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August 2023  Volume 21, Number 8        

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Should Employers Cover Employee Weight Loss Medications?

Originally prescribed for diabetes management, GLP-1 drugs like Ozempic and Wegovy have shown significant potential as weight loss tools. A rising demand underscores their effectiveness, and their off-label use for weight loss has added another layer of complexity for employers deliberating their health plan coverage.

A Financial Balancing Act for Employers

Providing coverage for these weight loss drugs comes with substantial financial implications. For example, on average, Ozempic costs over $1,000 per month, a steep price point that could significantly impact an organization's healthcare budget. Multiply this by the number of employees opting for the medication, and the costs quickly escalate. Furthermore, the medications are not designed for short-term use, indicating a long-term financial commitment for employers.

Employers at a Crossroads

Between increasing healthcare costs and needing to attract and retain talent, employers find themselves in a quandary. Data from the International Foundation of Employee Benefit Plans (IFEBP) reveals that fewer than a quarter of employers (22 percent) cover any prescription drug specifically for weight loss.

In response to these challenges, employers are considering implementing restrictions and policies for GLP-1 drug coverage. Potential strategies include requiring special authorization from doctors and insurers, limiting drug quantities, or allowing the drug for employees meeting specific criteria, such as a body mass index of at least 30.

Weighing Long-term Implications

While the short-term impact is a crucial concern, the long-term implications of drug coverage are prompting pause among employers. The weight loss associated with these medications appears to persist only with continuous use, which is an on-going expense for employers. Thus, many organizations are taking a wait and see approach to allow more time to assess the drugs' long-term effectiveness.

Likewise, consumer healthcare company Haleon has made strides in this area, implementing an impressive 26-week paid parental leave policy for all employees.

A Larger Conversation on Workplace Wellness

The GLP-1 drug coverage question is part of a larger dialogue about weight loss coverage in the workplace. There is the growing recognition of obesity as a disease, and employers are re-evaluating traditional weight management approaches and considering more comprehensive solutions, such as covering weight loss drugs or bariatric surgery.

Moreover, combating obesity has potential benefits beyond individual health. By helping employees lose weight, conditions such as high blood pressure or Type 2 diabetes may be better managed. This could lead to increased productivity and decreased healthcare costs for employers Indeed, 2022 data from IFEBP shows that a quarter of U.S. employers identify obesity as having the most significant impact on overall healthcare costs.

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In this issue:

This Just In ... Four Strategies Radically Transforming Employee Well-Being

Improving Employee Satisfaction by Moving Beyond Workplace Flexibility and Hybrid Schedules

How to Motivate Employees to Seek Healthcare When Needed and Encourage Well-Being

Parents Win Big: The Surprising Shift in 2023 Employee Benefits

Should Employers Cover Employee Weight Loss Medications?



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