The Case for Charging Smoking Employees Higher Insurance Premiums
A report in the Wall Street Journal reminds us that America's smokers are still 40 million strong, despite a dramatic drop from half a century ago. And the report notes that there are still "pockets of growth and opportunity that are generating great interest in the tobacco industry." In addition to stepping up marketing for some of the more popular options like menthol cigarettes, smoking rates also vary regionally. "Kentucky, a major tobacco producer, had the highest smoking rate in the country last year at 30.2%, followed by West Virginia and Mississippi, according to a Gallup poll. Utah had the lowest rate, at 12.2%, followed by California and Minnesota."
Employment law attorney F. Kytle Frye III of Fisher & Phillips LLP Contact examines the issue of linking insurance premiums to smoking in a recent Labor Letter at JDSupra Business Advisor. He lists a shocking litany of business losses related to smoking.
".. A study of 20,000 employees revealed that smokers had more hospital visits per 1,000 (124 vs. 76), had a longer average length of stay in the hospital (6.5 vs. 5 days) and made six more visits to healthcare facilities per year than non-smokers.
Another recent study found that smokers missed an average of 6.16 days of work per year as opposed to the 3.86 days missed by non-smokers, and that a smoker taking four 10-minute smoke breaks actually worked one month less over the course of a year than a non-smoking employee. The Centers for Disease Control (CDC) estimate that each smoking employee costs a company an additional $3,391 per year – including $1,760 in lost productivity and $1,623 in excess medical expenses. So, smoking employees seem to be an excellent target to help an employer manage its costs, and not just the cost of providing healthcare."
He notes that some employers are charging smokers higher insurance premiums while others refuse to hire smokers entirely. He examines several of the issues related to raising premiums for smokers, such as HIPAA and ADA concerns: is nicotine an addiction? Can smoking be be deemed a disability?
If you are considering a premium differential, Frye offers a checklist of 6 steps and considerations that employers should process before such any implementation. One important consideration is your state laws about smoking. While roughly half of all states have comprehensive smoke free laws, many others afford smokers various degrees of protection.