Weight-loss drug use, mental health concerns among trends in employer-based health care in 2024

Health care plan advisors will be integral to assisting employers address new challenges to their plans in 2024. Employers had hoped to maintain the status quo after the disruptions of the pandemic lockdowns, but necessary legislative and regulatory responses, then the expiration of those responses, put employer health care plans in constant reactive mode over the last couple of years. However, the status quo in health care has never been maintained for long, and the industry needs to assist employers in adjusting to the emerging marketplace.

Weight loss drugs

The FDA recently approved another prescription drug intended to treat obesity, joining Wegovy (the weight-loss formulation of Ozempic) and others that are already on the market. The off-label use of Ozempic, for weight loss, led to shortages due to its popularity, and the strong demand is expected to continue in 2024.

Employers should examine the effectiveness of these prescriptions versus the expense of the medications. If that is measured against the cost of avoiding diabetes, heart disease or other illnesses tied to diabetes, these drugs might be well worth the expense.  However, there are currently no long-term indications that weight loss can be maintained without the continued use of the medications, which, like all medications, have side effects. Therefore, to the extent that employers have control over their health care plan provisions (fully insured plans are typically going to be controlled by the carrier while self-funded plans will have more design leeway), they must monitor the usage of the new drugs and determine the best outcomes for the plan overall.

Generally, if drugs are prescribed by a physician to treat a specific condition, they will meet the definition of a qualified medical expense under Section 213 of the Internal Revenue Code, and the employer plan can pay for that treatment on a tax-free basis.  Many plans default to using that generic definition for most treatments when determining coverage.

More scrutiny has evolved over time for prescription drugs, but employers will want to examine their options and determine what makes the most sense for their employees and their corporate goals and culture. Health care plan advisors will be invaluable in assisting employers to understand the requirements of the rules and in balancing those rules in a way that best fits the corporate culture.

Mental health concerns in the workplace

The National Institute of Mental Health estimates that 18% of U.S. workers have a mental health condition during any given month. This means that psychiatric disability is one of the most common types of disability covered under the Americans with Disabilities Act. Whether rising to the level of an ADA-covered disability or not, mental health issues seem to be increasing and will be a major factor in 2024.

The ADA applies to employers with 15 or more employees, and a covered disability is defined as a physical or mental impairment substantially limiting one or more major life activities. Employers are required to protect the rights of the affected individuals by offering them reasonable accommodation to work around any difficulty caused by the disabling condition. The accommodation must be individualized and should begin with employee input. Accommodations might include additional or more frequent job breaks, leave, scheduling flexibility and additional technology.

Employers’ health care plans also have new obligations with respect to mental health benefits. The Mental Health Parity and Addiction Equity Act of 2008 prohibits employer plans that offer mental health or substance use disorder benefits from having less favorable benefit limitations than medical/surgical benefits. The regulations require all plans to analyze both quantitative and nonquantitative limitations to ensure limitations are no more stringently applied to MH/SUD benefits (unless recognized clinically appropriate standards of care permit a difference) than medical/surgical benefits.

New legislation directs federal agencies to analyze plans’ and insurers' restrictions, particularly regarding NQTLs in plans. They have been auditing large insurers and self-funded plans in an effort to understand how those NQTLs can disproportionately affect the MH/SUD benefits even if the plans do not overtly indicate any differentiation.

Employers and their service providers should be prepared to share any analysis that will demonstrate that NQTLs are essentially equivalent between the two types of treatments.

Other health care changes on the horizon

Several other changes to health care plans will potentially affect employer plans in 2024 or 2025 include:

1. Telehealth flexibility (permitting access at no or very low cost even with health savings account-qualified plans) is due to expire after 2024.
2. New and more expensive cancer treatments are in the pipeline.
3. Additional use of on-site or near-site clinics as an integral aspect of the employer health care plan.

Health care plans will continue to evolve next year and beyond. Employers who are prepared for those changes will be in the right position to address them in a way that works to the best advantage of the company and its employees.

Jay Kirschbaum is senior vice president and director-benefits compliance at World Insurance. He is a tax and ERISA attorney focused on compliance for employer health and welfare plans. Contact him at [email protected].

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