Walmart is making some popular GLP-1 medications free for eligible employees with Type 2 diabetes next year. But workers seeking the same drugs for weight loss won’t get the same benefit — a distinction that highlights one of the biggest debates facing employers as they consider coverage in light of soaring costs.
The nation’s largest private employer said that beginning in 2027, it will cover Ozempic and Mounjaro without charge for eligible employees with Type 2 diabetes, subject to prior authorization, according to reports. But coverage comes with an important limitation: Walmart will not cover the medications when prescribed solely for weight loss.
That difference reflects a broader challenge for employers. While GLP-1 drugs have become a flash point in benefits discussions, many companies are drawing a line between treating conditions such as Type 2 diabetes and covering the same medications for weight management.
“More and more companies [are saying], ‘I’ll cover it out of medical necessity. I’m not going to cover it if it’s purely for weight loss,’” SHRM President and CEO Johnny C. Taylor, SHRM-SCP, said recently during a panel at the 2026 EBRI–SHRM Health Benefits Symposium. “Others are saying, ‘I’ll give you both, but you’re going to have different deductibles.’ Then others are not covering it at all.”
Employers are increasingly willing to cover GLP-1s for diabetes while remaining reluctant to extend that coverage to weight loss. SHRM’s 2026 Employee Benefits Survey found that 47% of responding employers covered GLP-1s for Type 2 diabetes, compared with 15% for weight management.
Other research points to the same tension. In a July survey by the International Foundation of Employee Benefit Plans, 60% of responding employers said they covered GLP-1 medications for diabetes only, up from 55% in 2025. Just 36% covered the drugs for both diabetes and weight loss, a share that was unchanged from the prior year.
Cost Is Driving the Debate
The reluctance to cover GLP-1s for weight loss isn’t simply a question of whether employers believe the medications work. It’s also a question of how to pay for them — and how to manage a benefit that could be used by a large share of the workforce over an extended period. One in 8 adults are currently taking a GLP-1, according to KFF, and the brand-name injectable drugs typically cost between $1,000 and $1,500 a month for consumers. Employers may foot 70% to 100% of that bill.
As costs rise, a larger share of employers are dropping coverage. Recent figures from the Business Group on Health (BGH) find that 14% of employers have already dropped or plan to drop coverage of GLP-1s for weight management by 2027. Overall, fewer employers are covering GLP-1s to treat obesity, with coverage dropping from 72% in 2025 to 60% in 2026, according to BGH’s survey of 127 employers representing 8.7 million covered U.S. individuals. About a quarter (24%) have never offered coverage and are not considering it, and another 3% are considering coverage for 2028-29.
Starbucks said it will no longer cover GLP-1 medications prescribed for weight loss for benefits-eligible employees, a move that demonstrates how significant the GLP-1 cost burden has become.
“At the end of the day, the biggest issue is cost,” said Eileen Pincay, pharmacy practice leader at benefits and HR consultancy Segal. “We wouldn’t be having this conversation about a drug like metformin, even though that has been used off label for weight loss, because historically it has been pretty cheap. GLP-1s are a different story. GLP-1s work, employees want them, and they’re extremely expensive.”
Flexibility Matters
Experts have argued that employers have to be flexible with design. Kevin Hern, senior vice president of Lilly Employer at Indianapolis-based Lilly USA, said during the EBRI–SHRM Health Benefits Symposium that the financial impact of covering GLP-1 medications depends partly on patients’ health at the start of treatment. People with more advanced obesity-related conditions may see medical costs decline relatively quickly, while healthier patients may initially generate additional costs as they seek more preventive care and routine checkups.
Flexible benefit designs and greater transparency in drug pricing could help employers make better-informed decisions. Hern, for example, cited Lilly’s Employer Connect platform, which is designed to give employers more pricing transparency and flexibility in structuring coverage.
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