Are Employers Ready to Stomach Employees’ Growing Appetite for GLP-1s?
- Allison Martinez, née De Tal
- 1 day ago
- 4 min read
Whether from an ad during your favorite podcast or television show, or from a friend or family member, by now you’ve certainly heard about GLP-1s. Some GLP-1s, like Ozempic, are injectable drugs approved by the U.S. Food and Drug Administration (“FDA”) to help adults with type 2 diabetes manage blood sugar levels. The FDA has approved other GLP-1s for weight management, with Wegovy becoming the first FDA approved daily pill in December 2025. As the popularity and accessibility of GLP-1s for weight loss has grown dramatically over recent years, employers continue to grapple with questions related to their cost and coverage.
Are employers’ group health plans required to cover GLP-1s?
Generally, employers are not required to cover GLP-1 drugs used for weight loss programs under their group health plans. The rising cost of health plan premiums is on the minds of employers, employees, and government officials alike. More than one-third of surveyed companies with 200 or more employees recently indicated prescription drug prices contributed “a great deal” to higher premium prices. Employers with fully insured plans are subject to the rules of their state— with North Dakota becoming the first to add GLP-1 drugs to the state’s essential health benefit clause for individual and small group plans in January 2025. Employers who maintain self-insured group health plans typically have the option to decide whether to cover GLP-1s, with many weighing the immediate cost of coverage against long-term costs of obesity related health conditions. This is a topic that health and welfare plan committees should be carefully considering and documenting in their meetings. Exclusion of GLP-1s has been the impetus for recent lawsuits alleging discrimination, so employers should consult counsel regarding the potential impact of both federal and state laws prohibiting discrimination based on health status.
Are there options for employers who want to provide coverage for GLP-1s for weight loss?
Yes, there are a variety of creative options for employers who want to provide access to GLP-1 drugs prescribed for weight loss but who also want to contain costs. But, as with any benefits program, each employer must carefully consider the associated risks with these options and ensure they can be tailored to suit the employer’s individual needs. These options include health reimbursement accounts and health flexible spending accounts.
Health Reimbursement Accounts
Health reimbursement accounts, or HRAs, are employer funded accounts used to reimburse certain health care costs on a tax-free basis. HRAs can only be used to reimburse medical expenses as defined by Internal Revenue Code (“Code”) Section 213(d), which may include the cost of prescription drugs like GLP-1s. To comply with the Affordable Care Act, HRAs generally must be integrated with the employer’s group health plan, which requires meeting specific requirements. Finally, HRAs are subject to numerous other rules— including nondiscrimination testing— which must be satisfied for this type of arrangement to be a viable, tax-advantaged option. Many employers have opted to explore HRAs as a potential solution for offering GLP-1s to employees.
Health Flexible Spending Accounts
Health flexible spending accounts, or health FSAs, are a type of group health plan which can be funded by both tax-free employer and employee contributions. Employee and employer contributions to a health FSA are capped at a set dollar amount each year— $3,400 in 2026— which is indexed for inflation. Generally, the funds in a health FSA must be used to reimburse expenses incurred during the plan year (i.e., the “use-or-lose” rule), subject to the plan’s optional grace period or limited carryover feature. Amounts in a health FSA can only be used to reimburse expenses for medical care described in Code Section 213(d) that are permitted by the terms of the health FSA plan document. This means, if the plan document permits, GLP-1s prescribed for weight loss may be reimbursed through a health FSA. Health FSAs, like HRAs, are also subject to nondiscrimination rules.
Plan Design Changes
Many employers with self-insured health plans are considering innovative plan design strategies for GLP-1 coverage. The Centers for Medicare and Medicaid Services encourage plans to use utilization and medical management techniques to reduce costs instead of excluding certain treatments altogether. Some design options may include quantity limits, step therapy, limiting use to FDA-approved uses, requiring prior authorization, or adding a deductible and/or higher cost sharing for GLP-1 category.
If you have questions regarding GLP-1 coverage, please contact your Boutwell Fay attorney.
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