Employer Incentives Encourage Employees to Quit Smoking

Employer Incentives Encourage Employees to Quit Smoking

It’s hard to stop smoking, but financial incentives can give workers the extra push they need to kick the habit.

By Joanne Sammer October 29, 2018
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​The message board on BecomeAnEx.org provides a window into the struggle: “[Quitting] wasn’t entirely my idea—it is being forced by my employer,” one person wrote on the smoking-cessation website. 

At first glance, this person seems to resent participating in a quit plan. Yet, he or she is invested enough in the process to post this message—one that yielded hundreds of responses of support from others also trying to quit.

Smoking is a remarkably hard habit to break, with studies indicating that nicotine can be as addictive as heroin. While nearly 70 percent of smokers say they want to stop, only about 6 percent succeed, according to the U.S. Centers for Disease Control and Prevention (CDC). Anything employers can do to give workers even a slightly better chance of kicking the habit can be worthwhile, from both health and financial perspectives. To that end, benefits professionals at many companies have introduced financial incentives for employees who quit or attempt to quit using tobacco and nicotine products. The incentives have been working and illustrate the influence that employer policies can have on helping workers transform their lives.

​The toll that smoking takes is staggering and well-documented. From 1964 to 2014, 20 million Americans died from causes related to the habit, including 2.5 million from exposure to secondhand smoke, according to the U.S. surgeon general. While smoking rates are less than half of what they were in 1964, 42 million adults and 3 million middle and high school students still use tobacco products and e-cigarettes. In addition, smoking and secondhand smoke are responsible for at least $130 billion per year in direct health care costs and annual productivity losses of more than $150 billion, according to the surgeon general.

When Smoking Hits Home

There are human faces behind the data. The management team at Semblex Corp. had considered implementing a smoking-cessation program, but it wasn’t until a few years ago when a longtime employee died of a heart attack at age 51 that the plan became a reality.

“Everyone knew him because he was a larger-than-life character,” says Todd Switzer, vice president of human resources for the Elmhurst, Ill.-based automotive fastener manufacturer. “They also knew that he was a heavy smoker.”

The shock of suddenly losing one of its 220 employees spurred leaders into action. Within a month, Switzer was meeting with workers to discuss plans to implement a health insurance surcharge of $10 per week for all tobacco users. Although there was some pushback, the co-worker’s death had made the situation personal for many. “We wanted employees to be healthier, and people believed in our sincerity,” he says. The availability of a class on smoking cessation and a promise to waive the surcharge for anyone who participated also made the change in benefit terms more acceptable.

​Three years later, there has been a lot of progress, but, Switzer says, “we still have work to do.” When Semblex’s efforts began, 55 employees were smokers—about 25 percent of its workforce. Since then, 48 people have completed the program, and 19 have quit smoking. However, no workforce is static. As people left or retired and new employees joined (the firm now has 260 workers), the number of smokers fluctuated. About 40 employees—around 15 percent of the manufacturer’s workforce—are still smoking, Switzer estimates.

Choosing Incentives and Penalties

​Financial incentives and disincentives can make a difference. “That is really what moves the needle as far as getting employees engaged in a program,” says Alli Szott, wellness advocate at Assurance, an insurance brokerage based in Schaumburg, Ill. Discounts and surcharges also force people to reconsider their smoking status every year at open enrollment, she says.

A 2004 study involving General Electric found that offering up to $750 in cash incentives led to three times as many people successfully quitting after six months compared to a control group—a finding that was confirmed by studies published in 2015 and 2018 in the New England Journal of Medicine.

Leaders are picking up on this idea: 16 percent of employers provide a discount on health insurance premiums to people who do not use tobacco products, and 10 percent offer a discount for participating in a program to quit smoking, according to the Society for Human Resource Management’s (SHRM’s) 2018 Employee Benefits survey report. Meanwhile, 18 percent impose a smoking surcharge.


​Preparing the Ground

​Rolling out effective anti-smoking policies takes time and preparation. For one thing, “you have to decide what is subject to the surcharge,” says Brent Haugh, executive vice president at Lockton Dunning Benefits, an employee benefits consulting business in Dallas. “Will the occasional cigar trigger the surcharge? How will you define a tobacco user?”

Another consideration: Will your policy include electronic cigarettes, which deliver nicotine without using tobacco? The popularity of vaping is on the rise as smokers seek healthier alternatives or try to quit tobacco. But the long-term health effects of the practice are unknown. A 2015 report from the National Institute for Occupational Safety and Health recommended that e-cigarettes be included in indoor smoking bans due to the limited safety data available. At the workplace, 44 percent of employers included e-cigarettes and other vaporizers in their smoking policies, according to the results of a 2016 SHRM survey on smoking in the workplace. Another 33 percent reported that they planned to adopt a vaping policy.

You’ll also need to figure out how to ensure that employees who say they are tobacco-free actually are. In some firms, workers must sign a legal affidavit, while other companies require employees to take blood or saliva tests.


​Any smoking-cessation program must be crafted so that it deals with the physical, emotional and psychological aspects of trying to quit.

“Smokers need to start to build a nonsmoker identity,” says Amanda Graham, senior vice president with the Truth Initiative, an anti-tobacco nonprofit organization in Washington, D.C. “They need to understand what they will look like after they have quit, and that vision fully fleshed out is what keeps people on track.”

The withdrawal symptoms that come with kicking the habit can be quite uncomfortable, so give workers the support and resources necessary to manage them, including access to nicotine gum and patches.

Focus your early communication efforts on letting people know that the change is coming. How will it work, and why is the policy being modified? What resources, including a formal program and medication, will be available?

“People don’t like surprises,” says Beki Lischalk, CHRO of Kitsap Mental Health Services, so the not-for-profit clinic in Bremerton, Wash., was forthcoming about upcoming changes to how it would handle smoking in the workplace. “We spent a lot of time preparing employees and our patients for the change.”

Kitsap imposes a $100-per-month health insurance surcharge for tobacco users and sponsors a program to help smokers quit. To avoid paying the extra fee, workers must sign an affidavit stating that they are tobacco-free during every open enrollment period. If they are using tobacco, they can still avoid the charge by completing a 90-day program. After that, they will be subject to the nonsmoking rate regardless of their smoking status until next year’s open-enrollment period.

Some business leaders bolster their policies by making it as inconvenient as possible to smoke. Leaders at Kitsap banned smoking on the entire campus in 2015 for everyone—employees, patients and visitors. “You can’t even sit in your car in the parking lot and smoke,” Lischalk says.

While the cost associated with smoking was a key factor in these decisions, the ban was also driven by the team’s concern for the well-being of the organization’s staff and patients, many of whom have allergies or are sensitive to certain odors. 

A few years before imposing a health insurance premium surcharge for tobacco users, leaders at Monarch Beverage Co., a beer and wine distributor based in Indianapolis, barred smoking anywhere on company property, including in all delivery trucks, vans and cars used by the sales force. That was an important first step in their efforts, says Natalie Roberts, a senior vice president at Monarch.


Leveraging Wellness Tools

​Smoking cessation is an important dimension of broader wellness efforts. At Indianapolis-based Major Tool & Machine Inc., employees earn a premium reduction whenever they meet certain goals regarding tobacco usage, body mass index, blood glucose, cholesterol and blood pressure. Tobacco usage is more heavily weighted than the other four metrics, and nonusers get a $10 break per paycheck.

Other aspects of the wellness program include an onsite fitness room and health clinic, annual biometric screenings and personal coaching. About 80 percent of the organization’s employees make use of these offerings, which emphasize the dangers of smoking. When the benefits team promoted a $49 test that measures plaque in coronary arteries, an indicator of heart disease, several workers found they had significant buildup, even though they had no symptoms. Clinic staff used this as an opportunity to discuss how smoking raises people’s risk for heart disease.

The onsite clinic “allows us to offer a much more personal and individualized program with one-on-one accountability and coaching on a regular basis,” says Kendra O’Brien, the company’s vice president of human resources. Clinic staff can also fill prescriptions for any medication, including nicotine gum and patches. Since 2016, 124 people have completed the smoking-cessation program; 38 of them have quit smoking.

A Never-Ending Process

​It’s important to have realistic expectations for a smoking-cessation program,” advises Steve Wojcik, vice president of public policy at the National Business Group on Health, an employer group focusing on health care benefits in Washington, D.C. “Relatively few people will successfully quit tobacco use every time the program is offered. Many will need to go through it several times before they quit, and some never will.”

The structure of your plan may also need to change over time. Monarch Beverage Co.’s plan has evolved significantly in the 15 years since it started. Although the program has helped reduce the number of smokers among the organization’s 750 employees from 50 percent to 13 percent, the team still thinks of it as a work in progress. “Things that worked in the past won’t necessarily work now,” Roberts says. 

For example, the company had long allowed those using tobacco to obtain the same 30 percent reduction in health insurance premiums available to nonusers as long as they participated in a certified plan to quit. But then the organization’s leaders realized that some people were just going through the motions to get the discount—so they now require workers to pay half the cost of participating and to check in regularly to qualify for the markdown. “They have to be actively involved with the program,” Roberts says. “If they have some skin in the game, we think they will be more likely to succeed.”

​The best programs leverage digital tools that facilitate self-directed education, interactive coaching through videoconferencing and, most important, a connection to others who are also trying to kick the habit. Providing a social network allows people to engage with others anonymously, conveniently and with more privacy than an in-person meeting.

 “The core components of smokingcessation programs have not changed, just the way they are delivered,” Graham says. “Physical and social issues related to tobacco usage are still there, and people still need help to deal with them.”

​Legal Concerns

​Legal issues abound when implementing penalties or incentives to encourage workers not to smoke.
  • The Health Insurance Portability and Accountability Act. Under HIPAA, employers can impose surcharges on tobacco users, but they must also offer employees a way to avoid those added fees—for example, by enrolling in a smoking-cessation program.
  • The Affordable Care Act. The ACA permits these surcharges to reach 50 percent of the nonsmoking premium. However, some states have passed their own laws prohibiting or curtailing the practice.
  • State laws. Currently, 29 states and Washington, D.C., have laws protecting smokers at work, according to the American Lung Association.
  • Local ordinances. In New York City, as long as workers do not smoke on company property, while using the employer’s equipment or during work hours, “smoking cannot be the basis for changes in an employee’s terms and conditions of employment, including financial compensation,” says Joseph Harris, a partner with law firm White Harris PLLC in New York City. Related laws are on the books in other local jurisdictions as well.


Gauging Success

​Measuring the return on your investment is difficult at best. In many cases, the full costs of smoking do not occur until well after someone leaves a job, making many long-term expenses someone else’s responsibility. In addition, HR professionals may not have access to smokers’ health insurance claims history.

Instead, look at the cost of delivering an anti-smoking program, including any communication and support provided, and compare that against its success, Graham suggests. In this case, the key metric will be cost-per-quit—total cost divided by the number of employees who have stopped using tobacco and nicotine.

Productivity and absenteeism are other elements to consider. Absences related to smoking as well as the cigarette breaks that smokers often take can be a major drain on productivity, not just for smokers but for their colleagues as well. “People go outside to smoke and get distracted from what they are doing,” Switzer says. “That can cause bad feelings among nonsmoking employees.”

​The frequency of these complaints can be a good first indicator of whether breaks are declining as people enroll in the program. “When people quit smoking, there are fewer complaints from nonsmokers about smokers being out frequently on break,” Lischalk says.

Ultimately, helping employees to stop using tobacco and nicotine means making a commitment to their health. Not all workers will greet the news of penalties happily, but at least some will take advantage of your program and potentially add years to their lives by quitting. And whether they were “forced by their employer” or not, that’s what matters.

Joanne Sammer is a New Jersey-based business and financial writer.

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