In states where medical marijuana is legal, employee benefits administrators sometimes wonder:

Must our plan cover it?
Can we legally cover it?
Should we cover it?

Most states have legalized the use of marijuana or cannabis by an individual for medical purposes when recommended by a doctor. Regularly updated map and summary of state medical marijuana laws from ProCon.org show 29 states and Washington, D.C. allow some type of medical marijuana use.

What does this mean for employer-sponsored group health plans?

Here are a few questions to explore as you consider medical marijuana coverage.

Does a group health plan/prescription drug plan have to cover medical marijuana?

• Neither self-funded plans nor fully insured health plans must cover marijuana.
• At this time, although many states would allow health plans to cover medical marijuana, no states require it.
• Marijuana is classified by the U.S. Department of Justice (DOJ) as a Schedule I drug pursuant to the federal Controlled Substances Act (CSA), meaning its possession and use is still unlawful.

[Overview of Prescription Drugs Online Learning Course]

Can our group health plan legally cover medical marijuana?
I’m not qualified to offer legal advice; I’d suggest asking your employee benefits attorney for an opinion. Offering coverage for medical marijuana could be problematic because:

• Marijuana is a Schedule I controlled substance under the CSA.
  DOJ explanation of drug scheduling system (see second paragraph under “Schedule I”)
• Physicians are not allowed to prescribe Schedule I drugs under the CSA.
  Section II of DOJ Practitioner’s Manual states, “IMPORTANT NOTE: All drugs listed in Schedule I have no currently accepted medical use in treatment in the United States and therefore may not be prescribed, administered, or dispensed for medical use.”
• Possession of controlled substances without a valid medical prescription is unlawful under Title 21 of the CSA.

[Related: Certificate Series—Health Benefit Plan Basics, July 24 – Tuesday, July 25, 2017, Denver, Colorado]

Some group health plans do cover medical marijuana. Should ours?
Again, get some good legal advice. Here are a few pros and cons to think about.

• Possible reasons to cover
  • Some employees would see it as the right thing to do—They would believe the organization is going in the right direction.
  • Coverage might help meet employees’ medical needs.
  • Medical marijuana might be a cost-effective treatment for some conditions, resulting in savings for the medical plan.
  • Coverage of medical marijuana would encourage the employer to tackle a thorny issue that it really should tackle anyway: its policy on employee drug use or impairment during working hours.
• Possible reasons not to cover
  • Marijuana coverage would be taxable, like wages. Internal Revenue Code Section 105(b) excludes from gross income reimbursements of expenses incurred for medical care as defined in Code Section 213(d). Marijuana/cannabis is not considered medical care under Code Section 213(d), according to IRS Publication 502.  (See “Controlled Substances” on page 15)
  • Flexible Spending Arrangements (FSAs) are not allowed to reimburse expenses not included in Code Section 213(d).
  • Possession or use of marijuana—even for medical reasons—is not legal under federal law.
  • Some employees would see it as the wrong thing to do—They would believe the organization is going in the wrong direction.
  • Covering medical marijuana could send an unintended message about the employer’s position on recreational marijuana use.
  • Employees impaired by legal or illegal substances could pose risks to employee and public safety, especially in certain industries.

When deciding whether or not a group health plan will cover medical marijuana, there are many factors to consider including federal controlled substance law, state laws, employee benefit plan taxation issues, and employee reactions to coverage. This issue bears revisiting from time to time as the federal, state, and cultural landscapes change. Discussing this with legal counsel before making a decision is recommended.

Lois Gleason, CEBS
Manager, Reference/Research Services at the International Foundation