Employers with large US workforces are feeling the pressure of rising healthcare costs, driven by chronic conditions and the growing use of high-cost prescription drugs. For years, employers could plan for the financial impact of these medications because they were prescribed to a smaller segment of their population. Now, glucagon-like peptide-1 (GLP-1) medications have changed the landscape.
Over a dozen FDA-approved GLP-1 drugs exist today, including Wegovy, Zepbound, Ozempic, and Mounjaro, which are prescribed for a variety of use cases, including Type 2 diabetes, weight management, and other chronic conditions. Several drugs are also available off-label for weight loss.
Demand for these GLP-1s has surged. With 49% of Americans projected to be living with obesity by 2030, employers face increasing pressure to expand coverage of weight management drugs, already accounting for half of drug spending growth in 2024. Used as recommended over the long term, GLP-1s represent a serious, ongoing financial commitment.
Employers must now confront a new reality: a treatment many of their employees desperately want at an unsustainable cost.
Employers are under pressure to offer GLP-1s
Peterson Health Technology Institute (PHTI) reports that in companies with over 200 workers, only 19% covered GLP-1s for weight loss in 2025. While most employers already offer the drug for diabetes treatment, affordability is cited as the main reason they can’t expand coverage to weight health management. This financial position is confusing for employees since direct-to-consumer (also known as cash-pay) prices have fallen by 50-65% since GLP-1s launched. They can’t understand why their employer won’t provide this revolutionary weight-loss drug and treat it like any other prescription medication delivered via employer-sponsored health plans.
Unfortunately, the economics aren’t straightforward, with Caroline Pearson, Executive Director of PHTI, highlighting a specific return on investment problem: “Drug costs exceed any reductions in other medical costs over the 3-4-year period in which most workers are covered by their employer-sponsored insurance, and employers who have offered coverage report demand for GLP-1 prescriptions is outstripping their annual budget projections.”
Employers take varied approaches to GLP-1 coverage for weight loss
In conversations with consultants and advisors, it’s clear GLP-1 coverage decisions aren’t a binary yes-no decision. Employers want to explore the most viable solution for their employees, based on their current benefit structure, workforce demographics, and budget.
Some continue to cover GLP-1s within their medical and pharmacy plans for specific chronic conditions. They rely on pharmacy benefit managers (PBMs) to control costs by requiring authorization, participation in weight management programs, or BMI and comorbidity criteria. Alternatively, some employers exclude GLP-1s from their plans entirely, encouraging employees to arrange individual treatment through cash-pay pharmacies or direct-to-consumer providers. This approach keeps GLP-1 costs out of the health plan, but it also shifts the cost burden entirely onto employees.
Predictable costs and greater control through specialty Health Reimbursement Arrangements (HRAs)
For employers eager to control who receives access to GLP-1 medications and how much they pay, specialty Weight Health HRAs offer a defined-contribution alternative to traditional medical and pharmacy coverage. Using this model, employers provide a fixed, pre-tax allowance that employees can use toward GLP-1 medications and related care, setting clear limits on employer spend while still supporting access.
In contrast, when employers rely on the core medical and pharmacy plan to cover GLP-1s, they have less control over how costs evolve. Employer-sponsored health plans must comply with ERISA fiduciary obligations and ACA plan design rules, including caps on employee out-of-pocket spending. This limits how much cost employers can shift to employees, even when medication utilization rises. As the popularity of GLP-1s increases, its financial impact flows through medical claims and ultimately into higher plan costs and premiums.
Weight Health HRAs operate differently because they’re defined-contribution models. Employers set contribution levels and reimbursement parameters upfront, fixing their financial exposure in advance. Employees can choose whether to supplement that contribution if medication costs exceed the employer-funded amount, allowing employers to support access without assuming unlimited liability. This approach gives employers greater control over cost variability while maintaining flexibility for employees, resulting in more predictable per-member-per-month (PMPM) spend compared to PBM-based coverage.
HRAs also allow employers to benefit directly from falling cash-pay prices for GLP-1 medications. Employers can restrict eligible HRA spending to certain pharmacies, such as LillyDirect or NovoCare, enabling them to capture savings as direct-to-consumer pricing declines. In many cases, net cash-pay prices are now competitive with, or significantly lower than, PBM-negotiated net pricing for drugs like Zepbound and Wegovy.
However, formulary decisions can affect employer pharmacy costs beyond GLP-1s themselves. When GLP-1s are managed within the PBM formulary, removing or restricting coverage may trigger renegotiation of rebate guarantees tied to other medications. Employers will need to consider how a Specialty HRA impacts their PBM rebate contract.
Employers already working with transparent pass-through PBMs are well-positioned to adopt this model, as rebate value flows directly to the employer and pharmacy costs are easier to track. Pairing a transparent PBM with a specialty weight health HRA allows employers to manage GLP-1 costs separately while preserving existing rebate agreements and keeping overall pharmacy spend predictable.
What to consider when offering GLP-1s through an HRA
Weight health HRAs expand access to GLP-1s without exposing their health plans to open-ended financial risk. Yet, not all HRA vendors are equipped to manage rising demand. Always ask the following questions before committing to a specific weight health HRA.
How much year-over-year cost variability can we absorb?
GLP-1 costs can increase quickly as more employees begin using these medications. For employers, total spend is driven by two factors: how many employees use the benefit and how much the employer agrees to pay for each person.
The first factor is participation. Eligibility criteria, such as BMI thresholds, comorbidity requirements, or physician verification, directly influence how many employees qualify and enroll. Even small changes in uptake can lead to large swings in annual healthcare spending.
Under traditional PBM coverage, for example, the average employer cost for GLP-1 medications is approximately $600 per month after rebates, based on the net pricing for drugs like Zepbound and Wegovy. If 1% of a 10,000-person workforce uses GLP-1s at this price point, employer costs average around $6 per member per month (PMPM). At 5% participation, the cost rises to $30 PMPM.
Employer contribution is the second factor. Defined-contribution models like specialty HRAs allow employers to set a fixed subsidy amount, creating predictable cost ranges even as participation increases. With a $400 monthly employer contribution, costs range from $4 PMPM at 1% participation to $20 PMPM at 5%. A $200 contribution lowers that range further, from $2 PMPM to $10 PMPM. Without the protection of defined contributions, employer costs rise in line with participation and remain exposed to changes in drug pricing and rebate structures.
Employers should also consider the interaction of these two factors: given the same budget, would you rather provide more financial support to a smaller population or lower financial support to a broader population? Regardless, understanding their member population and the historical context will determine whether those limits are transparent, enforceable, and easy to adjust as demand evolves.
Does the Specialty HRA require behavioral change?
Most employer health plans operate on relatively short time horizons, yet GLP-1s are intended for the long term. To sustain weight loss, primary care providers insist that dietary changes and regular exercise support the medication, according to Marsh & McLennan Agency. These behavioral changes are particularly important if GLP-1 treatment is interrupted or discontinued.
When evaluating vendors, employers should consider whether the HRA supports a broader definition of weight health, allowing employees to use funds for behavior-change tools, like nutrition or fitness programs that reinforce healthier habits over time.
How much control do we need over GLP-1 spending?
Not all GLP-1 access channels carry the same level of clinical oversight or regulatory confidence, which is a problem if employees seek medication through cash-pay pharmacies, weight-loss programs, telehealth providers, or compounded alternatives that aren’t FDA-approved.
Employers must decide their preferred level of control. The best vendors allow employees to spend their funds on GLP-1 prescriptions at approved pharmacies, and block spending at certain merchants and in certain categories.
What documentation is required to establish eligibility?
GLP-1 demand spans clinically indicated treatment as well as non-medical cosmetic categories, such as losing weight for a wedding or accelerating postnatal weight loss. Without clear eligibility criteria, employers risk funding use cases beyond the benefit’s scope.
Employers providing GLP-1s for strict medical reasons should define the documentation they require, including evidence of BMI thresholds, diagnosed comorbidities, or physician verification. Self-attestations from employees may not be enough.
Transparency around GLP-1 coverage and cost limits
Most employees won’t expect unlimited coverage for GLP-1 medications, but they do expect clarity. Once you’ve decided on your approach, explain what support is (or isn’t) available for your employees and why any limits exist.
GLP-1s may be new, but the challenge they present is not. Employer-sponsored healthcare has always been a balancing act between innovation and affordability. GLP-1s just compress that tension into a single, highly visible category. As demand grows, employers must design benefits around clear cost controls, realistic expectations, and long-term sustainability.
