The Carrot or the Nicotine Stick

Tobacco surcharges have become increasingly prevalent in employer medical plans over the last few years. In 2015, 22% of large employers (500 or more employees) offered lower premiums to non-tobacco users, up from 12% in 2011, according to Mercer’s research. When tobacco surcharges are in place, the ACA requires that employers offer tobacco users a ‘reasonable alternative standard’ that employees can meet in order to avoid surcharges. In many cases this means offering a tobacco-cessation program. However, the use of surcharges has come under fire by the American Lung Association, which sees the additional costs imposed upon tobacco users as a roadblock to the care they need. Nonetheless, research has found direct ties between tobacco use and increased health care costs: the American Cancer Society estimates that from 2000 to 2012, tobacco-related health costs and productivity loss in the United States totaled $289 billion. When implementing a tobacco surcharge or smoking cessation program, clear communications to employees and incremental changes can help to prepare employees. As Mercer’s Steven Noeldner suggests in this Employee Benefit News article on the subject, employers “could begin by putting policies and practices in place that eliminate smoking on campus. Then they might offer nicotine replacement therapy and counseling as early as possible.”

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Emily Ferreira
by Emily Ferreira

Associate, Health & Benefits Survey Research, Mercer

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