Lifestyle drugs have typically been defined as those designed to treat obesity, infertility, erectile dysfunction and male pattern baldness, as well as those to encourage smoking cessation. While providing coverage for these drugs isn’t likely to be the determining factor in attracting employees, it can be part of an overall message that is becoming increasingly important. Organizations that demonstrate that they are dedicated to maintaining a healthy workplace and have the best interests of employees at heart may have the upper hand in the ongoing competition for talent.
There may also be a good business case for providing lifestyle drug coverage. Helping employees deal with lifestyle-related conditions such as obesity and smoking will benefit both the employee and the employer—both in the short term and in the long term, by potentially avoiding other serious conditions in the future. And while infertility, erectile dysfunction and male pattern baldness are not life-threatening conditions, giving employees the means to deal with them goes a long way in conveying the message that the organization prioritizes employees’ well-being.
Employers are turning to prescription drugs, along with health and wellness initiatives, to help employees handle these conditions more effectively. However, research suggests that coverage levels are still quite low overall. According to Hewitt Associates’ 2007 Rapid Response survey on lifestyle drugs, more than half of the 200 responding employers provide coverage for smoking cessation medication and infertility treatments. But only one-third of employers provide coverage for obesity drugs, one-quarter for erectile dysfunction medications, and very few (5%) for male pattern baldness treatments. Therefore, including lifestyle drug coverage in employee benefits can be a major differentiator for an organization.
Anecdotal evidence from the U.S., where healthcare benefits are a much more important factor in attracting and retaining employees, suggests that providing lifestyle drug coverage can put employers ahead of the pack. This is particularly true with coverage for expensive infertility treatments, given the current efforts to encourage more women to enter or return to the workforce.
Containing Costs
Although controlling costs is often a priority, covering lifestyle drugs may not be prohibitive for employers. If only a small portion of employees use these drugs, there won’t be major costs associated with providing coverage for them. And there are ways to ensure that costs don’t skyrocket.
For example, some of the survey respondents impose limitations on the amount of coverage provided, such as annual or lifetime dollar maximums. Another approach is to offer coverage through a health care spending account or through flexible benefits plan options requiring employee contributions. Employees may also share the cost of lifestyle drugs through greater co-insurance as part of a two-tier formulary structure.
Managing Expectations
Whatever decisions employers make regarding lifestyle drugs—adding, ending, limiting or sharing the cost of coverage—it’s important that they communicate the reasons behind their decisions to employees. Clear and open communication helps ensure that employees don’t feel they are losing out on a perceived entitlement or, if coverage is being added, that they appreciate the additional benefits.
Should employers pay for lifestyle drugs as part of employee healthcare benefits? The answer depends on how each organization chooses to balance cost management with talent management. In today’s competitive labour market, organizations need to carefully consider if providing coverage for lifestyle drugs fits within their overall strategies for a healthy workplace.
Sarah Beech is managing principal, consulting, with Hewitt Associates. sarah.beech@hewitt.com
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