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Smoking: Hazardous to your bottom line

Shane Borer
by Shane Borer
June 12, 2008
  • Accounting
  • Benefits
1 minute read
  • SHARE ON

Using incentives to promote employee wellness can take a major bite out of health care. But is your company’s program being abused by freeloaders?

A Whirlpool Corp. factory in Evansville, IN suspended 39 workers who signed insurance paperwork claiming they were tobacco-free. After an audit of the program, the workers were found smoking or using chewing tobacco on company premises.

The 1500-employee factory required people who used tobacco to pay an extra $500 in annual health insurance premiums to keep insurance costs under control, but based its paperwork on the honor system — no drugs tests required.

After the suspensions, Whirlpool was forced to bring in outside workers to keep production moving.

Adjusting health care premium contributions according to employees’ smoking status is becoming more popular — 16% of large employers use a version of the system, according to a 2007 survey by Mercer. And that number’s on the rise.

But just because your company takes steps towards physical and fiscal health doesn’t mean employees will follow all policies to the letter. Complicating things even further is the Employee Retirement Income Security Act (ERISA), which limits the changes an employer can make to a health plan based on workers’ unhealthy habits.

That’s not an issue with Whirlpool’s situation, though — a company can’t punish employees if it finds out they’re unhealthy, but employees who flat out lie about their habits aren’t protected by ERISA.

Has your company instituted changes to its health care plan to cut costs? Sound off the comments section and let us know what has and hasn’t worked for you.

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