Waco employees may see 7% hike for health coverage Waco eyes 7% increase in employee health plan premiums, cut to GLP-1 coverage

City of Waco employees would pay 7% more in health insurance premiums and lose coverage for GLP-1s and other drugs prescribed solely for weight loss under a proposal presented to the Waco Budget and Audit Committee on Tuesday.

Possible raises of at least 3%, however, would more than cover the higher employee insurance costs, Waco Human Resources Director Missie Pustejovsky said. The budget and audit committee, which consists of the full city council, is in the early stages of assembling the city's budget proposal, alongside city staff, for the new fiscal year, which starts Oct. 1.

"We're facing a $4.23 million shortfall in the funding of the health plan," Pustejovsky told the committee Tuesday.

Alongside the 7% employee premium increase, a $270,000 gain for the health plan, Pustejovsky's proposal includes a 12% increase in the city's premium payments, a $2.23 million gain. Without a premium increase or a change to the health plan, projections show the city would spend a little more than $30.1 million, compared to contributions of $25.9 million. Health plan expenses are expected to include:

$14.4 million for medical claims$11.8 million for prescription claims$2.9 million for catastrophic and unpredictable claims$360,000 for plan administration$571,000 for all other expenses.

Pustejovsky said before she considered a recommendation to increase employee premiums or cut coverage for weight-loss drugs, the city hired benefits consultant Lockton USA to negotiate the pricing and payment structure of the current prescription plan, resulting in almost $1.1 million in expected savings without changes to plans or coverage.

About 17.5% of spending on medications in fiscal year 2025 was for GLP-1 prescriptions solely for weight loss, according to committee documents.

"Claims related to GLP-1 medications for weight loss alone were over $1.6 million for FY 24-25 and have been rising, with usage among a relatively small portion of members, less than 150 members out of our more than 3,000 members on the plan," Pustejovsky said by email.

Cutting coverage for the drugs would save an estimated $1 million.

"The City is exploring discontinuing coverage for GLP-1 medications and other prescription drugs when used solely for weight loss purposes," Pustejovsky said. "This decision is driven by the significant, rapidly increasing costs associated with these medications. We also looked at what other employers are doing, and most do not cover GLP-1 medications for weight loss only. Like many organizations, we're having to make difficult decisions to keep our health plan sustainable for everyone."

GLP-1s and similar drugs would still be covered for treatment of diabetes and any other condition the Food and Drug Administration has approved them for, she said.

"These medications play an important role in managing chronic conditions," she said. "The City of Waco will continue to offer and evaluate alternative programs and resources that support overall health and wellness. For those who still choose to use these medications, the City's FSA [Flexible Spending Accounts] may be used to pay for them with pre-tax dollars, if prescribed by a doctor."

Pustejovsky said her goal and the city's goal for employees is providing a balanced, sustainable approach that supports employee health while maintaining responsible stewardship of public funds.

City Council Member Andrea Barefield asked during Tuesday's meeting if the city could achieve the needed savings by keeping GLP-1s for weight loss covered only for employees but not for family members. She noted some people need more than diet and exercise, nutritional counseling and exercise coaching.

Pustejovsky also pointed out that pay raises the city council may approve for employees likely would more than cover the higher health plan premiums.

As an example she considered the lowest paid wage band of employees, $17.59 per hour or $36,587 per year, and the smallest raise the council would likely give, 3%.

Such an employee would see a $1,097 increase in pay across the year.

Including a $75 discount for taking an annual wellness check, a 7% premium increase would amount to $33 for the year for individual coverage or $487 for family coverage. With family coverage, the raise and premium increase would net an additional $610 for the employee.

With the proposed premium increases and the cut to GLP-1 coverage, the city could fully fund expected health plan expenses and put $344,000 toward health fund reserves, Pustejovsky told the committee.