.webp?width=1200&height=800&name=GLP-1-Drives-Up-Employer-Healthcare-Costs%20(1).webp)
There’s explosive demand for GLP-1 drugs, initially approved for treating Type 2 diabetes and now widely prescribed to treat obesity. Between 8% and 10% of Americans are using GLP-1s, while 30%-35% are interested in using them.
That demand is a key contributor to the expected sharp rise in employer-provided healthcare in 2026. Benefit plan experts predict a 10% median increase in health plan costs. Among experts who believe specialty drugs are the main reason for those cost increases, 59% cite GLP-1 as the primary cause.
RELATED: Rising Group Healthcare Costs - What Employers Can Expect in 2026 >>
With the success and popularity of GLP-1 medications like Wegovy, Zepbound and Ozempic comes more consumer demand and, ultimately, higher healthcare costs. Employees on GLP-1 therapy can generate nearly double the medical and pharmacy expenses of non-users, often reaching tens of thousands of dollars per person annually.
Three GLP-1 cost drivers are:
GLP-1 medications range from $6,000 to $10,000 per patient annually. Generics with lower prices are not expected for several years.
Although the first GLP-1s were approved for weight loss in 2014, usage surged in 2021. Employers now report GLP-1s among their highest pharmacy expenses.
There is a large pool of GLP-1 candidates. About 34 million Americans have Type 2 diabetes and 40% of Americans are considered obese. Beyond GLP-1 for weight loss and diabetes, some GLP-1s are approved for addressing conditions including cardiovascular risk, sleep apnea and chronic kidney disease in people with Type 2 diabetes.
Insurance premiums for employer-based plans have been increasing for years. Nationwide, the average annual cost per employee grew 40% from 2015 to 2024. During the same period, Kansas’ average rates also rose around 40% while Missouri’s rates jumped nearly 50%.
In Missouri, Blue Cross and Blue Shield of Kansas City requested a 19% average increase for its small-group plans in 2026. While insurers in Kansas haven’t released their 2026 rates, industry analysts predict a minimum 11% average increase for small-group plans.
RELATED: Why PEOs Beat a Small Business Health Insurance Broker - Hands Down >>
While higher insurance costs affect all employers, large companies leverage their human resources departments to research providers, explore self-funding options and negotiate better rates with major carriers.
An increase in group insurance costs generally places a heavier burden on small- and mid-sized employers. They face higher premiums and have fewer options to handle sudden spikes. Small businesses may be likely to consider reducing employee benefits, especially those related to GLP-1, or shifting a greater percentage of healthcare costs to employees.
Professional employer organizations (PEOs) can provide small- and medium-sized businesses access to insurance plans typically only available to larger companies, resulting in better premium rates and lower administrative costs. Partnering with a PEO provides businesses with several advantages over handling employee benefits on their own.
Insurance providers base premiums on the number of employees, so smaller companies usually pay higher rates. PEOs act as the employer of record for multiple clients and their employees. By aggregating these employees into a single group, PEOs can negotiate more affordable premiums on behalf of a larger employee pool.
PEOs typically have established relationships with major carriers and vendors, providing them – and their clients – with more sophisticated, personalized and flexible plan options.
For small and mid-sized companies, PEOs can reduce HR workloads by managing benefits administration, handling claims disputes and support and ensuring compliance with healthcare-related laws and regulations at the state and federal levels.
PEO health insurance rates generally cost less than open market plans and help small businesses save money on administrative expenses.
RELATED: PEO Insurance - The Key to Affordable Employee Benefits >>
While GLP-1 drugs are delivering many positive outcomes to the American workforce, they are also significantly raising the costs of employer-sponsored health plans. Small- and medium-sized employers should prepare for higher health-benefit costs in 2026 and beyond.
Partnering with a certified PEO like Axcet HR Solutions is a practical way to leverage collective buying power, access more insurance options, manage administrative and compliance issues and control costs. With more than 30 years of experience serving employers in Kansas City and across the country, Axcet specializes in providing Fortune 500-level benefits at a price smaller businesses can afford.
Let’s talk about how Axcet can help your small business offer affordable healthcare benefits.
.png){kind=logo}
%20(1).jpg)
.webp)
Let us know what you think...