BEnEfits trEnds
Lifestyle Choices
Covering lifestyle drugs as part of a healthy
workplaCe strategy may also help attraCt and
retain employees. By Sarah Beech
E mployers looking to reduce, or at least contain,
healthcare expenses often categorically refuse
to provide coverage for so-called “lifestyle drugs,”
baldness treatments. Therefore, including lifestyle
drug coverage in employee benefits can be a major
differentiator for an organization.
viewing them as a low priority because they’re Anecdotal evidence from the U.S., where health-
merely for “cosmetic” or “discretionary” purposes. care benefits are a much more important factor in
However, in an increasingly competitive labour attracting and retaining employees, suggests that
market, is this the right strategic decision? providing lifestyle drug coverage can put employ-
ers ahead of the pack. This is particularly true with
Competitive Advantage coverage for expensive infertility treatments, given
Lifestyle drugs have typically been defined the current efforts to encourage more women to
as those designed to treat obesity, infertility, enter or return to the workforce.
erectile dysfunction and male pattern baldness,
as well as those to encourage smoking cessation. Containing Costs
While providing coverage for these drugs isn’t Although controlling costs is often a priority,
likely to be the determining factor in attracting covering lifestyle drugs may not be prohibitive for
employees, it can be part of an overall message employers. If only a small portion of employees
that is becoming increasingly important. use these drugs, there won’t be major costs associ-
Organizations that demonstrate that they are ated with providing coverage for them. And there
dedicated to maintaining a healthy workplace are ways to ensure that costs don’t skyrocket.
and have the best interests of employees at For example, some of the survey respondents
heart may have the upper hand in the ongoing impose limitations on the amount of coverage
competition for talent. provided, such as annual or lifetime dollar
There may also be a good business case for maximums. Another approach is to offer coverage
providing lifestyle drug coverage. Helping through a health care spending account or through
employees deal with lifestyle-related conditions flexible benefits plan options requiring employee
such as obesity and smoking will benefit both the contributions. Employees may also share the cost
employee and the employer—both in the short of lifestyle drugs through greater co-insurance as
term and in the long term, by potentially avoiding part of a two-tier formulary structure.
other serious conditions in the future. And while
infertility, erectile dysfunction and male pattern Managing Expectations
baldness are not life-threatening conditions, giving Whatever decisions employers make regarding
employees the means to deal with them goes a long lifestyle drugs—adding, ending, limiting or sharing
way in conveying the message that the organization the cost of coverage—it’s important that they
prioritizes employees’ well-being. communicate the reasons behind their decisions to
Employers are turning to prescription drugs, employees. Clear and open communication helps
along with health and wellness initiatives, to help ensure that employees don’t feel they are losing out
employees handle these conditions more effective- on a perceived entitlement or, if coverage is being
ly. However, research suggests that coverage levels added, that they appreciate the additional benefits.
are still quite low overall. According to Hewitt Should employers pay for lifestyle drugs as
Associates’ 2007 Rapid Response survey on life- part of employee healthcare benefits? The answer
style drugs, more than half of the 200 responding depends on how each organization chooses to
employers provide coverage for smoking cessation balance cost management with talent management.
medication and infertility treatments. But only In today’s competitive labour market, organizations
one-third of employers provide coverage for need to carefully consider if providing coverage for
obesity drugs, one-quarter for erectile dysfunction lifestyle drugs fits within their overall strategies for
medications, and very few (5%) for male pattern a healthy workplace. BC
Sarah Beech is managing principal, consulting, with Hewitt Associates. sarah.beech@hewitt.com
BenefitScAnAdA.com mArcH 2008 45