More employers requiring tobacco users to pay higher
premiums.
CINCINNATI - Smokers squeezed by soaring cigarette costs and
workplace smoking bans are increasingly being hit with another cost increase —
this time for health insurance.
A growing number of private and public employers are
requiring employees who use tobacco to pay higher premiums, hoping that will
motivate more of them to stop smoking and lower health care costs for the
companies and their workers.
Meijer Inc., Gannett Co., American Financial Group Inc.,
PepsiCo Inc. and Northwest Airlines are among the companies already charging or
planning to charge smokers higher premiums. The amounts range from about $20 to
$50 a month.
“With health care costs increasing by double digits in the
last few years, employers are desperate to rein in costs to themselves and
their employees,” said Linda Cushman, senior health care strategist with Hewitt
Associates, a human resources consulting and services firm.
She said the practice of smoker surcharges is becoming such
a significant trend that this year, it will be part of Hewitt’s annual survey
of companies’ current and future health care plans.
Cushman said a general benefits survey of 950 U.S.-based
employers last year showed that at least 41 percent used some form of financial
incentives or penalties in their health care plans.
She estimates that at least 8 percent to 10 percent of the
businesses probably aimed some of the incentives or penalties at smokers and says
that percentage is growing.
“With smokers costing companies about 25 percent more than
nonsmokers in the area of health care, it just makes good business sense,” she
said.
The companies imposing the surcharges are mostly
self-insured, with employers and employees sharing the insurance premium costs.
Other companies or insurance plans have offered workers
financial rewards for exercising, dieting or other healthy behaviors. Some have
started onsite fitness programs and are paying for gym memberships.
The Centers for Disease Control and Prevention estimates $92
billion in lost wages annually in the United States from smokers who die
prematurely. In addition, the economic cost of smoking includes $75.5 billion
per year in direct health care costs.
“In addition to employers having to pay out more in health
care costs, public opinion is now solidly on the side of eliminating smoking
and workers are realizing increasingly that they are having to pay for others’
lifestyle choices,” said Helen Darling, president of the National Business
Group on Health, a nonprofit agency representing more than 200 of the nation’s
large employers.
Gannett Co., the nation’s largest newspaper publisher, this
year began charging its employees who smoke an extra $50 a month for the
company’s insurance coverage.
“We have some strong feelings that smoking is really bad for
employees, and a healthier employee is better for us,” said Tara Connell, a
spokeswoman for the McLean, Va.-based company.
PepsiCo Inc., based in Purchase, N.Y., has been charging
employees who use tobacco $100 annually for a couple of years, and Grand
Rapids, Mich.-based Meijer Inc. started charging smokers $25 a month this year.
That fee is dropped if smokers complete a smoking-cessation program, said
Meijer spokeswoman Judith Clark.
Cincinnati-based American Financial Group holding company
and its subsidiaries waive the $37.92 monthly fee for a year if smokers make a
good-faith effort and complete the company’s stop-smoking program, said Scott
Beeken, a vice president with the Great American Insurance Group subsidiary. If
the employee starts smoking, the fee would be reinstated the next year.
About 35 workers were expected to enroll if the voluntary
program had not included the financial incentive, but 325 have signed up so
far.
“The charge probably was a motivating factor,” Beeken said.
Public employers also are requiring smokers to pay for their
habit.
The state of Alabama on Oct. 1 began charging $20 a month
extra per employee insurance contract. The charge applies if anyone covered
under a contract — such as a spouse — smokes. Georgia charges $40 a month for
smokers covered under the state’s health plan. Employees caught lying on their
insurance form about whether they smoke could lose their insurance for a year.
The state health plan kept having cost overruns due to
rising costs and high use, said Georgia state Sen. Tommie Williams, R-Lyons.
“We know smokers cost more as far as health care goes,” said
Gary Matthews, deputy administrator of the Alabama State Employees’ Insurance
Board. “We are putting the burden on them to take responsibility for their own
health.”
Incentives or penalties?
Employers say the surcharges are incentives rather than
penalties, but that’s not the way many smokers see it.
“Where is it going to end?” asked Jim Clark, a smoker and
owner of Strauss Tobacconist in Cincinnati. “Are they going to start saying you
can’t wear a blue shirt on Monday or drive a green car on Thursday?”
Lewis Maltby, president of the National Workrights
Institute, says that making smokers pay more for insurance and take more
responsibility for their health choices is not inherently wrong, but he worries
about the precedent the surcharges may set.
“They could be the first step down a very dangerous road,”
Maltby said. “Do we really want to live in a world where employers penalize us
for everything in our private lives that isn’t healthy?” he said.
Some employers have turned to even stronger measures to
discourage smoking. Weyco Inc., an Okemos, Mich.-based medical benefits
administrator, fires employees who smoke even if it is on their own time.
Jim Wendling, a 45-year-old employee for Cincinnati-based
Kroger Co., recently acknowledged on Kroger’s health survey that he is a
smoker. Even though Kroger doesn’t charge smokers more for insurance, he fears
the survey may be the first step in that direction.
“I personally don’t think a company should tell employees
what to do when they are not at work,” Wendling said.
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