More Companies Lean on Employees to Stop Smoking to Cut Insurance Costs

A growing number of businesses are using sticks instead of carrots to encourage employees to stop smoking, in an effort to cut health insurance costs, Bloomberg Businessweek reports.

Macy’s started charging workers who admit using tobacco a surcharge of $35 per month for health coverage, according to the article. If the workers enroll in a free smoking-cessation program, the extra cost will be deferred. After six months, their progress will be assessed.

PepsiCo charges workers who smoke a $600 annual insurance surcharge. Publisher Gannett charges smokers $60 per month, while Union Pacific and Scotts Miracle-Gro won’t even hire smokers. Scotts Miracle-Gro reports that since implementing the smoking hiring ban, their health premiums have risen at about half the U.S. average.

Cathy Tripp, a consultant at Aon Hewitt, told Bloomberg Businessweek that for employers, a smoker is 18 percent more expensive than a nonsmoker. That gap is likely to increase in 2018, when a provision of health care reform will require health plans that spend much more than average to pay additional federal tax.