Health care plan advisors will be important in helping employers address new challenges in their plans in 2024. Employers expect to maintain the status quo after the disruption of pandemic lockdowns, but the required legislative and regulatory responses, then the expiration of those responses, employer health care plans in a consistently reactive mode over the past two years. However, the status quo in health care is never maintained for long, and the industry needs to help employers adjust to the evolving market.
Weight loss drugs
The FDA recently approved another prescription drug intended to treat obesity, joining Wegovy (the weight-loss formulation of Ozempic) and others on the market. Off-label use of Ozempic, for weight loss, has led to shortages due to its popularity, and strong demand is expected to continue in 2024.
Employers should evaluate the effectiveness of these prescriptions against the cost of the drugs. If that’s measured against the cost of preventing diabetes, heart disease or other diabetes-related illnesses, these drugs may be worth the cost. However, there are currently no long-term indications that weight loss can be maintained without the continued use of drugs, which, like all drugs, have side effects. Therefore, if employers have control over their health care plan provisions (fully insured plans are usually controlled by the carrier while self-funded plans have more leeway in design), they should They monitor the use of new drugs and determine the best outcomes for the overall plan.
Generally, if drugs are prescribed by a physician to treat a specific condition, they meet the definition of a qualified medical expense under Section 213 of the Internal Revenue Code, and the employer plan may pay for that treatment without tax. Many plans default to using a generic definition for most treatments when determining coverage.
More scrutiny has evolved over time for prescription drugs, but employers will want to evaluate their options and determine what makes the most sense for their employees and their goals and corporate culture. Health care plan advisors will be invaluable in helping employers understand the requirements of the policies and in balancing those policies 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 US workers have a mental health condition in 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 or not it rises to the level of disability covered by the ADA, mental health issues seem to be on the rise 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 that substantially limits one or more major life activities. Employers are required to protect the rights of affected individuals by offering them reasonable accommodation to resolve any difficulties caused by the disabling condition. Accommodation must be individualized and must begin with employee input. Accommodations may include additional or more frequent breaks from work, vacations, scheduling flexibility and additional technology.
Employer health care plans also have new obligations related 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 limits than benefits that medical/operational. The regulations require all plans to review both quantitative and non-quantitative limits to ensure that the limits are not more strictly applied to MH/SUD benefits (unless the recognized clinically appropriate criteria of care allows the difference) rather than medical/operational benefits.
The new law directs federal agencies to review insurers’ plans and restrictions, particularly regarding NQTLs in plans. They audited large insurers and self-funded plans in an effort to understand how those NQTLs might affect MH/SUD benefits even when the plans did not explicitly state any difference.
Employers and their service providers should be prepared to share any analysis that shows that NQTLs are essentially equivalent between the two types of treatment.
Other health care changes on the horizon
Some other changes to health care plans that may affect employer plans in 2024 or 2025 include:
- Telehealth flexibility (allowing access at no or very low cost even with qualified health savings account plans) is due to expire after 2024.
- Newer and more expensive cancer treatments are in the pipeline.
- Additional use of on-site or near-site clinics as an important aspect of the employer’s health care plan.
Health care plans will continue to evolve over the next year and beyond. Employers who are prepared for those changes are 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 with employer health and welfare plans. Contact him at[email protected].
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