SURVEY SAYS: Higher Health Care Premiums for Tobacco Users

Recently, the U.S. District Court for the Southern District of Indiana has ordered the fiduciaries of health benefit plan to pay restitution of $145,635 to 596 employees who paid a tobacco use surcharge as part of their medical insurance premium.

Health benefit plan sponsors may legally implement a tobacco use surcharge as part of employees’ medical insurance premiums if employees are offered a reasonable alternative standard or waiver of that alternative.

One could argue that tobacco use does not necessarily drive up health insurance costs or that it is not the only bad habit in which employees may engage that drives up costs. Employees who use too much alcohol, are overweight or obese or who do not follow prescribed medical treatments may also drive up health benefit costs.

Last week, I asked NewsDash readers, “Do you think it is fair for employers to impose higher premiums for health care benefits on tobacco users?”

More than two-thirds (68.3%) of responding readers reported that their company does not impose higher health benefit premiums for tobacco users. More than two-in-10 (21.7%) said their company does if the employee does not participate in a smoking cessation program, 3.3% said their company does with no alternative offered and 6.7% said their company does and they are not sure if an alternative is offered.

Asked whether they think it is fair for employers to impose higher premiums for health care benefits on tobacco users, 41.7% said no, 36.7% said yes, if they are offered a chance to participate in a smoking cessation program, and the remained said yes, whether a smoking cessation program is offered or not.

In comments left by readers, there were some who felt strongly for a higher premium for tobacco users, but they were definitely in the minority. Many people said this was just the first step in employers meddling, judging and discriminating. Some pointed out that there are people who don’t smoke—or even engage in other bad habits—that get sick or have diseases. Editor’s Choice goes to the reader who said: “I’m just glad this is a bad habit I never picked up. Now, if I could just lose the extra weight . . . and hopefully before they assess higher premiums for that!”

Thank you to all who participated in the survey!


They are healthy smokers, healthy fat people and unhealthy skinny, non-smoking employees. Who is the employer to judge?

Fairness would seem to dictate a surcharge should then be applied to obese employees or those who drink too much. Where would this end then? After all, this is America.

While I think smoking does increase health care costs, I agree that many unhealthy habits also contribute to higher costs and they are not penalized.

Our company sends mixed messages about smoking. It charges tobacco users a higher rate for health insurance but provides a smoking area in the parking lot.

Life’s not fair…why should this be?

I am generally not in favor of this approach, as it is a ‘stick’ rather than a carrot. The number of smokers in the U.S. has been in decline. I would rather see employers focus on a variety of wellness initiatives (‘carrots’) aimed at their total employee population.

The few stubborn smokers in our area tend to have frequent upper respiratory ailments. In our open work environment, these bugs are shared by everybody. There has been a noticeable increase in sickness. Not to mention the disruptive coughing, and the stench. Any means of encouraging smokers to quit is worth it. Other behaviors may also add to medical care costs, but those behaviors aren’t impacting the day to day office experience health of co-workers.

Former smokers often put on weight. Non-smokers can get lung cancer. Our whole nation is too fat. And how much do genetics cause poor health? Since we can’t quantify the cost of our various vices and genes, we should all pay equally.

Here’s my vent: I have to go to a pharmacist and show my ID for a decongestant. Yet cigarettes, first declared bad for the lungs in 1957, are still legal.

Reduction in premiums seem to work better as an incentive.

This makes no sense if you aren’t also going to impose sanctions on those who indulge in alcohol, cannabis or excessive amounts of sugar and carbs.

There’s a clear connection between illness/disease and tobacco use. The causal connection is more attenuated with regard to some other behaviors. It is fair to charge higher premiums to tobacco users since they increase the cost of the plan for everyone. However, participants must be offered a tobacco-cessation program. Not only is it the law, but it’s a question of fairness for people who have become addicted to tobacco.

The risk from tobacco use is an easily quantifiable risk across a population of insureds. Imposing no tobacco risk premium effectively results in non-users subsidizing the tobacco habit of users.

I think this is fair, because it impacts all of the company’s Insured with higher premiums. HOWEVER I THINK EMPLOYERS SHOULD IMPOSE HIGHER PREMIUMS FOR OVERWEIGHT EMPLOYEES. They can have MORE health issues and cost MORE!

First, I confess that I am not a smoker, and I watched my father die of emphysema (he was a smoker, although he quit about 30 years before he died). I am sympathetic to trying to force employees to stop smoking. However, I worry about the “slippery slope” such bad habit taxes represent. What else will we be penalized for? Having “too many” children? Being diabetic (not always the result of the bad habits)? Drinking alcohol (how much is “too much”)? Sky diving? Rock climbing? Driving a motorcycle? You may think I am being ridiculous, but . . .

Tobacco usage, particularly smoking, can affect others as well as the individual using tobacco, so it is absolutely fair to impose higher premiums. It is fair to impose any restriction which might encourage those users to stop their usage. It is for their benefit both financially and for their personal health to stop. Tobacco usage is a choice made – some other conditions mentioned (obesity, etc.) are not necessarily a choice, but a condition of genetics or result of other health issues. That is much more difficult to control. As far as alcohol is concerned, too much alcohol is difficult to define. Is one drink too many? How often? Studies are often quoted that red wine is beneficial, how do you reconcile that? Too much alcohol for one individual is not necessarily too much for another. If you drink at a party one night every 6 months, is that considered too much? Alcohol, while not a healthy choice, is not the same type problem as tobacco. Tobacco has nicotine to create an addiction, so ultimately, as I mentioned above, yes, not only do I think it is fair for companies to charge extra to incentivize their employees to quit smoking (or using other tobacco products), I am surprised it is not coming from the actual insurance companies as a mandate.

As stated what about those who abuse alcohol or are overweight? The next thing you know we’ll have a ‘fat’ tax for obese individuals!!

It’s not about fairness. It’s about offering the most competitive benefit plans at the lowest cost to the employee and employer. Whether someone smokes or not doesn’t usually enter the conversation.

I hesitate a little on this one. Tobacco has, for decades now, been known to carry significant health risks – and costs. So, buyer beware. But where do you draw the line? Are obese folks (and obese by what definition) next? How about diabetics? Or Type II diabetics? At some point, group insurance that takes every possible thing into account isn’t group insurance any more, and we may as well individually insure (I feel like I’m doing that already). But tobacco is an easy one.

Lung problems are not the leading cause of death in America. Heart/obesity issues are.

This is the beginning of a slippery slope. What is next? Higher premiums for not being at the perfect weight? Higher premiums if you do not check into the gym 5 days a week? Higher premiums for having a glass of wine with dinner or having a drink at the holiday office party? Will there be a higher premium for those who might get injured in an accident caused by their recreational hobbies such as rock climbing, ATV, racing cars, skiing, flying private planes? Will there be higher premiums because a person is of child bearing age or has a family history of some sort of illness or due to monitoring their health find out they have a higher risk of cancer, diabetes, or heart issues? And what about those people who work long hours due to their work load or dedication to their job, will they pay a higher premium because they are at risk for a heart attack? Will there be higher premiums if a person chooses to have a large family? Health insurance is expensive but charging higher premiums to any group because it is perceived that their life choices might increase health care expenses is discriminatory.

Smoking is an easy target. To be fair, charge a surcharge on all dangerous activity: hang-gliding, motorcycle riding, alcohol use and obesity. I would probably get dinged by the last 2, but at least it would be more equitable.

I think smoking is different than drinking alcohol or being overweight. Smoking is addictive to EVERYONE who engages in it. Alcohol & food is not, so I think a premium for other vices do not make sense. I could easily give up alcohol or fattening food, but it’s not that simple for smokers.

We have to start somewhere to educate employees about the high costs of insurance caused by unhealthy behavior

I’m ok with it for tobacco use as long has cheap/free cessation program is offered. I’m not a fan when they clarify for nicotine. Two different things.

It’s unfair to penalize only one group in this manner. There are other habits that are big contributors to poor health and rising health care costs. It’s too easy to make the decision to impose higher prices or taxes when it doesn’t hurt your own pocket. I think there is too much emphasis on smoking as the problem, while ignoring other habits that many more people abuse.

If you charge more for any type of issue, then you need to charge more to people with cancer, high blood pressure, etc. The best way is to spread the cost out as much as possible, reducing the cost for everyone

If plan experience confirms it, I believe employers should be able to add surcharges for any behaviors which lead to higher health care expenses, as long as alternatives to help curb the behavior are offered. Claims experience drives “ratings” and insurance premiums for other types of insurance, so why not medical insurance?

To restate the survey question, “Is if fair for an insurance provider to charge a higher premium for a group that makes lifestyle choices and that demonstrably is paid more in claims because of those choices?” The other question extends the issue to add a caveat “Should an individual who takes demonstrable steps to reduce his or her risk be rewarded by paying a lesser premium than an individual who does not reduce his or her risk?” If the majority answers yes and yes, then the Affordable Care Act was the first big step this country took in that direction.

In a group plan, singling out individual behavior for one single behavior isn’t really right, not when so many office workers can’t even barely use the stairs and the vending machines sell coke and chips. Let’s just not go down that slippery slope of judgment.

What’s next? Higher premium for those who don’t join an employer sponsored Exercise or Wellness Plan? Higher premium for those who are known daredevils or are known to “party hardy”?

Other bad habits include eating too much food, not exercising, not walking, drinking alcohol etc. Tobacco is not a sole bad habit that can lead to health issues.

We impose higher premiums on tobacco users. As one employee puts it-yes, he does use tobacco but has not called in sick in years whereas non-tobacco users have a different surgery every year, etc.

My company gives a credit when an employee self certifies he/she is not a tobacco user. Smoking cessation programs are also offered.

I’m just glad this is a bad habit I never picked up. Now, if I could just lose the extra weight . . . and hopefully before they assess higher premiums for that!

It is none of their business what an employee puts in their body whether it is food, alcohol or tobacco. There are employees that do not engage in poor eating or smoking habits that can get the same illness that any of these things may cause.



NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Strategic Insight or its affiliates.