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Can we make smokers pay higher premiums?

by on
in Employee Benefits Program,Human Resources

Q. I have to admit I am not a fan of smokers, but what really concerns me is the cost they are adding to our benefits programs. I don’t think it is fair to the nonsmokers that their costs should keep going up year after year when it's likely smokers are fueling a part of that cost. Can I make smokers pay more in premiums? –S.S.

A. Yes, but within limits established by the privacy rules of the federal Health Insurance Portability and Accountability Act. Employers cannot require employees to pay more for health insurance because of “health factors,” like nicotine addiction. Companies may qualify for the “wellness program exception,” which allows employers to charge premium differentials under these four conditions:

  1. Employers can add a premium surcharge of up to 20 percent of the total cost of employee-only coverage.
  2. The wellness program must be reasonably designed to promote good health or prevent disease.
  3. The program must allow any employee for whom it is unreasonably difficult to quit tobacco use to satisfy a reasonable alternative for quitting (e.g., smoking-cessation classes, counseling sessions, pharmaco-therapy).
  4. All health insurance plan materials describing the wellness program must disclose the availability of a reasonable alternative to quitting.

You can impose higher payments on smokers only if you have a bona fide wellness program and the smoker does not comply with the program’s requirements. If the smoker participates, the employer cannot impose a higher charge. Also, if a smoker finds it unreasonably difficult to stop smoking due to addiction, the employer must provide a reasonable alternative, such as a discount in return for attending educational classes or trying a nicotine patch.

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