Lydia Parker and Lynne Wakefield explore the complex legal landscape surrounding the coverage of GLP-1s prescribed for weight loss purposes within self-insured medical plans.
In this episode of Troutman Pepper Locke's Employee Benefits and Executive Compensation podcast, hosts Lydia Parker and Lynne Wakefield explore the complex legal landscape surrounding the coverage of GLP-1s prescribed for weight loss purposes within self-insured medical plans. As these medications gain popularity, plan sponsors face the challenge of controlling costs while meeting participant demand and maintaining legal compliance. The discussion covers various design alternatives, including cost-sharing strategies, waiting periods, and wellness program rewards, while addressing potential legal risks under HIPAA, the Affordable Care Act, and the Americans with Disabilities Act. Tune in to explore how plan sponsors can navigate these issues effectively as a means to attract and retain employees, while mitigating financial exposure.
Employee Benefits and Executive Compensation Podcast Series — Navigating Legal Strategies for Covering GLP-1s in Self-Insured Medical Plans
Hosts: Lydia Parker and Lynne Wakefield
Recorded: May 7, 2025
Aired: June 2, 2025
Lydia Parker:
Hi, everyone. Welcome to another special edition podcast where we're addressing an issue that may seem a little niche or narrow in focus, but is something that so many of our clients have been grappling with over the past couple of years, and particularly this past year. We really wanted to address it all with you.
That topic is GLP-1s prescribed for weight loss and how employers can offer those drugs under their self-insured medical plans in a cost-effective and key here, legally compliant way. I'm Lydia Parker, and I'm joined today by my colleague, Lynne Wakefield. We’re partners in Troutman Pepper's Employee Benefits and Executive Compensation practice.
Lynne Wakefield:
Thanks for the introduction, Lydia. Recently, more and more plan sponsors have been evaluating whether to cover GLP-1s that are prescribed for weight loss purposes under their self-insured medical plans, because planned participants have really been asking for this coverage.
To help set the stage, popular GLP-1s include drugs like Ozempic, Zepbound, and Wegovy. These drugs help to reduce hunger and cause individuals to feel full for a longer period of time, which is why they can be effective for weight loss purposes.
Lydia Parker:
Right. Because they're so effective for weight loss, the number of individuals using them for weight loss have increased substantially in the last several years, and that increase is expected to continue with studies that up to 9% of the US population could be using the drugs for weight loss by 2030. I think we all know that these drugs are not cheap. So, when you factor in the high cost and the increased usage, the drugs are becoming a significant expense for self-insured medical plans that choose to cover them for weight loss purposes.
Lynne Wakefield:
Yes, that's right. That's why I think we've seen a substantial increase in the number of clients asking about this, particularly like you mentioned in the last 12 months. And they're asking about a wide variety of design strategies that may help to mitigate the cost of the GLP-1s, but there is a little bit of a catch-22 because while the GLP-1s are really expensive, medical expenditures for obese individuals outpace those for participants without that comorbidity. So, covering these drugs may reduce costs down the road. Regardless, as the GLP-1s have become more widely recognized, prescribed, and coveted, we've also seen litigation from participants who aren't able to access them for the treatment of weight loss within their medical plans.
Lydia Parker:
Yes, for sure. People definitely want the drugs, and plan sponsors are grappling with challenges of, okay, on one hand, we want to offer coverage as an employee attraction and retention tool, and we want to avoid litigation, but then on the other hand, also trying to manage costs and stay compliant with legal requirements.
So, as we'll see in this podcast, there are a variety of legal considerations associated with structuring coverage for GLP-1s prescribed for weight loss purposes. Just as a caveat, we're going to focus on self-insured plans today because fully insured plans have less flexibility to be creative in how they cover the drugs. And even though self-insured lands can be flexible and how they limit coverage, they have a lot of different compliance obligations to think about. We'll talk about HIPAA, the Affordable Care Act, or the ACA, and the Americans with Disabilities Act, or the ADA.
Lynne Wakefield:
Just before we jump into the meat, I think another caveat is that this podcast today is focused on legal issues and cost mitigation strategies with respect to GLP-1s prescribed for weight loss purposes as opposed to GLP-1s prescribed to treat diabetes or other medical conditions. So, many plans already cover GLP-1s for the treatment of diabetes and other conditions, and other legal considerations may apply to that coverage. Also note, that we're not advocating that plans cover GLP-1s prescribed for weight loss purposes or opining on the effectiveness of the drugs for treatment of obesity. Instead, the intent of the podcast is really to just explore the regulatory landscape, potential legal risks, and strategic considerations for implementing limitations on GLP-1 Act.
Lydia Parker:
So, I think that's all of our caveats. A couple of lawyers are bound to get those. But with that background, let's jump in to kind of the meat of the discussion. Let's tackle the most fundamental question first. Are self-insured medical plans required to cover GLP-1s for weight loss purposes?
Lynne Wakefield:
Yes. The answer to that is no. Self-insured medical plans are not currently required to cover GLP-1s for weight loss purposes. Just to play that out a little bit, the ACA doesn't require self-insured medical plans to cover GLP-1 for weight loss purposes, and there are no other federal mandates that require the coverage. We have seen some states introduce legislation to require coverage of GLP ones for weight loss purposes. But even if those laws are implemented, self-insured medical plans should not have to comply with the state law requirements due to a risk of preemption. So, it would be permissible for plan sponsors to limit coverage for GLP-1s to those that are prescribed for the treatment of diabetes only, subject to the ADA considerations, we'll discuss a little bit later on the podcast.
Lydia Parker:
Yes. So some good news for plan sponsors. Not legally required to offer these drugs, but like we mentioned before, participants are asking for this, and the coverage can be a tool for attracting and retaining employees.
Lynne Wakefield:
Yes, which is why we're seeing the increases, the number of plans that cover them. But then the next logical question, is if we do cover them, are there ways for plan sponsors to cover the drugs for weight loss purposes while at the same time limiting overall financial exposure? So, let's spend a little bit of time talking about possible design alternatives. What types of things, Lydia, have you seen companies try to use to limit the exposure?
Lydia Parker:
Yes. I think we can both confidently say that strategies have been all over the map. But one strategy we've seen is to implement annual or lifetime limits. So for instance, a $30,000 lifetime max on GLP-1s used for weight loss purposes. From a legal perspective, although the ACA generally prohibits annual and lifetime dollar limits and self-insured medical plans, that prohibition only applies to limits on the value of essential health benefits.
The current guidance on essential health benefits supports a conclusion that weight loss drugs are not essential health benefits, at least for now. So, since the ACA prohibits these limits for central health benefits and weight loss drugs are not a central health benefits based on HHS guidance. It seems reasonable to conclude that annual and lifetime limits on weight loss drugs are permissible and that would still be compliant with the ACA.
But imposing annual limits on GLP-1s prescribed for weight loss purposes, but not imposing similar limits on other non-essential health benefits may give rise to disability discrimination claims under the ADA. But this will be a common theme. We talk about that risk a lot. So, we'll get to that later. But before we get to that, tell us about some other strategies you've seen from clients.
Lynne Wakefield:
Yes, so we have seen clients impose various different cost sharing requirements on GLP-1s prescribed for weight loss purposes, like as compared to GLP-1s prescribed for the treatment of diabetes, for example, covering GLP-1s prescribed for the treatment of diabetes at 100% as a preventive care service, while covering GLP-1s prescribed for weight loss purposes under sort of the general 70% co-insurance provision.
At first blush, this may seem to raise issues under the HIPAA non-discrimination rules because we're singling out a prescription drug for a particular condition and subjecting it to less favorable cost-sharing provisions. On its face, that seems like it could be discrimination based on a health factor, but the HIPAA non-discrimination regulations provide that a plan can limit or exclude benefits in relation to a specific disease or condition, or limit or exclude benefits for certain types of treatments or drugs if the benefit limitation or exclusion applies uniformly to all similarly situated individuals that is not directed at individual participants based on a health factor.
So, I think you're having different levels of coverage for GLP-1s prescribed for weight loss purposes as compared to GLP-1s prescribed for the treatment of diabetes or another condition seems permissible from a HIPAA non-discrimination perspective. As with the annual lifetime limits that you were talking about, Lydia, there is still that some degree of ADA risk associated with the design.
Lydia Parker:
I also think it's so interesting because that analysis really depends on exemptions found in the HIPAA regulations. So, question whether a litigant trying to allege discrimination would argue that the court shouldn't grant any deference to those regulations based on Loper Bright, which as we know, we've returned Chevron. I won't go too far down that path. We have a separate podcast episode on that case, if anyone's interested. But let's keep discussing the possibilities.
Lynne Wakefield:
Yes, agreed. So, I think one approach that would seem to be permissible is to impose a waiting period for access to GLP-1s prescribed for weight loss purposes. This design would seem to at least mitigate against the risk of individuals seeking employment, solely for purposes of accessing GLP-1s. Similar to the different call sharing approach I described, this design would seem to be permissible from a HIPAA non-discrimination perspective. Although the HIPAA non-discrimination rules prohibit medical plans for discriminating with regard to eligibility, including waiting periods on the basis of health status-related factors, they also provide that plans may restrict or limit eligibility, as long as similarly situated individuals are treated the same and the limit is not directed at individual participants based on the health factor.
Lydia Parker:
But this strategy, though, what about ACA prohibition on excessive waiting periods? Does that raise any compliance issues?
Lynne Wakefield:
Yes, the ACA regulations on excessive waiting periods address limitations on waiting periods for coverage under the plan as a whole, rather than for specific benefits. So, I think, in the absence of other guidance, a benefit-specific waiting period for access to GLP-1s prescribed for weight loss purposes would seem permissible as long as it applies for conditions arising after the effective date of the planned coverage. If you are trying to impose a benefit-specific waiting period on conditions arising before the effective date of planned coverage, you could potentially run a foul of the ACA's prohibition against preexisting condition exclusions. So, we have the same ADA issues kind of lurking with this design as well.
Lydia Parker:
Yes. I think that all makes sense. Although, it sounds like this one could get tricky from an administrative perspective, and I think you could get a little too cute with this kind of design if you start imposing benefit-specific waiting periods for lots of different benefits. You start to kind of beg the question of if you actually have effective coverage.
Another approach along these same lines and maybe one that's a little easier to administer is to limit coverage of GLP-1s prescribed for weight loss purposes to employees only and exclude coverage for dependents. And I think this is similar to the approach some plans take with designs like spousal surcharges. This one seems permissible from a HIPAA non-discrimination perspective for kind of the same reasons we've discussed with the other designs.
Lynne Wakefield:
Yes, I think that's right. I mean, the dependent exclusion should similarly be permissible from a HIPPA non-discrimination perspective, as would a design that limits coverage of GLP-1s prescribed for weight loss purposes to a specific period of time, like one year. So, another option there. What about wellness programs? Have you seen clients asking about that? Do you think it would be permissible to offer access to GLP-1 coverage as a reward under a HIPAA-compliant wellness program?
Lydia Parker:
Yes. Wellness programs can get very tricky, but it does seem that access to GLP-1 coverage could be an appropriate reward or additional benefit under the wellness program regs. You just have to ensure that the requirements for accessing the reward are structured to comply with the wellness program requirements. So, just taking an example, if we had a requirement to complete an educational program to access GLP-1s, prescribed for weight loss, that would be a participatory wellness program. So, you'd only have to ensure that the program is available to all similarly situated individuals, which is a relatively easy standard.
But if the wellness program requirements are activity-based or even outcomes-based, the applicable requirements for a health contingent wellness program would need to be satisfied, and those are harder.
Lynne Wakefield:
Yes. I mean, the wellness program design makes a lot of sense to me from a philosophical perspective, given the intent to change behavior in addition to promoting weight loss, but I agree it would need to be carefully structured and analyzed given the complexity of the wellness program requirements, and it seems there would also be potential ADA issues to think through there as well.
Lydia Parker:
Yes, I agree. Another possibility I've seen is to limit access to coverage of GLP-1s to individuals with a certain BMI, and I think that one's permissible under the HIPAA non-discrimination regulations, given that the regulations provide that if a plan can treat an individual with an adverse health factor more favorably than it treats others. So essentially, this is the exception for benign discrimination.
For example, a plan sponsor could provide that coverage for GLP-1s prescribed for weight loss purposes is not available for individuals with a BMI under 40, but it is available for individuals with a BMI of 40 or above because it's treating people with the adverse health factor more favorably.
Lynne Wakefield:
Yes, even though that may work, it seems like it could potentially drive negative behavior. So, if someone was just below the 40 BMI cutoff, would you want them to try to increase their BMI just so they can get access to the GLP-1s? I've seen that too, but query whether that makes sense from a philosophical perspective. So, I think, although there are other potential designs out there, this seems like a pretty comprehensive list of potential strategies for mitigating the cost of these GLP-1s. Are there any others you think it would be helpful to mention?
Lydia Parker:
The only other one maybe worth mentioning, even though I think it often doesn't make sense, is the use of an HRA. All those standalone HRAs aren't a viable option for active employees due to the ACA prohibition on annual lifetime limits, a plan sponsor could exclude coverage of GLP-1s prescribed for weight loss under their medical plan and then offer an integrated HRA that only reimburses GLP-1s prescribed for weight loss purposes. So, that would put a definitive cap on the financial exposures for the GLP-1s, but there's also a lot of administrative complexity associated with offering, implementing, and administering the HRA, so you'd have to make sure that the HRA integration requirements are satisfied.
You'd have to select a vendor, and according to ERISA, develop a new SPD, wrap the benefit to avoid a separate Form 5500 filing, and do several other things to make sure that HRA is legally compliant. So, it just seems to offer very few incremental benefits, because we talked above, you can already impose, or you arguably can already impose, a lifetime in annual cap. So, really what does the HRA give you but additional burdens.
Lynne Wakefield:
Yes. That makes perfect sense. So, we've been dancing around it for a bit, so it likely makes sense to go ahead and talk about the ADA concerns. The argument here that a plaintiff may seek to make is that any of these potential designs that we've been talking about violate the ADA. This is something that, if you're considering implementing any of these designs, this is something that should be vetted with employment and labor counsel, as this is not our primary area of expertise. But at a high level, in order for a plaintiff to prevail on an ADA claim, a court would have to determine that obesity is a disability under the ADA, and that the particular design at issue constitutes disability discrimination under the ADA.
The conclusion on these issues is likely going to be very fact-specific and jurisdiction-dependent. But there are some courts that have held that obesity could be a disability under the ADA, even in the absence of a physiological disorder or condition. Also, although courts in many circuits have held that a medical plan that provides different benefits for different types of disabilities does not violate the ADA's prohibition on discrimination, as long as every employee, disabled or not, is able to access the same plan and the same benefits, that conclusion is not something that the Supreme Court has confirmed in the ADA context, and it's not established in all circuits. So, this is definitely something that should be factored into any decision about how to proceed from a design perspective.
Lydia Parker:
Yes. I know there are, we already had several GLP-1 cases out there alleging disability discrimination under the ADA, and we've seen some results that may be favorable to defendants so far, but I will say the cases are fairly limited relatively, and the case theories are still evolving. So, given the prominence of the issue, the cost implications, the high cost of GLP-1s, I wouldn't be surprised at all if we continue to see cases, particularly given the general trend of increasing health and welfare plan litigation.
Lynne Wakefield:
Yes, agreed. So, I know we're getting close to our allotted time for the podcast. Are there any other considerations you think it would be helpful to raise for the audience before we wrap up?
Lydia Parker:
Just a couple of things I think are worth mentioning. The first is that in addition to the discrimination concerns that you talked about under the ADA, plan sponsors that are covered entities under section 1557 of the ACA will also need to consider whether any potential design changes would constitute prohibited discrimination under section 1557. Another one that we've heard several clients talking about is the impact of potential design changes on the availability of PBM rebates. PBM rebates can be very lucrative, and losing them could offset any cost savings you obtain from the alternative designs we've been talking about.
So, before moving forward with any design changes, plan sponsors should really think about and make sure that the changes will impact the prescription drug rebates that they're otherwise entitled to receive from their PBM.
And then the last thing I'll say, we talked about the design alternatives we've heard the most about and the legal obligations that are triggered by those designs, but even just in the past week or so, I mean, we've been seeing more and more creativity with these designs and even just slight differences and the proposed design can trigger different legal requirements. So, we've had to think about more than just HIPAA, ACA, ADA. It really depends on how you're trying to structure the drugs under your plan.
Lynne Wakefield:
It's definitely an interesting issue and evolving for sure. So thanks, Lydia, for your commentary. That brings us to the end of today's episode. We hope you found our discussion on the legal implications and strategies for limiting financial exposure while covering GLP-1s prescribed for weight loss purposes, both insightful and practical.
Lydia Parker:
Yes, hopefully everyone has a clear understanding of challenges and the potential strategies involved.
Lynne Wakefield:
Remember, whether you're an employer, plain administrator, or legal professional, staying informed and proactive is key to navigating these issues effectively. If you have any questions or need any further assistance, please don't hesitate to reach out to us at Troutman Pepper Locke.
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