Charging Smokers More
Kizzie
10 Posts
Our CEO has asked us to research whether we can charge a higher medical premium to smokers than to non-smokers (we are currently self-insured for our medical coverage). His concern is based on the various studies that have been published indicating that smokers miss more work, have more medical problems, etc. Aside from the morale concerns; the monitoring concerns; the concerns that we are not targeting other health issues like obesity, etc., I believe that under ERISA we cannot discriminate due to health conditions. Would smoking be covered as a health condition? Further, life insurance companies can ask about health related issues, such as whether a person is a smoker, etc. and can then charge more or decline coverage. Is there a difference between medical and life insurance and what they can and cannot do? Would one way to charge smokers more be to charge everyone a higher medical premium and then reduce the premiums of the non-smokers like is done with some wellness programs?
Any help would be appreciated.
Any help would be appreciated.
Comments
Nice to see someone stepping up, and you are doing it the right way by offering smoking cessation. Fact is smokers should be charged more. I know if I interview two candidates, and all things are equal I would take the non-smoker every time.
Plain and simple they should be charged more. So should people 100#s over weight. Those weight charts are a little on the light side, but 100#s would make sure you were safe.
Oh before others think I am horrible, I am 6' 215#'s, but in great shape working out 6x a week and have completed two Ironman triathlons. Being a little over suggested weight charts alone means nothing. Is it muscle or fat?
My $0.02 worth.
DJ The Balloonman
Can plans charge smokers more than non-smokers? Under the bona fide wellness proposed regulations, a plan can only charge smokers more than non-smokers if the plan provides an alternative standard for the smoker to adhere to, such as a smoking cessation program, and the nicotine-addicted smoker declines to participate. As long as the smoker participates in the smoking cessation program, the plan can not penalize the smoker, even if the person never stops smoking.
Although I do not relish the thought of proceeding with such a proposal, with the cost of health care ever-increasing, we may have to consider this.
Thanks for your help.
If ee's want to qualify for the non-tobacco rate, they have to pass a urine test. Spouses only have to supply a letter from their physician that they are tobacco free.
We have a system set up if someone wants to quit. You can email me if you want to talk about it. It is a complex program.
BTW The reasonable alternative IS quitting. I've yet to see a doctor give me a note that says the ee should continue using tobacco and that if they quit it will be harmful to their health. It may happen, but not yet.
I agree that you should also target other behaviors. We are doing that currently on a voluntary basis- such as weight/exercise and DM. We may up the ante down the road.
To the naysayers... you are going to continue to naysay your way into huge cost increases. You better take the bull by horns now or you are going to regret it. When the CFO and CEO asks what you are doing about your healthcare costs are you going to tell them, well we can switch carriers and raise the deductible? Come on.
My biggest problem with the practice is that I think it's the tip of the iceberg and no one knows how deep the 'berg goes or can go. Today it's smoking, tomorrow it might be obesity, is it foreseeable that it could go towards heredity? Do we create policies whereby anyone with a history of diabetes/cancer/alcoholism/drug addiction/heart disease in their family, would have to pay a higher premium because their risks are higher than someone without the history? What about type A personalities - if someone is too hyper, then they have to pay higher premiums because studies show their behavior puts them in line for increased risks of heart disease. Or, what about people that are poor - do they have to pay more for their premiums because studies show they are more apt to use emergency medicine & not take maintenance drugs because they can't afford them? How about from the news today - a study shows that people in "bad" relationships are at greater risk of heart disease than people in "good" ones. As employers, do the people that spend time with their co-workers, supervisors, HR discussing their lousy marriage have to pay more for health insurance premiums?
I do think we need to address the health issues of Americans and due to the rising costs of insurance we have to look at things from every angle - I'm just not sure I like this angle. Honestly, I don't think enough is done evaluating insurance company practices and how they set their rates. We need that inspector general from New York to investigate the health insurace industry.
For MWild:
I'm not sure any kind of a wellness program would be available for hereditary conditions, so I don't see this going that far.
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I may not have made this clear, but ee's and spouses have incentives to comply. If a spouse and ee both use tobacco, they pay $14/week more for their insurance.
We did not want to make all spouses come to the plant to pee in a cup. This is a fairly intrusive program and we want to have some "give" in it where we could. You could certainly make everyone pee in a cup. We only make ee's. We do it on their shift and they are paid for the time.
We require a dr's note at the beginning of the cessation program. When they are finished we surprise test them. Then they are a non-tobacco user for the year and will have to recertify the next year.
Bottom line- tobacco is bad for you. It causes/contributes to significant health problems. The only counter argument that has any merit is that smokers die quicker so their health costs (from beginning to end) are actually cheaper.
We hacked off the tip and are working our way down. Some people don't like it. I guess they can work somewhere else. If they stay, we will save them money on their health insurance. That's part of my job.
You ask about it moving to genetics (heredity). That is pointless because it is illegal.
I happen to agree with you on tobacco, but that is not my issue. I'm just trying to figure out the most effective (and legal) way to monitor a wellness program.
Thanks.
DISCLAIMER: This information is provided for informational purposes only and is not offered as legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. No person should act upon this information without seeking professional counsel. Do not send us information until you speak with one of our lawyers and get authorization to send that information to us.
It's too much info to type. If you would like more help, it will be easier to talk about it. Email me and I'll give you my #. If not, good luck. You can do it.
I didn't walk into your point - you missed mine. x:-) As employers, I agree, we can't just sit back and not do anything - I'm just not sure that I agree philosophically with this approach. You say we can't charge more for people with heredity issues because it's illegal - how is it illegal? The people already work for you & you charge more based on their history & the way you don't charge more is exactly what you are doing for the smokers & overweight folks - as long as they are enrolled in an alternative program (such as wellness initiatives, gym memberships, etc.) then they don't have to pay more.
The program you have at your company is, like I said before, the direction we will more than likely go - I just think it is the wrong direction for all employers...
>03-03-06 AT 02:47 PM (CST)[/font]
>
>Hi SMace
>
>I didn't walk into your point - you missed mine.
>x:-) As employers, I agree, we can't just sit
>back and not do anything - I'm just not sure
>that I agree philosophically with this approach.
You don't agree with it, yet your company is probably going to do it??? Huh???
> You say we can't charge more for people with
>heredity issues because it's illegal - how is it >illegal?
I didn't say that. You said what's next... heredity. I was speaking of genetics. It is illegal to take adverse action based on genetic testing.
I interpreted a lot of blah, blah, blah... rhetorical questions and then you say your going to do what I and others suggest. I don't understand.
First, I am asking a lot of questions right now and they are rhetorical - it's called a conversation. I cetainly don't think that everyone here has all of the answers, but I don't think it's wrong to voice (write) the questions/concerns I do have. I'm not inclined to think that charging people more in health premiums will be THE answer we need to deal with the health crisis in America. I think it's the wrong approach & I hope it doesn't become the main stream. It's a slippery slope. I remember with FML started back in '93 and I never imagined that it would become in the nightmare it is today to administer...
Second, even though I have this opinion, very strongly I concede, I don't own my company. Our President has already indicated that he would like to see us charge more for smokers and those 100+ pounds overweight. Although I would disagree with him - if he wants to do it, then we will do it & I would need a game plan - this is what I meant when I said that I could use the information you presented as a foundation.
Blah, Blah, Blah
Mandi
Do you have a problem with excluding coverage for self-inflicted injuries?
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You can exclude this in an ERISA plan, however if it is the result of a physical or mental medical condition, it's paying.
I'd have a hard time believing that anyone who tries to kill themself doesn't have a mental condition.
>
>First, I am asking a lot of questions right now
>and they are rhetorical - it's called a
>conversation. I cetainly don't think that
>everyone here has all of the answers, but I
>don't think it's wrong to voice (write) the
>questions/concerns I do have. I'm not inclined
>to think that charging people more in health
>premiums will be THE answer we need to deal with
>the health crisis in America. I think it's the
>wrong approach & I hope it doesn't become the
>main stream. It's a slippery slope. I remember
>with FML started back in '93 and I never
>imagined that it would become in the nightmare
>it is today to administer...
>
>Second, even though I have this opinion, very
>strongly I concede, I don't own my company. Our
>President has already indicated that he would
>like to see us charge more for smokers and those
>100+ pounds overweight. Although I would
>disagree with him - if he wants to do it, then
>we will do it & I would need a game plan - this
>is what I meant when I said that I could use the
>information you presented as a foundation.
>
>Blah, Blah, Blah
>
>Mandi
That cleared things up. Sorry if I was a bit rude. I was in a bad mood.
There is no "right" or "easy" answer. If you are looking for it in healthcare you will never find it. You gotta do what you gotta do.
O.K., so I vented and got off the main topic a little!!! It's a catch 22 for the employer/employee no matter what cost savings measures an employer wants to implement.
With that said, some companies are not charging smokers more, but are rebating back to employees, that do not smoke, a portion of what they paid in premiums. Essentially smokers pay more, but this seems to get them around the discrimination rules.
Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]
>especially for your state.
>
>With that said, some companies are not charging
>smokers more, but are rebating back to
>employees, that do not smoke, a portion of what
>they paid in premiums. Essentially smokers pay
>more, but this seems to get them around the
>discrimination rules.
>
>Margaret Morford
>theHRedge
>615-371-8200
>mmorford@mleesmith.com
>[url]http://www.thehredge.net[/url]
No, that is not what gets employers around the discrimination rules. Providing them with a reasonable accomodation gets you compliant with the rules.