When you set up group health insurance plans, the option exists to separate out tobacco users from non tobacco users. This allows insurance companies to charge tobacco users higher premiums. But should tobacco users really pay more? I don’t personally think so and that’s what I want to talk about today.
It’s Legal to Charge Tobacco Users More Even If They Don’t Ever Go To The Doctor
First off, I want to talk about why tobacco users get singled out to pay higher premiums. That’s because it’s a legal way for insurance companies to charge higher premiums for some employees in your group. Since it’s legal, you can bet that insurance companies want to do it.
It’s often cloaked in the veil of some sort of “wellness” mission the employer has but it’s basically just a way to get more premiums out of somebody.
Ironically though, you can’t charge higher health insurance premiums for older employees. Nor more for females than for males. You also can’t charge employees who actually have health conditions a surcharge because of their medical problems.
Those groups get subsidized by everybody else but the tobacco users do not.
Insurance Is Meant To Spread The Risk Across ALL Members Of The Group Not Just The Tobacco Users And Unhealthy People
Sometimes I think people forget that insurance is designed to spread risk across everyone in the group.
Not too long ago, I had an employee express disappointment that everyone got the same rate. He didn’t use tobacco and didn’t think it was fair that he didn’t get to pay less. However, he completely overlooked the fact that he had high blood pressure and took medication for it. Shouldn’t all the employees who don’t have high blood pressure get to pay less in that case?
Of course, the answer is no, so why should smokers be any different.
Many times tobacco users don’t even have any medical problems. This means they don’t even use the health insurance they purchase but have to pay more than the employee who has had two heart attacks and a triple by pass surgery.
This doesn’t make any sense to me.
A Tobacco Surcharge Creates Ill Will Toward You The Employer
When I enroll employees in benefits, employees aren’t stupid. When they see a tobacco surcharge that means they will have to pay more even if they never go to the doctor, they look at their fellow employees.
Then they ask, why do I have to pay more than the employee who has diabetes or the employee who had breast cancer?
Last year I did an enrollment where the health insurance was set up so that employees who used tobacco paid $100 more per month than their non tobacco counterparts. If their spouse smoked, they also paid it. This meant some families paid $200 per month more than the non tobacco users.
Granted, these employees had a smoking cessation program available to them. They could enroll in that and get the tobacco surcharge waived in a couple of months.
But still, you are sending a clear message to those employees that creates resentment against you the employer.
It Encourages Lying To Avoid The Smoker Surcharge
Most employees that smoke will own up to it if they are everyday smokers. But the casual smokers who maybe only smoke every now and then don’t consider themselves “smokers” even though they are.
You’d be surprised at the number of employees who say they don’t smoke but really do. Of course, they aren’t hardcore smokers. It’s usually something they might do only when they go out for drinks or something.
It still counts though and they technically should pay the surcharge but you know what, they don’t. That’s not fair to the employees who are completely honest about it.
Shouldn’t We Be Promoting Wellness? Isn’t Tobacco Use Unhealthy?
Yes. You should be promoting wellness. And yes, tobacco use is unhealthy. I’m not advocating that smoking is great or anything. The only thing I am suggesting is that when it comes to spreading risk in your group, spread the risk across everybody like insurance risk is meant to spread.
Remember, that the tobacco surcharge is there for one purpose which is to collect more premiums. Theoretically it’s there to offset the cost of the health problems the smokers and other tobacco users might have.
But in my experience, and while I don’t have the scientific data to back it up, I’ve found that most of the tobacco users use the health insurance less than the non tobacco users who have medical problems.
And that’s why I’m against the tobacco surcharge.
What do you think? Should employers charge a tobacco surcharge or not?
Let me know in the comments.
Amy Dowell says
How do the employers check to see if you are in fact a smoker? Do they go into your medical record? Do they require a blood test? Is that not a violation of HIPPA? This surcharge is a violation of civil rights and opens way too many doors for discrimination. In the case of teachers. A student who dislikes their teacher may see them vaping and turn them in. Colleagues will tell on their coworkers and create a negative work environment. I am furious. Consider the military. We all pay for their insurance. Are you going to tell a Marine going to his death he must pay to smoke a cigarette. This is the first time our school board has insisted on this surcharge for its group insurance and it is WRONG! And I do not smoke!
Michael Kuhn says
While I suppose there are a myriad of ways that smokers could be outed, I wouldn’t think it’s likely to happen in most of the ways you mention. The most likely way would be through doctors records in the claims submitted. In my opinion, insurance is meant to spread all risks across all persons and not meant to spread risks across segments of those people but insurance companies don’t operate that way. Unfortunately, it’s legal to charge smokers more and it’s written into the law. The thing to keep in mind is that most employer groups (not all) offer a smoking cessation program that if people join and complete, they can reduce their premium back to the non smoker rate even if they don’t quit smoking and only pay a higher premium for a couple of months. I’m not saying I agree with it, but I do want to point out that if someone does smoke, it’s really important to answer the questions truthfully so claims don’t get denied. Thanks for the comment!
Delorise Deel says
I have experienced a surcharge this year in addition to higher premiums. I am charged a surcharge of 25.00 from my employee. I am one of few who told the truth that they smoke. Many smoke but lied or should I say bent the truth some “they are still smokers”. I am told I have to do the smoking program and my surcharge will come off. I should not worry I am told, it only takes about 2 months to take the program, I don’t even have to quit for my charge to be removed. The company I work for and the insurance companies forgot to charge those who are addicted to opioids, which I believe is also as addictive as smoking. I understand smoking if bad for my health. I am 61 years old and if my employee and insurance company wants to charge a surcharge fine ,charge the government . I know what you are thinking we can not charge the government since that is where our laws are made. It was not until 1987 that the legal age to buy cigarettes was changed from 16 to 18. I was 16 before this law was passed and there was not any laws that prohibited smoking at school at this time. The students and teachers would smoke at lunch or in between classes. No charges was brought against us for smoking because we were of legal age. I work for this same school that while I was a student allowed me to smoke and now are charging me a surcharge because I smoke . I have been working for this school for 10 years . Why is it legal now in the year 2018 to charge me a surcharge because I am a smoker. What legal rights do I or any one else who lived before the smoking age was changed from 16 to 18 have, ” absolutely none”. I will take the program and just might be able to quit smoking . I have stated why no surcharge should have been imposed upon all of those who had been obeying the laws . The laws were changed from 16 to 18 in the year 1987
Michael Kuhn says
You are right that a lot of employees lie about their smoking. The reason it is legal now is because the Affordable Care Act made it legal to charge tobacco users extra. That’s what happens when you let the insurance companies basically write the law the government passes. You pointed out why the tobacco surcharge is stupid. Many employees look around at the other employees and say exactly what you do. They use drugs, they’ve had a heart attack, etc. All they are really doing is skimming extra premium for themselves. Granted we all no smoking is unhealthy. I’m not encouraging it. Take the class, quit if you can and save the money the rest of the year at least.
Delorise Deel says
I do not condone smoking. We know it is a fact that a nicotine surcharges are added on for smokers in addition to their high premiums ,these are two separate charges. The Affordable Care Act made it legal so why do they not have a mandatory blood screening test to determine who is a smoker and who is not. The insurance companies can make a lot more money when they see how many people lied about not being a smoker. I suppose this is where the insurance companies and other employees are protected under the H.I.P.A.A where they are not allowed to give this type of test for nicotine users. This is leading to additional surcharges to be implemented into law for all other health problems. What will be next ,additional surcharges and insurance premiums opposed upon the veterans of foreign war, men and women who was subjected to chemical warfare . Something has to change. I do not condone smoking. if the people continue to allow the insurance companies and employers to impose these fees , it is opening many avenues for discrimination.
Michael Kuhn says
My guess is that it’s too costly to test everyones blood for nicotine and that’s why it’s on the honor system. I also think that the effect tobacco users have on claims was already priced into the premium. The surcharge is really just extra profit in my opinion. More importantly, I think it’s there to give insurance companies an “out” if they don’t want to pay a claim if they can prove someone lied. Thanks for commenting.