When it comes to healthy behaviors, employers want to do the right thing—for themselves and their employees. That includes helping employees quit smoking by offering an incentive to do so.
Quit-smoking incentives—also called tobacco surcharges or nonsmoker discounts—are typically based on affidavits that employers collect during open enrollment. If an affidavit indicates someone uses tobacco, they pay a premium rate for their health care.
At first it seems fairly straightforward: implement a tobacco surcharge on health plans to encourage employees to quit smoking. However, it’s not as simple as it seems. A tobacco premium for health plans is legal; however, by law, employers must also offer a reasonable alternative that allows tobacco users to receive the lower premium, even if they are unable to quit.
Unfortunately, many employers don’t know this and put themselves at risk—47% of small employers who offer quit-smoking incentives don’t provide programs to help smokers quit. It’s not just small businesses; lawsuits in recent years suggest larger companies might not fully understand the implications either.
Here’s what you need to know to ensure your quit-smoking incentive meets requirements.
Nicotine addiction qualifies as a health status factor
The Health Insurance Portability and Accountability Act (HIPAA), among other things, prohibits health plans and health insurance policies from charging higher premiums or providing less coverage on account of an adverse health factor (for example, obesity).
Because nicotine addiction is considered an adverse health factor under HIPAA, financial quit-smoking incentives that are tied to a group health plan must comply with the law’s nondiscrimination provisions as smokers who do not receive the incentive are being charged a higher premium or other cost associated with the health plan.
HIPAA requires that individuals who are smokers must receive an alternative means to receive the “reward” provided to non-smokers.
Reasonable alternative standards apply to quit-smoking incentives
When it comes to quit-smoking programs, reasonable alternatives that employers typically use include coaching for tobacco cessation, health education classes, and completion (or “achievement” as we like to say) of a company-sponsored tobacco quit program.
Standard requirements for a reasonable alternative include:
- Awareness: Tobacco users must be notified about and aware of the reasonable alternative.
- Availability: It must be an option for everyone each year, regardless of the individual’s achievement in prior years.
- Cost: At least one reasonable alternative option should be available at no cost to the individual.
- Individual circumstances: If an individual’s physician states that the standard is not medically appropriate for that individual, an employer must provide a different reasonable alternative that accommodates the physician’s recommendations.
- Time commitment: The time required to complete the reasonable alternative must be realistic. For example, regulations state that requiring attendance at a one-hour class every night would not be reasonable.
- Reward duration: Individuals who complete the reasonable alternative of a company-sponsored quit smoking program must receive the reward for the full plan year.
There are additional legal considerations to understand before implementing a tobacco surcharge, including incentive limits for individuals and family members. To confirm your quit-smoking incentives adhere to legal guidelines, we advise checking with your legal counsel.
Ultimately the goal of offering an incentive and a reasonable alternative for tobacco users should be to help them overcome this persistent addiction. It takes a program that personalizes the quitting journey for each participant and provides 24/7 support based on how addiction works.
The EX Program qualifies as a reasonable standard and has helped more than 910,000 tobacco users build the skills and confidence for a successful quit. As part of our program, we provide access to a real-time dashboard for reporting of those who achieve the incentive. Visit our Employers page to learn more.