Dive Brief:
- Thinking about implementing smoking surcharges on employee healthcare plans? Then be certain to pair the move with an effective smoking cessation program (or a "reasonable alternative standard"), according to Employee Benefits News.
- Without doing both, HR and employers are opening themselves up legal compliance issues, the article explains.
- While the Affordable Care Act and state laws vary (and often conflict) on the allowable amount of a surcharge, the Health Insurance Portability and Accountability Act (HIPAA) mandates that smokers are offered the chance to meet that “reasonable alternative standard” for an exemption on those fees. That could mean a smoking cessation program, for example.
Dive Insight
While smoking surcharges are gaining some traction, the article cites a SHRM survey that most (54%) of its 375 member organizations would rather support workers via wellness information than by taking the tougher surcharge stance (18%).
However, SHRM’s manager of compensation, Bruce Elliott, told EBN that he expects more employers may take the surcharge route to put smoking front and center. Nevertheless, he acknowledges that the surcharge approach also requires wellness strategies such as typical smoking cessation programs.
While the American Lung Association does not ultimately favor the surcharge approach, the strategy can reduce costs. The article mentions a case study whereby an employer saved nearly $270,000 within two years after implementing a surcharge program that required a smoking cessation component (for the fee to be waived).
On balance, experts in the article agree that employers need to think carefully about a smoking surcharge on health premiums, including a very proactive communications plan (a year in advance) and being very clear with the workforce about the benefits of such a strategy.
