This week: Every reporting season brings the same questions from employers. Who files what? When is it due? And why are level-funded plans different? This article walks through the ACA reporting rules employers struggle with most and highlights where compliance issues—and penalties—tend to arise.
When Formularies Change
How a Wisconsin asthma case exposed the real cost of coverage surprises, and what agents and employers need to know
In January 2024, a 22-year-old man from Wisconsin, Cole Schmidtknecht, died after suffering a severe asthma attack in a sequence of events that has since drawn national attention and a federal lawsuit.
According to ABC News, Cole had managed his asthma for years using a daily maintenance inhaler, Advair Diskus. His insurance typically covered it, leaving him with an out-of-pocket cost between $35 and $66.
When he went to refill his prescription in early January, he was told that the medication was no longer covered and that the new price would be more than $500. He could not afford it and left the pharmacy without the inhaler, relying only on his rescue inhaler. Five days later, he suffered a severe asthma attack and died.
Cole’s parents have since filed a wrongful death lawsuit against OptumRx and Walgreens, alleging failures related to notice and assistance when his coverage changed. A federal judge recently allowed the case to proceed, meaning it will now move forward in court. Local coverage from WMTV outlines the current status of the lawsuit.
The legal outcome remains to be seen. But the story resonated nationally because it revealed something many employees, employers, and even advisors do not fully understand.
Prescription coverage is not static, even in the middle of a plan year.
Formularies Aren’t Locked In for the Year
Most people assume that once a health plan starts, its benefits stay the same until renewal. That is generally true for deductibles and employer contributions. Prescription formularies work differently.
A formulary is simply the list of drugs a plan agrees to cover and how those drugs are tiered. Carriers and pharmacy benefit managers can update formularies throughout the year due to rebate negotiations, pricing strategies, or shifts in preferred medications.
Even when carriers say their formularies stay consistent for the year, they usually mean the calendar year, not an employer’s plan year. That matters. Employers that renew outside January 1 may already be stepping into a newly updated formulary, which feels like a mid-year change to employees. Add in occasional PBM adjustments during the year, and it becomes easy to see why workers are often blindsided.
When coverage changes, a drug that was affordable last month might suddenly require prior authorization, move to a higher tier, or drop off coverage entirely. Employees rarely learn about these changes through advance communication. In most cases, they find out at the pharmacy counter.
That is exactly what happened in Cole’s case.
Why This Matters for Employers
Most employers believe they have done the right thing by offering solid coverage. In many cases, they have. But formulary decisions sit largely outside employer control.
When an employee suddenly cannot afford a medication they have relied on for years, the issue goes beyond benefits administration. It becomes a health risk.
Employers can help by encouraging employees to speak up when prescriptions change unexpectedly and by providing clear paths for getting assistance. In many situations, solutions exist. These may include prior authorizations, formulary exceptions, alternative medications, or manufacturer assistance programs.
The challenge is that employees rarely know those options are available.
Where Agents Add Real Value
This is where experienced agents and advisors make a difference.
Agents do not need to memorize every formulary. What matters is understanding that mid-year coverage changes are possible, recognizing which medications create higher risk, and helping employers prepare for those situations.
When coverage issues arise, agents can help interpret plan rules, escalate with carriers or PBMs, and guide employers through next steps. That support transforms a confusing and stressful moment into a managed process.
This is how agents move from plan selection to trusted advisory.
The Broader Lesson
Formulary changes may sound like an industry technical detail. In real life, they affect real people.
When medications suddenly become unaffordable, employees face impossible choices. They may skip doses, stretch prescriptions, switch to less effective options, or go without treatment entirely.
Cole’s story is an extreme and tragic example. But smaller versions of this happen every day.
For employers and agents alike, it is a reminder that benefits work does not end at renewal. Ongoing communication, awareness, and advocacy matter throughout the plan year.
If an employee ever says, “My medication suddenly isn’t covered anymore,” that is not just a complaint. It is a red flag.