Employers Face Soaring Costs as Workers Turn to Weight Loss Drugs

The use of weight loss drugs among employees with job-based health insurance is rapidly increasing — but it’s coming with a hefty price tag for employers. A growing number of companies are now re-evaluating whether they can afford to cover these medications as costs skyrocket.

According to a recent survey by the health policy organization KFF, 43% of large companies — those employing over 5,000 people — now include coverage for weight loss medications in their health plans. That’s a significant jump from just 28% the previous year. In contrast, only 16% of mid-sized firms (with 200 to 999 employees) offer similar benefits, showing a clear gap between large corporations and smaller employers.

The most in-demand treatments are GLP-1 drugs, which were originally designed to treat diabetes but have become popular for weight loss after demonstrating remarkable results. These drugs, including well-known brands like Wegovy and Ozempic, help users shed weight by suppressing appetite and regulating blood sugar levels. However, the high cost — around $1,350 per month for Wegovy before discounts — has made them a financial challenge for insurers and employers alike.

While many companies initially embraced coverage for weight loss medications to attract and retain employees, the financial impact has been greater than anticipated. Nearly 60% of large employers reported that the number of workers using these drugs exceeded expectations, while two-thirds said the cost of prescription drug spending had risen significantly.

One large retailer shared that GLP-1 medications became its single largest pharmaceutical expense this year, leaping from 32nd place just a year earlier. Another employer revealed that spending on these drugs surged from $500,000 to a projected $1.2 million in only twelve months.

Despite the costs, most employers acknowledge that access to weight loss treatments is an important benefit that improves employee satisfaction and well-being. More than one-third of Americans with employer-based insurance meet the medical criteria for obesity treatment, highlighting the scale of potential demand.

Some companies are now tightening access to GLP-1 drugs by introducing eligibility restrictions. These include requiring higher body mass indexes or mandatory participation in supervised weight management programs. Others have set time limits for how long employees can stay on the medication before reassessment.

Still, a portion of firms have chosen to drop coverage altogether, citing unsustainable expenses. Yet experts believe the story is far from over. As more workers seek coverage and as the drugs are approved for additional medical uses, employers may be pressured to revisit their decisions — especially if prices eventually fall due to market competition.

Rising prescription costs are also contributing to broader increases in health insurance premiums. KFF’s report noted that the average annual premium for family coverage has reached $27,000, up 6% from last year. Workers contribute about $6,850 toward that cost, while employers cover the rest. Individual coverage now averages over $9,300 annually.

Experts warn that without effective cost-control strategies, employers may have to shift more expenses to workers through higher deductibles and co-pays. As healthcare costs continue to rise, the challenge of balancing employee well-being with financial sustainability remains one of the biggest tests for corporate benefit programs.