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Beginning in July 2026, new Medicare Part D GLP-1 programs could reshape how retiree health benefits are funded and managed
Medicare GLP-1 coverage is entering a new phase
GLP-1s (glucagon-like peptide-1s) are a class of prescription drugs used to treat type 2 diabetes, obesity, cardiovascular disease and other conditions. These medications have exploded in popularity due to their demonstrated effectiveness, but have traditionally not been covered by private insurance, Medicare or Medicaid, particularly for the treatment of obesity.
The Trump administration is pursuing various approaches to expand coverage and reduce the cost of these medications. With respect to seniors, this includes the introduction of a temporary federal program for Medicare Part D beneficiaries, which begins July 1, 2026 and runs through December 31, 2027 (the Medicare GLP-1 Bridge Program), and then a more formal voluntary demonstration program focused on delivering these medications through group and individual Medicare Part D plans, including Medicare Advantage Prescription Drug plans, beginning as early as 2028 (the BALANCE Model).
Current Medicare Part D rules specifically exclude coverage for medications to simply treat weight loss, and the Medicare GLP-1 Bridge Program is intended to test the effectiveness in reducing obesity and the corresponding medical costs in the Medicare population. If successful, the program has the potential to provide regulators with the data needed to support future legislation to expand Medicare Part D coverage rules to cover GLP-1s to specifically target obesity in the Medicare population, improve health outcomes and reduce the long-term cost of the Medicare program.
Although not intended, the new federal programs have the potential to introduce both direct and indirect medical and drug costs to group-based plan sponsors, beginning as early as July 2026.
Further, if the BALANCE Model launches as planned in 2028, group-based plan sponsors will face a decision. They can participate in the program to offer GLP-1s to retirees on a group basis and take on the associated costs or they can direct retirees to the individual Medicare marketplace to obtain GLP-1s and other Medicare medical, drug, and ancillary benefits.
The Bridge Program (July 2026 to December 2027)
The Medicare GLP-1 Bridge Program is a temporary, nationwide, federally funded program that will be administered separately from Medicare Part D coverage. This means that group and individual Medicare Part D plan sponsors do not have to opt in to this program for eligible beneficiaries to gain access to GLP-1s, nor will Medicare Part D plan sponsors bear any direct financial risk for costs incurred by their beneficiaries.
Program highlights:
- All Medicare Part D beneficiaries are eligible regardless of how the Medicare Part D benefit is secured (group vs. individual)
- Medicare/HHS will fully fund the direct cost of the GLP-1 medication and deliver the benefit outside of the Medicare Part D system through a central processor
- Beneficiaries will be responsible for a $50 copay for a 30-day supply with the copay not accumulating toward the Medicare Part D out-of-pocket maximum
- Medicare/HHS has negotiated pricing for the GLP-1 manufacturers included in the Program, upon which the federal manufacturer payment will be based
Projected cost headwinds for group-based plan sponsors
Although the direct cost of providing the GLP-1s is fully funded by Medicare/HHS outside of the Medicare Part D system, there are expected to be a number of ways in which this program will impact group medical and prescription drug costs, including:
- Increase in provider visits as beneficiaries establish eligibility for the GLP‑1 Bridge Program, including evaluation, submitting prior authorization, and receiving a prescription.
- Additional provider visits, diagnostic testing, and lab work to monitor progress, assess side effects, and support ongoing prescription management and renewals.
- Additional provider, convenient care, urgent care and emergency room visits associated with adverse health events/side effects created by the GLP-1s
- Select prescription medications needed to treat side effects
The impact on any given group-based plan sponsor will be a function of their specific beneficiary GLP-1 utilization and should be discussed with the group-based medical and prescription drug carrier. Reporting as experience emerges will be critical to understanding the financial impact. Material changes in plan cost can lead group-based Medicare Advantage carriers to revise group ratings, premiums and benefit designs. It’s very likely these costs were not contemplated when the current premium guarantee was put in place.
The BALANCE Model (targeted for 2028+; better approaches to lifestyle and nutrition for comprehensive health)
BALANCE is a nationwide temporary Medicare Part D demonstration program that will be delivered through Medicare Part D and with voluntary group and individual plan participation. This means that group and individual Medicare Part D plan sponsors will have to opt into this program for eligible beneficiaries to gain access to GLP-1s after the Bridge Program ends, with plan sponsors bearing the direct financial risk for costs incurred by their beneficiaries, and with some degree of federal funding support under Part D (details are lacking around federal funding/payment). There are many factors that will impact a plan sponsor’s decision to participate in BALANCE including the specific program features and rules, which have yet to be finalized. Additionally, actual experience under the Bridge Program will also impact plan sponsor decision making.
How plan sponsors can prepare for Medicare GLP-1 changes
Alight suggests that group-based plan sponsors engage their Medicare group medical and prescription carriers for insight into the specific implications of the Medicare GLP-1 Bridge Program with scheduled reporting to understand emerging experience.
Further, Alight’s point of view is that the most cost-effective and retiree-friendly way to provide GLP-1s to Medicare beneficiaries is through the diverse and competitive individual marketplace so that retirees can select the medical and prescription drug coverage that best meets their individual needs, while managing their expenses.
By moving to an exchange, group-based plan sponsors do not need to opt in to the BALANCE Model to provide access to GLP-1s after 2027. Many will find that the individual Medicare marketplace is the optimal place to source coverage.
Alight can help group-based plan sponsors assess the implications of the new federal GLP-1 programs and develop an individual Medicare marketplace strategy that best meets all retiree and plan sponsor needs. Please contact Alight to discuss further.
