Extra Cost of Tobacco Use

Tobacco use, and smoking in general, is becoming an expensive addiction.   Not only is the price of the tobacco products pinching your wallet, you may have to dig deeper to pay for higher health insurance premiums as many businesses are now adding surcharges for employees who use tobacco.  Health care costs are increasing and employers are trying to save money wherever they can.

This trend is not new.  Five years ago USA Today reported businesses were already using financial incentives or penalties in their health care plans aimed at smokers.  At that time the companies adding surcharges were mostly self-insured and employees shared in the insurance premium costs.  Now, most employers have passed on part of the insurance costs to their employees, and added a surcharge for tobacco use on top of higher premiums.

Employees of Palm Beach County School District have until August 1 to sign a “tobacco affidavit” stating whether they use tobacco products or not.  If they still use tobacco or do not sign an affidavit, they will start paying a surcharge of at least $50 per month starting January 1.  Premium increases for all employees are still being negotiated and the surcharge may be higher than $50.  Medical costs for tobacco users are higher and the district is working to keep costs down and use the surcharge as an incentive to quit.

Another school district in Florida takes tobacco use one step further.  Escambia County, Florida board of education voted to adopt a tobacco free policy for all new employees starting October 1, 2011.  New hires will be tested for nicotine and must certify they don’t smoke or chew tobacco.  Current employees and tenured teachers will not be affected by the new policy and will be “grandfathered” in.

Paying extra for unhealthy lifestyle choices isn’t the wave of the future.  The ripple started a long time ago.  You are already paying big tobacco to make you sick every time you buy their products.  Now you will have to pay extra for your health.  You have so much to gain from quitting.





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2 Responses to Extra Cost of Tobacco Use

  1. Tony sacco says:

    In Florida, can a self insured employer legally charge current employees who were already smokers upon hire, the surcharge? Also if the employee and insurance policy is under a collective barganing contract, can the employer legally impose the surcharge without negotiating first?

    • Two very good questions. I’m not an insurance expert; that being said, let me try to answer the questions. From what I have read so far, the employer is passing on the surcharge mandated by the insurance provider; it is usually not something that can be negotiated with the insurance provider. More and more insurance companies are assessing surcharges and higher premiums for smokers. Passing those on to the smoker gives them incentive to quit. Insurance companies will also provide cessation coverage, such as nicotine replacement therapy and counseling for a certain period, without “penalizing” the smoker. As an example The School Board of Palm Beach County passes along a surcharge mandated by the insurance company to those who continue to smoke.

      The Affordable Care Act has already changed the insurance landscape and bargaining. By law, employers only have to offer the minimum to avoid penalties. Also, under the ACA, smokers can and will be charged 50% more for their premiums. The 50% surcharge is not negotiable. (http://obamacarefacts.com/obamacare-smokers.php).

      I’m not sure what you mean by “self insured employer”. Do you mean an employer who puts aside an amount of money in an account for employees to draw from when needed? Whole Foods is a good example of this. (http://www.wholefoodsmarket.com/careers/about-our-benefits). I do not know how they are handling insurance with the ACA. Here is another link to read about how Whole Foods handles smoking. http://www.motherjones.com/blue-marble/2010/01/whole-foods-employees-lose-weight.

      Basically, if you are a smoker, your employer is already paying a higher price for your insurance. More employers are hiring non-tobacco user in order to save insurance costs and save money from lost-productivity. Most insurance companies are now adding penalties and surcharges amounting in thousands of dollars per smoker per year, and your employer will likely pass those on to the smoker. To be fair, some companies will also pay for smoking cessation for smokers to quit, which is a win-win for not only you, but your family as well.

      If your company is unionized, contact your union representative for more information.

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