In some cases, small employers, even if they want to cover weight-loss drugs, are simply priced out of the market and have to accept that they can't offer as much coverage as they would like.
"Given the price of these drugs, you have to do a cost-benefit analysis, and a lot of small companies, even some large companies, just can't do that," Greminger says. "It doesn't matter how badly they want to do it."
Here are a few issues employers and employees of small businesses should keep in mind when obtaining expensive weight loss medications as part of their workplace benefits.
Deals are now being made for annual allowances.
The open enrollment season for health insurance won't arrive until the fall, but employers should already be talking to a broker or agent about renewing coverage, and those conversations should include weight-loss drugs. According to Gary Kushner, chairman and president of Kushner & Company, a benefit design and management company, small business employers should let the broker know they would like to be able to provide weight-loss medications to employees and ask for help in finding the right carrier or plan.
The market is changing rapidly. Last year, an insurer asked about coverage for weight-loss drugs may have said no, but it's worth asking again because it may have been forced to modify its offerings for competitive reasons, said Kate Moher, president of the national health and employee benefits division of the Marsh McLennan Agency, which advises employers on the design of benefit plans and programs. "You have to ask that question every year," she said.
Insurance premiums could go up.
To get access to weight-loss medications, many small businesses may have to switch insurance companies and probably pay more. "It's likely to be more expensive if one doesn't cover the medication and the other does," Kushner says.
Employers must also decide how much of that cost can be reasonably shifted to employees without unduly burdening workers who may never need the drugs. "If 20 percent of your population takes them, everyone's insurance premiums go up by the percentage needed to cover the cost," Greminger says.
Small businesses should consider establishing a Capital Health plan.
According to Moher, any business with at least 50 employees can consider partnering with a captive health insurance system such as Roundstone, ParetoHealth, Stealth and Amwins. These companies allow groups of companies that cannot self-insure, which is common for most large corporations, to pool resources and work together to develop a group health insurance plan.
Moher said this approach can give small businesses and their employees more flexibility, but owners still have to weigh the costs, and certain requirements must be met to qualify for the program. It's also not something businesses can change every year, as with a traditional insurance company. "It's a long-term game; you can't jump in and get out," Moher said.
These plans are designed for the long term because, as owners, all participants agree to share risk, and this approach reduces costs and volatility over time. But if business owners are looking for a quick fix or prefer to wait and see how the market develops over the next year, this model is probably not appropriate.
The option of separate coverage for GLP-1 drugs may also work for some small businesses. Companies such as Vida Health, Calibrate, Found Health and Vitality Group provide such offerings separately from the employer's primary insurer, Greminger said. Employers need to do the math to determine if this might be more cost-effective and if this option really fits their employees' needs based on the offerings available.
Use an FSA to cover the cost of weight loss medications.
If insurance coverage options are not currently an effective solution, small employers have several other ways to help employees cover the cost of weight loss medications. For example, they can make contributions to flexible spending accounts or employee health savings accounts. They may also consider a health reimbursement arrangement, or HRA, which is an employer-sponsored plan that reimburses employees for qualified medical expenses.
However, there are strict rules and requirements for each of these options. With an FSA, for example, the IRS limits the employer's contribution based on how much the employee contributes, and that's still unlikely to be enough to cover the cost of these drugs in the long run. "Does it help? Sure. Does it solve the problem? No," Kushner said.
You also shouldn't take this step without first checking with a lawyer. "You need guidance from your ERISA lawyers to make sure you meet all the criteria," says Moher. "It's creative, but you need to make sure you're in compliance."
Currently, the end result can be very discouraging for small businesses and their employees, given the costs and limited capacity, but it's also important to know that there are about 20 drugs in the approval stage. Once they are approved, costs will likely come down, Moher says. "This may be a short-term phenomenon until more GLP-1 drugs are approved."