health insurers continue to seek alternative strategies for managing the associated financial implications.

According to Justin Held, director of educational programs at the International Foundation of Employee Benefit Plans (IFEBP), the focus remains on promoting employee health instead of directly funding weight loss medications. A survey by IFEBP, involving nearly 300 U.S. employer health plans, found that about 36% of employers covered GLP-1 medications for both diabetes and weight loss, reflecting predictions for 2025 and an increase from 34% in 2024.

Coverage specifically for diabetes has increased to 60% of employers, with 45% extending coverage to other approved conditions like obstructive sleep apnea and heart disease. The hesitancy to support weight loss coverage is largely due to the high costs of GLP-1 drugs from manufacturers, such as Eli Lilly and Novo Nordisk, amidst growing demand. Many plans have thus opted for restrictions or halted coverage to cut costs. Held highlights that this financial burden significantly influences employer decisions on GLP-1 drug coverage, with reported costs soaring from 6.9% in 2023 to 11.4% in 2026.

Exploring Alternatives

Despite these challenges, employers are investigating alternative avenues to aid employees interested in GLP-1 treatments. Approximately 27% of employers direct employees to direct-to-consumer platforms for drug procurement, while 21% advise using FSA, HSA, or integrated HRA funds.

Held suggests that these rising costs provide a chance for employers to emphasize existing health management benefits. The survey disclosed that 74% of plans offer disease and chronic care management, 61% provide nutritional counseling, and offer bariatric surgery. Additionally, employers support lifestyle modification programs and alternative non-medication interventions for weight loss.

The future of GLP-1 coverage for obesity could depend on evidence showing overall cost reduction through fewer procedures and increased workforce productivity. Held notes that tangible data demonstrating these benefits might lead employers to reconsider their coverage strategies.

Initial insights into cost-saving potential may be derived from an ongoing 18-month Medicare program, which for the first time includes GLP-1 drug coverage for obesity. Presently, about 9% of employers are evaluating the adoption of GLP-1 drugs for obesity treatment, while industry professionals carefully observe shifts in employer adoption trends.