How Medicare's New GLP-1 Pilot Could Change Drug Costs for Beneficiaries and Employees
Medicare beneficiaries may soon have a less expensive way to obtain certain GLP-1 medications prescribed for weight loss, while workers covered by employer health plans could face higher premiums or reduced coverage as the cost of those drugs continues to climb. In this interview, Jae Oh, CFP and ...
New Medicare GLP-1 pilot program could lower drug costs
A Medicare pilot could reduce GLP-1 costs for some beneficiaries, while rising employer health plan expenses may reshape coverage for workers.
Jun 28, 2026 5:03 AM EDT
By Robert Powell, CFP – Retirement, Senior Editor
Edited by Celine Provini
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How Medicares New GLP-1 Program Could Save You Thousands from finStream.TV on Vimeo
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Medicare beneficiaries may soon have a less expensive way to obtain certain GLP-1 medications prescribed for weight loss, while workers covered by employer health plans could face higher premiums or reduced coverage as the cost of those drugs continues to climb.
In this interview, Jae Oh, CFP and author of “Maximize Your Medicare,” explains how a new 18-month Medicare pilot program could expand access to GLP-1 medications for some beneficiaries beginning in July, why formulary rules still matter, and how rising use of these medications is affecting employer-sponsored health insurance.
Below is a transcript of the interview with Oh, edited for brevity and clarity.
Some Medicare beneficiaries may get GLP-1 drugs for flat monthly copay
Bob Powell: Starting in July, some Medicare beneficiaries will be able to access GLP-1 medications by paying one flat fee per month. Good news for some, yes?
Jae Oh: I think it is good news because it expands the number of Medicare beneficiaries who can obtain GLP-1 medications.
We’ve discussed before that GLP-1 drugs are generally covered under Medicare Part D when there is a qualifying medical condition. Under this new pilot program, which is expected to begin next month and run for 18 months, eligible beneficiaries would pay a flat $50 copay. It also broadens access to people pursuing medically supported weight-loss programs.
GLP-1 medications must still appear on your Part D formulary
Bob Powell: In the past, we’ve talked about Part D coverage requiring the medication to appear on a plan’s formulary.
Jae Oh: That’s an important point.
There are many GLP-1 medications on the market today. Whether you have a standalone Part D prescription drug plan or prescription coverage through a Medicare Advantage plan, your specific plan must include the medication your physician prescribes.
Simply being prescribed a GLP-1 medication does not automatically guarantee coverage.
The pilot program could begin as early as July
Bob Powell: Because Medicare drug plans are annual contracts, is it more likely that this won’t officially begin until January?
Jae Oh: Based on the information I’ve seen, it could begin as early as July 1.
That’s welcome news because it aligns with broader efforts to improve health outcomes. The thinking is straightforward: If beneficiaries who want to lose weight can access these medications more easily, they may improve their overall health and potentially reduce future medical claims.
At least in theory, that’s how the program is intended to work.
The existing Part D out-of-pocket cap remains in place
Bob Powell: Do beneficiaries need to pay attention to the medical indication used to qualify for the flat fee?
Jae Oh: Yes.
The flat-fee program appears to apply specifically to weight-loss treatment, while existing Part D coverage continues to operate as it does today.
It’s also worth remembering that Medicare Part D now includes an annual out-of-pocket maximum of $2,100 for 2026.
The pilot program will run for 18 months
Bob Powell: The program lasts 18 months. After that, it could either end or continue depending on the results.
Jae Oh: That’s right.
It’s a pilot program, and policy decisions in Washington can change quickly. A great deal can happen over an 18-month period, so it’s difficult to predict what happens after the pilot concludes.
Rising GLP-1 costs are creating pressure on employer health plans
Bob Powell: What’s happening in the large employer market with respect to GLP-1 medications?
Jae Oh: We’re seeing some remarkable developments.
Recent data suggest roughly 20% of prescription drug spending under large employer health plans is now devoted to GLP-1 medications.
Many large employers operate self-funded health plans, meaning they assume much of the financial risk themselves. Heavy utilization of GLP-1 medications increases the cost of those plans and can make them more difficult to sustain financially.
Employers may respond with higher premiums or reduced coverage
Bob Powell: One report estimated the average annual cost for a patient taking a GLP-1 medication is about $7,400, with total U.S. spending exceeding $100 billion. Those are remarkable numbers.
Jae Oh: They are.
Insurance works by spreading costs across everyone participating in the plan. The money required to pay for these medications has to come from somewhere.
Employers may eventually decide to stop covering certain GLP-1 medications altogether if costs continue climbing. Another possibility is increasing employee cost-sharing by requiring workers to pay more out of pocket.
Medicare beneficiaries should revisit eligibility for GLP-1 coverage
Bob Powell: What’s the practical advice for Medicare beneficiaries and employees?
Jae Oh: For Medicare beneficiaries, anyone who previously couldn’t obtain a GLP-1 medication because it wasn’t covered for weight-loss purposes should revisit that question.
Given that this pilot program is expected to begin very soon, it makes sense to determine whether you now qualify.
For employees, it’s important to monitor changes to your employer’s health plan. Workers generally have fewer options because coverage decisions are made by the employer.
If your employer offers a Health Savings Account (HSA), those funds may help pay for medications that are no longer covered under your health plan.
Consumers should expect additional GLP-1 policy changes
Bob Powell: It sounds as though Medicare beneficiaries and employees alike should pay close attention to future developments.
Jae Oh: Absolutely.
GLP-1 medications continue to generate headlines because obesity and diabetes affect millions of Americans. These drugs have produced dramatic results for many patients, making them one of the most closely watched developments in health care today.
I expect we’ll continue seeing new developments.
Longer life expectancy also creates new retirement planning challenges
Bob Powell: If GLP-1 medications improve health and extend life expectancy, retirees may need larger retirement savings to support a longer retirement.
Jae Oh: It’s an interesting tradeoff.
The goal is to become healthier and live longer. But living longer also means paying living expenses over a longer period.
As part of LIMRA’s Retirement Income Institute, we’re focused on longevity risk, which is the possibility of outliving your savings.
It’s still too early to know how much these medications may ultimately extend life expectancy. We don’t yet have enough long-term data to answer that question.
More GLP-1 headlines are likely
Bob Powell: Anything we missed?
Jae Oh: I think we’ll continue seeing additional headlines. This is an area that’s changing rapidly, and we’ll likely have more to discuss as new developments emerge.
About the authors
Robert Powell, CFP – Retirement, Senior Editor
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Robert Powell, CFP®, RMA®, is an award-winning financial journalist whose work has appeared in The Wall Street Journal, MarketWatch, USA Today, TheStreet, Investor’s Business Daily, Yahoo! Finance, and AARP. He is the editor and publisher of Retirement Daily on TheStreet and hosts the Decoding Retirement podcast. Powell also serves as editor-in-chief of the Retirement Management Journal and is a co-founder of finStream.tv. He was named a 2022 Robert N. Butler–Jack Rosenthal Age Boom Academy Journalist Fellow at Columbia Journalism School and received the 2021 RTDNA/NEFE Excellence in Personal Finance Reporting Award. Additionally, he teaches in the Financial Planning Association’s Online Elder Planning Specialist program.
Celine Provini
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Celine is a writer and editor with over 20 years of experience and has covered diverse news, features, academic/research, and legal topics. At TheStreet.com, Celine is a senior editor with experience across retail, stocks, investing, personal finance, technology, the economy, and travel.
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