Smokers Paying Extra Health Fees
Smokers squeezed by soaring cigarette costs and workplace smoking bans are increasingly being hit with another cost increase, this time for health insurance.
A growing number of private and public employers are requiring employees who use tobacco to pay higher premiums, hoping that will motivate more of them to stop smoking and lower healthcare costs for the companies and their workers.
Meijer Inc., Gannett Co., American Financial Group Inc., PepsiCo Inc. and Northwest Airlines are among the companies charging or planning to charge smokers higher premiums. The amounts range from $20 to $50 a month.
“With healthcare costs increasing by double digits in the last few years, employers are desperate to rein in costs to themselves and their employees,” said Linda Cushman, a senior healthcare strategist with Hewitt Associates, a human resources consulting and services firm.
The practice of smoker surcharges is becoming such a significant trend that this year it will be part of Hewitt’s annual survey of companies’ current and future healthcare plans, she said.
Cushman said a general benefits survey of 950 U.S.-based employers last year showed that at least 41% used some form of financial incentive or penalty in their healthcare plans.
She estimates that at least 8% to 10% of the businesses probably aimed some of the incentives or penalties at smokers and said that percentage is growing.
“With smokers costing companies about 25% more than nonsmokers in the area of healthcare, it just makes good business sense,” she said.
The companies imposing the surcharges are mostly self-insured, with employers and employees sharing the insurance premium costs.
Other companies or insurance plans have offered workers financial rewards for exercising, dieting or other healthful behaviors. Some have started fitness programs at work and are paying for gym memberships.
The Centers for Disease Control and Prevention estimates that the economic cost of smoking includes $75.5 billion a year in direct healthcare expenses.
“In addition to employers having to pay out more in healthcare costs, public opinion is now solidly on the side of eliminating smoking, and workers are realizing increasingly that they are having to pay for others’ lifestyle choices,” said Helen Darling, president of the National Business Group on Health, which represents more than 200 of the nation’s large employers.
Gannett, the nation’s largest newspaper publisher, this year began charging its employees who smoke an extra $50 a month for the company’s insurance coverage.
“We have some strong feelings that smoking is really bad for employees, and a healthier employee is better for us,” said Tara Connell, a spokeswoman for the McLean, Va.-based company.
Public employers also are requiring smokers to pay for their habit.
The state of Alabama on Oct. 1 began charging $20 a month extra per employee insurance contract. The charge applies if anyone covered under a contract -- such as a spouse -- smokes. Georgia charges $40 a month for smokers covered under the state’s health plan.
Employers say the surcharges are incentives rather than penalties, but that’s not the way many smokers see it.
“Where is it going to end?” asked Jim Clark, a smoker and owner of Strauss Tobacconist in Cincinnati. “Are they going to start saying you can’t wear a blue shirt on Monday or drive a green car on Thursday?”