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What 2021 and COVID-19 Could Mean for Tobacco Use Surcharges

What 2021 and COVID-19 Could Mean for Tobacco Use Surcharges

In today’s environment, incentives that inspire and engage employees in healthy behaviors are more important than ever. And one proven method to motivate people to quit smoking is a tobacco use surcharge.

A tobacco surcharge (sometimes referred to as a “nonsmoker discount”) imposes a higher insurance premium on tobacco users. By law, employers that implement a tobacco use surcharge must also offer what’s known as a “reasonable alternative,” which gives tobacco users an alternative way to receive a lower premium even if they’re unable to quit.

Reasonable alternatives that employers typically use for tobacco cessation include coaching, health education classes, and completion of specific steps of a company-sponsored program.

1 in 5 Employers Have Tobacco Use Surcharge

According to an employee benefits report from SHRM, nearly 1 in 5 employers uses tobacco surcharges. Financial incentives can prompt tobacco users to take important first steps toward quitting that they might not otherwise consider, and they can improve quit rates.

A review of nearly 3 dozen studies found that incentives improve cessation rates when they’re in place and even after they are discontinued.

Our own data backs this up as well. Our clients that offer some type of incentive enroll 3.5 times more of their eligible employees than clients that do not offer an incentive.

What’s Ahead in 2021

Much like 2020, making predictions for the year ahead isn’t easy, but one thing is likely: you may want to reconsider your approach to incentives to help people quit tobacco.

Here’s why.

  • COVID-19 and Tobacco Use Surcharges

As the country slowly recovers from the upheaval of the pandemic, many employees may still have real challenges in completing tobacco cessation program goals.

For example, work schedules may still be altered, they might be sick or caring for someone who is ill, and they could be struggling with anxiety and depression. For some tobacco users, the threat of COVID-19 was a reason to quit. But they are the minority. Data from numerous sources have shown that substance use has increased overall during 2020.

Recognizing the major challenges facing all your employees, you may want to extend the deadline for tobacco users to earn rewards/avoid a surcharge for completing a tobacco cessation program.

If your tobacco cessation program typically is offered on-site or through a phone-based program, you should also consider providing an additional reasonable alternative. A digital program can be a more accessible alternative for those who are managing caregiving responsibilities, for example, because they can complete tasks when it works on their hectic schedule.

  • Pending EEOC regulation changes could affect tobacco cessation programs

Another item to keep on your radar relative to tobacco use surcharges is the U.S. Equal Employment Opportunity Commission’s (EEOC) announcement on proposed rules for wellness incentives.

Our guest blog author, Barbara Zabawa, JD, MPH, founder and president of the Center for Health and Wellness Law, LLC, explains the role that newly appointed EEOC Chair Charlotte Burrows could play on changing the proposed language revising wellness incentive rules. For a deep dive on this, see her blog, How Proposed EEOC Wellness Incentive Rules May Impact Workplace Tobacco Cessation Programs.

For specific guidance on how to best proceed with incentives for your unique population, please be sure to tap into your company’s own legal team.

Benefits of Partnership

We have many clients that use the EX Program as a reasonable alternative. For over 12 years, we’ve been proud to support tobacco users on their journey to quit for good, and this is especially true today.

As more studies have emerged during the pandemic, it’s become clear that smoking is associated with the negative progression and more adverse outcomes of COVID-19. E-cigarettes are also a potential risk factor.

Quitting tobacco has long been the most important thing people can do to improve their health. Now, in the context of a pandemic of respiratory illness, it has become even more important than ever for people to quit.

Let us help your employees or health plan members gain the benefits of living tobacco-free. Contact us today to learn how the EX Program can engage more of your population in quitting tobacco.


Robert Falk
Robert Falk

General Counsel

Robert Falk is a healthcare attorney with 15 years of private practice experiences at prominent national law firms and over a decade in the nonprofit sector. Prior to joining Truth Initiative, Falk served for 11 years as the general counsel and corporate secretary of the Human Rights Campaign, the nation’s largest LGBTQ civil rights organization. He has advised both the Human Rights Campaign and the Human Rights Campaign Foundation on legal issues including election and campaign finance law, nonprofit tax issues, real estate, human resource matters, and intellectual property. Before the Human Rights Campaign, he served as general counsel of the Whitman-Walker Clinic, an HIV/AIDS social service agency, and as acting general counsel at D.C. General Hospital. He is a recipient of the Human Rights Campaign’s Ally of Justice award. Falk is a graduate of Yale Law School and Princeton University.

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