Half of employees may struggle to get obesity drug insurance coverage

Firms are increasing access to latest blockbuster weight-loss drugs for workers, but size of employer may make an enormous difference in early access. Small businesses and their employees are sometimes stuck between a rock and a tough place relating to this burgeoning medical health insurance coverage market.

Small businesses employ roughly half of the employees within the U.S. labor market, and so they have been adding jobs at a faster pace than large employers. For the reason that first quarter of 2021, small-business hiring accounted for 53% of the 12.2 million total net jobs created across all employers, in keeping with the U.S. Bureau of Labor Statistics, consistent with the longer-term trend.

The blockbuster obesity drugs, called GLP-1 agonists, cost roughly $1,000 per thirty days on average — and so they are typically taken for a very long time. Access to those weight-loss drugs is coming from an increasing variety of sources within the marketplace, drug makers are ramping up production, and use cases proceed to extend, with clinical trials showing advantages for conditions from sleep apnea to heart disease risk. But most of the 100 million American adults who’re obese cannot afford to pay out of pocket for drugs like Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, and are turning to their employers for help. 

A survey last October of 205 firms by the International Foundation of Worker Profit Plans found that 76% of respondents provided GLP-1 drug coverage for diabetes, versus only 27% that provided coverage for weight reduction. But 13% of plan sponsors indicated they were considering coverage for weight reduction. Covering these drugs, nonetheless, is harder for smaller employers, lots of whom depend on off-the-shelf plans offered by their insurance carriers. While there are plans that cover GLP-1 drugs, the price might be prohibitive for a lot of small businesses.

There’s strong demand from employees for coverage and smaller employers would love to have the option to do it, but there are trade-offs, said Shawn Gremminger, president and chief executive of the National Alliance of Healthcare Purchaser Coalitions, a nonprofit purchaser-led organization. Firms have to think about the impact on wages or other advantages they could prefer to offer. “The corporate money has to come back from somewhere,” he said.

In some cases, small employers, even in the event that they need to cover weight-loss drugs, are simply priced out of the market and so they could have to just accept they cannot offer the coverage they would love to. 

“Given the worth of those drugs, you will have to do the cost-benefit evaluation and for quite a lot of small firms — even some larger ones — they simply cannot do it,” Gremminger said. “Irrespective of how much they need to.”

Listed here are just a few issues for small business employers and employees to grasp in accessing expensive weight-loss drugs as a part of job advantages.

Annual advantages deals are being brokered now. Open enrollment season for medical health insurance doesn’t occur until the autumn, but employers needs to be having renewal discussions with their advantages broker or agent now, and that conversation should include weight-loss drugs. Small business employers needs to be telling a broker they would love to have the option to offer weight-loss drugs for workers, and ask for help to find the correct carrier or the correct plan, said Gary Kushner, chair and president of Kushner & Company, a advantages design and management company.

The market is changing quickly. Last 12 months, an insurance carrier asked about covering weight-loss drugs could have said no, however it’s price asking the carrier again because they could have been forced to make changes to their offerings for competitive reasons, said Kate Moher, president of national worker health and advantages for Marsh McLennan Agency, which advises employers on plan designs and advantages programs. “You need to be asking the query every 12 months,” she said. 

Insurance premiums may rise. To realize access to weight-loss drugs, many small businesses could have to modify insurance carriers, and doubtless pay more. “It almost definitely can be dearer if one just isn’t covering the drugs and the opposite is,” Kushner said.

Employers even have to choose how much of that might be reasonably passed to employees, without unduly burdening employees who may never need these drugs. “If 20% of your population takes it, everyone’s premium goes up by whatever percentage that’s to cover the price,” Gremminger said.

Small businesses should consider a ‘captive health’ plan. Generally speaking, any business with a minimum of 50 employees might consider working with a captive medical health insurance plan like Roundstone, ParetoHealth, Stealth and Amwins, Moher said. These businesses allow groups of firms who couldn’t self-insure — the approach most large corporations take — to pool resources and design a bunch health plan together. 

This approach may allow a small business and its employees more flexibility, Moher said, but owners still need to weigh the prices and there are requirements to qualify. It is also not something businesses can change every 12 months like they may when working with a standard insurance carrier. “It is a long-term play; you possibly can’t jump out and in,” Moher said. 

These plans are designed for the long-term because, as member-owners, the participants all conform to spread the danger, an approach that may keep costs down over time and reduce volatility. But when business owners are searching for a quick-fix or prefer to attend and see how the market develops over the following 12 months, it’s probably not the correct model.

A GLP-1 drug standalone coverage option could also work for some small businesses. Firms like Vida Health, Calibrate, Found Health and Vitality Group provide these offerings separate from an employer’s primary carrier, Gremminger said. Employers have to do the mathematics to find out whether it could possibly be less expensive, and whether the choice truly suits their employees’ needs based on the offerings.

Use an FSA to assist cover weight-loss drug costs. If insurance coverage options aren’t an efficient solution today, small employers could have just a few other ways to assist employees defray the price of weight-loss drugs. They may consider, as an example, making contributions to employees’ 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 qualified medical expenses. 

Nevertheless, there are strict rules and requirements for every of those options. For instance, with an FSA, the IRS limits an employer’s contribution based on how much the worker contributes, and this still is not prone to suffice to cover the price of those drugs long-term. “Does it help? Sure. Does it solve the issue? No,” Kushner said.

It is also not a move to make without first getting sign-off from legal counsel. “You wish the guidance of your ERISA attorneys to make certain you meet all the standards,” Moher said. “It is a creative way of doing it, but you will have to make certain you are meeting your entire compliance requirements.”

Right away, the final result might be very discouraging for small businesses and their employees given the prices and limited options, however it’s also essential to know that there are 20 or so drugs within the approval pipeline. Once they get approved, costs are prone to come down, Moher said. “That is something which may be a short-term thing until we get more GLP-1 drugs approved.”