Charging Smokers Higher Health Care Premiums.
It seems settled that smoking poses a substantial health threat to those who smoke. The federal Centers for Disease Control and Prevention lists smoking as the leading cause of preventable death in the country, resulting in 400,000 deaths a year. The risk of dying from lung cancer is more than 22 times higher among men who smoke and about 12 times higher among women who smoke compared with nonsmokers. Cigarette smokers are 2-4 times more likely to develop coronary heart disease than nonsmoker.
Of course, smokers’ health problems show up in medical expenses. Men who smoke incur $15,800 and women who smoke incur $17,500 in additional lifetime medical expenses. These additional costs inevitably affect an employer’s health care costs. As a result, employers across the country are now attempting to shift some of these additional costs back to smokers. Some are charging smokers a higher co-pay for their health insurance benefits. Is this practice legal in Delaware? The answer is probably yes.
Currently, approximately thirty states, including New Jersey, have implemented some form of “lifestyle discrimination” statutes. These statutes make it illegal to discriminate on the basis of legal activities. More specifically, some states have “Smoker’s Rights” statutes which prohibit employers from discriminating against smokers in the workforce. Under these statutes, employers may not terminate employees because they are smokers or refuse to hire applicants who smoke. Some of these laws do permit employers, however, to charge higher health care premiums to employees who smoke. Delaware does not have any such law.
While no Delaware law prohibits employers from charging smokers higher health insurance premiums, HIPAA regulations should be consulted before beginning to impose such a surcharge. HIPAA prohibits employers who offer health insurance from charging an employee a higher premium than required of a similarly situated employee, on the basis of any health-related factor unless that surcharge is based on participation in a “bona fide wellness program.”
Wellness programs vary widely, and the features of such programs will determine whether they are subject to the HIPPA regulations. In order to lawfully implement a wellness program, employers should ensure that the reward is limited to a specified percentage (e.g. 10-20% of the cost of contributions for the employee’s health care); the program is available to all similarly situated individuals and offers written notice of an alternative for employees with physical limitations to meeting the program’s standards (e.g., by attending a smoking cessation program).
Consider the following example. An employer circulates a form to all employees to sign, which would certify that they have not used tobacco products in the past twelve months. Individuals who do not complete the form are assessed a surcharge equal to 20% of the total cost of the employee’s coverage. Employees who are unable to meet the standard due to a medical condition (addiction to nicotine) are not assessed the surcharge so long as they participate in a smoking cessation program. This is an example of a bona fide wellness program that satisfies HIPPA’s non-discrimination regulations.
The Department of Labor has a helpful online checklist employers can use to determine whether their wellness program is HIPPA-compliant. The link is below.
Other Posts on Smoking in the Workplace:
DOL Offers Compliance Checklist for Wellness Programs, which discusses the Wellness Program Analysis.