Wellness programs and incentives to reduce or prevent tobacco use are becoming critical parts of employers' overall health plan strategies as tobacco remains one of the leading causes of preventable death in the United States, and tobacco users impact the bottom line of an employer's health costs. Two recent developments – one under the Affordable Care Act legislation and one from academia – may be of interest to employers as they formulate strategies related to wellness and tobacco use in their employee populations.
Effect of Wellness Programs on Affordability and Minimum Value: Under the Affordable Care Act's "pay-or-play" requirements, an employer may be subject to a penalty if any full-time employees receive subsidies or premium tax credits because the employer coverage is not affordable or does not offer minimum value. The IRS recently released proposed regulations that address how wellness programs may impact affordability and minimum value determinations, and essentially divides the treatment of wellness programs by whether they are designed to prevent or reduce tobacco use or whether they are designed for any other wellness purpose. Under the current proposed rules, if the wellness program is designed to prevent or reduce tobacco use, both minimum value and affordability must be calculated assuming that all employees satisfy the requirements of the wellness program. Conversely, if the wellness program is not designed to prevent or reduce tobacco use, both calculations must be made assuming employees fail to satisfy the requirements of the wellness program, regardless of actual results for a particular employee. As for why the distinction is made, in the preamble to these proposed regulations, the IRS explains generally that these rules are consistent with other Affordable Care Act provisions reflecting a policy about individual responsibility regarding tobacco use.
Cost of a Smoking Employee: A new study from a team at Ohio State University estimates that U.S. employers pay almost $6,000 per year per smoking employee above the cost of a person who never smoked. The $5,816 average cost per smoker is the sum of the following costs:
- Excess absenteeism – $517/year;
- "Presenteeism" (reduced productivity related to effects of nicotine addiction) – $462/year;
- Smoke breaks – $3,077/year; and
- Health care costs (for self-insured employers) – $2,056/year
This study was an attempt to focus solely on the economics of smoking and the researchers involved obtained their figures by compiling multiple studies that calculated a variety of specific costs to develop an estimate of the overall annual extra cost per smoking employee. The lead author on the study, Micah Berman, seems to recognize the potential for good in employer-sponsored wellness programs designed to prevent or reduce tobacco use, stating that: "This is a place where business interests and public health align. In addition to cutting costs, [by making cessation programs available to their employees,] employers can help their employees lead healthier and longer lives by eliminating tobacco from the workplace."
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