As employers across the US grapple with exploding pharmacy costs driven to a significant extent by GLP-1 weight-loss drugs, a growing number are turning to health reimbursement arrangements (HRAs) as a cost-containment tool.
Chris Byrd, pictured, a benefits industry executive at WEX, headquartered in Portland, Maine, told Insurance Business Benefits that carving GLP-1 medications out of the employer drug plan and into a dedicated HRA is now a financially compelling argument and not just for budget control.
"The PBM price is often now the highest price in the market," Byrd said. "You have so many other places where a consumer can go and purchase branded GLP-1s, from Lilly Direct and other manufacturer support programs, from places like GoodRx; at a price that is less than what the PBM is charging the employer if they're included in the employer's drug plan. For that reason alone, you should carve it out.
The conversation comes as high-profile employers move to restrict GLP-1 coverage. Starbucks announced it will discontinue coverage for weight-loss use of GLP-1 drugs this fall, a decision Byrd described as a signal of a wider rethink rather than an isolated case.
"Early on - going back as many as four years for some of the more progressive employers - you had a number of employers come out and say, 'I'm going to cover this and I'm not going to put any conditions on it at all,'" Byrd said. "Most of those employers, I think, regret that decision now in hindsight because their budgets exploded."
The pullback is focused specifically on lifestyle use. Employers are moving to place clinical prior-authorization gates on GLP-1 coverage, including type 2 diabetes diagnosis, a body mass index (BMI) of 35 or above (the threshold used by Medicare), and a BMI of 27 to 30 with comorbid conditions such as hypertension, elevated cholesterol, or cardiovascular markers.
Almost one in five adult Americans (18 percent) has tried a GLP-1, according to a Kaiser Family Foundation (KFF) poll. The Employee Benefit Research Institute (EBRI) Greenwald Consumer Engagement in Healthcare Survey, released in summer 2026, found that two-thirds of employees believe their employer should cover the drugs.
"So that's going to exert some pressure on employers to do something," Byrd said. "The question is, okay, I'm caught in this kind of vice grip between employee expectations and budgetary reality. How do I deal with that?"
The original case for carving out GLP-1s into a dedicated HRA was straightforward budget containment.
By setting a fixed monthly allowance employers give their chief human resources officers (CHROs) and chief financial officers (CFOs) a predictable ceiling.
But the pricing inversion in the GLP-1 market has added a second, arguably stronger argument: the consumer channel often beats the PBM channel on cost for the same branded drugs, meaning employees can stretch a fixed HRA benefit further outside the employer's drug plan than within it.
"If you're going to provide your employee with $200 a month or whatever the number is, you want to get the most bang for that benefit buck," Byrd said. "And the way that you do that is you say, here's a bunch of places you can go shop."
For WEX employer clients, the structure of the GLP-1 health reimbursement arrangement (duration, benefit size, clinical conditions) is entirely at the employer's discretion. Byrd noted that employers can pare back the monthly amount or eliminate the benefit entirely if the budget impact warrants it.
Adherence is another factor that the HRA model can address. One-third of people who have tried a GLP-1 have dropped off, with cost cited as the most common reason. If an employer-funded HRA lowers the employee's net cost, continued adherence becomes more likely which also supports the case for attaching the benefit to a health coaching or behavior-modification program.
"Many employers, and I think most will end up doing this, are conditioning coverage on ongoing participation in a health coaching program, a behavior modification program," Byrd said. "And if you aren't continuing to participate in that program, you're going to lose the benefit."
The GLP-1 HRA argument is gaining traction not only among benefits payments specialists but among large benefits advisory firms.
Rick Kelly, National Pharmacy Lead and Senior Vice President, Employee Health & Benefits at Marsh McLennan Agency (MMA) in Raleigh, North Carolina, told Insurance Business in a separate interview that only about 18% of employers in MMA's book of business now cover GLP-1s for weight loss; a figure he said has been falling sharply as plan costs have grown unsustainable.
"Lilly and Novo have recognized that a lot of employers have stopped covering weight-loss GLP-1s," Kelly said. "Their direct-to-consumer programs have made it where those drugs may not be cheap, but they may be more affordable for an individual. And then if you think about it from an employer perspective, you can get into the conversation of how can we help support our employees with a cap on expense, or maybe just allowing them to have access, as opposed to us funding. That's where direct-to-consumer programs, that's where the health reimbursement arrangements come into play."
Kelly sees the GLP-1 HRA debate as part of a broader structural evolution in benefits design, away from one-size-fits-all packages and toward a model of foundational coverage supplemented by flexible, employee-directed HRA dollars.
"The average employee needs catastrophic protection on medical, catastrophic protection on disability, and some sort of life insurance protection," Kelly said. "And then when you get into what else do they want and need, whether that's GLP-1, whether that means infertility, whether that means out-of-network behavioral health counseling. I do see things moving in the direction where there's foundational coverage of real risk and then giving employees either options or an HRA."
Proliferating point solutions and HRA carve-outs risk undermining the simplicity employees say they want from their benefits, a complexity that makes strong communication from the broker an essential counterbalance.
Byrd offered a clear framework for benefits brokers advising mid-size employer clients whose current health plan already covers GLP-1s.
The conversation, he said, should unfold in three steps. First, ask whether the benefit currently has any clinical prior-authorization conditions; if it is available to any employee who requests it, that is a budget risk worth revisiting. Second, ask whether a coaching or lifestyle-modification program is attached. Third and critically, ask whether the employer even knows what their PBM is charging for the drugs.
"Chances are, especially the mid-size employer, the answer is going to be no, I don't know what they're charging me," Byrd said. "And then just show some data - it's publicly available - that the average PBM price is much higher than what you can get in the consumer market. So why wouldn't you carve it out?"
The implication runs deeper than GLP-1s alone. Specialty drug costs follow what Byrd called an 80/20 pattern: everyday medications are not the line item driving CFOs to distraction, but new high-cost specialty drugs are.
He suggested employers could begin by identifying a defined set of specialty drugs to carve into HRAs rather than overhauling the entire pharmacy benefit.
Benefits brokers advising employers on high-cost specialty drug coverage are increasingly finding that understanding PBM contract terms is a prerequisite for sound plan design and it’s a task that Byrd described with some humor as beyond even an advanced large language model.
Beyond GLP-1s, Byrd pointed to growing employer interest in individual coverage HRAs (ICHRAs, referred to on Capitol Hill as "choice arrangements”, as a vehicle for small to mid-sized employers that want to exit the administrative burden of managing a group health plan.
Under this model, employers set a fixed monthly amount (Byrd cited $600 per month for individuals and $1,000 per month for families) and direct employees to purchase their own coverage on a public exchange or through a private insurance marketplace.
Individual coverage HRAs have seen rapid growth among small and mid-size US employers since the rules governing them were finalized by the Department of Labor (DOL), the Department of the Treasury, and the Department of Health and Human Services (HHS) in 2019.
Byrd's larger enthusiasm, though, is reserved for what he sees as a long-overdue shift in healthcare consumerism, that is being enabled by artificial intelligence tools and government-mandated data transparency requirements, including price transparency rules put in place by the Centers for Medicare & Medicaid Services (CMS).
"We've been talking about consumerism in this country in the context of health and health insurance for a long time, over two decades now," Byrd said. "I think we are really starting to deliver on the promise of consumerism. AI has an incredible role to play there, but also the opening up of a lot of data based on some things the government did to mandate that certain data be available."
For benefits brokers, that shift creates an opportunity. As employees gain access to more data and more consumer-market purchasing options, they will need trusted guides and the broker relationship with the employer, already built on trust, is a natural platform.
"Their benefits broker that they have a relationship with, they already trust, they can be a trusted source for their teams as well in helping them understand how to use this money wisely," Byrd noted.
