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Design smoker surcharges to cut costs, preserve morale

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in Employment Law,Firing,Human Resources

Issue: More employers are increasing health premiums for smokers as a way to cut health costs.

Benefit/risk: Smoker surcharges can trim costs, but implementation mistakes can alienate employees and hurt morale.

Action: Use the following tips to design smoker surcharges that reduce the most costs with the least employee backlash.

For decades, employers quietly tolerated the fact that employees who smoke cost more in health care costs, about 25 percent more than nonsmokers. But with health premiums reaching the boiling point, that patience has worn out.

A small fraction of U.S. employers refuse to hire smokers, but that can be legally risky. Instead, many more employers have begun charging employees higher health premiums if they use tobacco. Forty-one percent of employer health plans now include some kind of incentive or penalty for smokers, according to a Hewitt Associates survey.

Hewitt estimates that about 10 percen...(register to read more)

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