Navigating the "Ozempic bump": 4 ways benefits advisors can manage rising health care premiums amid renewals

As benefits renewal season approaches, employers, benefits advisors, and HR teams across the country are bracing for what is expected to be a challenging round of negotiations. The past year has seen alarming increases in health care premiums, leaving many companies and their employees grappling with the financial implications. A significant driver behind this surge is the unprecedented demand for weight loss drugs like Ozempic, a trend now widely referred to as the “Ozempic bump.”  

This phenomenon has sparked a critical reassessment of health care options and associated costs, including the federal government negotiating directly with drug companies for the first time to determine prices for certain high expenditure drugs. Benefits advisors are now navigating uncharted territory, seeking innovative strategies to manage these rising expenses. 

The impact of the “Ozempic bump”

The “Ozempic bump” represents the ripple effect these high-cost medications have had on health care plans. Originally developed to treat type-2 diabetes, drugs like Ozempic have gained immense popularity for their off-label use in weight management. As more individuals seek these medications, insurers are facing escalating costs, which are being passed down to employers and, ultimately, to employees.

This has translated into double-digit increases in health care premiums for employers, placing a strain on budgets already stretched thin by inflation and other economic pressures. For employees, the situation is equally dire, as higher premiums mean less take-home pay and difficult decisions about whether to opt into certain benefits.

Challenges for benefits advisors

Benefits advisors are on the front lines of this issue, tasked with finding solutions to manage these rising costs while still offering comprehensive healthcare coverage. The “Ozempic bump” has added a layer of complexity to their role, requiring them to think creatively and strategically.

One of the primary challenges advisors face is the unpredictability of the market. With the demand for weight loss drugs showing no signs of slowing down, it’s difficult to forecast future premium trends. Additionally, the health care landscape is constantly evolving, with new treatments and medications entering the market, each with the potential to further drive up costs.

Practical strategies for managing costs

Despite these challenges, there are several practical strategies benefits advisors can employ to help companies and HR teams navigate conversations around the “Ozempic bump” and manage rising health care premiums.

1. Renegotiating plan terms: One of the most effective ways to control costs is to renegotiate plan terms with insurers. This might involve adjusting coverage levels, increasing deductibles, or introducing cost-sharing measures that encourage employees to take a more active role in managing their health care expenses. By working closely with insurers and consultants and/or brokers, companies can find a balance between comprehensive coverage and affordability, and get the most bang for their buck in the long term.
2. Exploring alternative coverage options: Another strategy is to explore alternative coverage options that might be more cost-effective. For example, companies could consider high-deductible health plans (HDHPs) paired with health savings accounts (HSAs), which can provide tax advantages for both employers and employees. Additionally, some companies are looking into self-funded plans, where the employer assumes the financial risk for providing health care benefits, as a way to gain more control over costs.
3. Leveraging data analytics: In today’s data-driven world, leveraging analytics can be a powerful tool for predicting future trends and making informed decisions. By analyzing claims data, companies can identify patterns that could indicate where costs are likely to rise. These insights can then be used to negotiate better rates with insurers or to develop targeted wellness programs that address the specific health needs of the workforce, potentially reducing the need for costly medications like Ozempic.
4. Employee education and wellness programs: Educating employees about the factors driving premium increases and providing them with resources to manage their health can also be effective. For example, it’s estimated that in many companies, 10 members per 150 employees, or roughly 1 in every 15, are utilizing Ozempic or a similar drug. This significant uptake has led some clients to experience a 3% to 5% increase in claims costs per year. With the cost of these medications ranging from $400 to $1,300 per month per member, depending on dosage and specific drug, this becomes a consistent monthly expense that adds up quickly. By offering alternatives like wellness programs and encouraging healthier choices, companies can work toward lowering their overall healthcare costs, thereby mitigating the impact of the “Ozempic bump.”

The next round

As companies and their benefits advisors prepare for the next round of renewals, the “Ozempic bump” serves as a stark reminder of the volatility of health care costs. However, it’s important to remember that clear and proactive communication with clients is essential. Advisors should provide clients with detailed insights on how the surge in demand for weight loss drugs is impacting their premiums and offer actionable advice on how to adjust their benefits packages accordingly. 

The ultimate focus is to create solutions that are both effective and sustainable for the employer and its employees, ultimately leading to smarter, more resilient benefits plans that support a health-conscious workforce. 

Cheryl Swirnow is the Founder and CEO of CMS Consultants.