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Tobacco Usage and Cost of Coverage

A group health plan may charge employees who use tobacco more for their coverage than non-tobacco users, but the difference in contribution rate between those who use tobacco and those who do not must be part of a wellness program that meets certain regulatory conditions in order to avoid discrimination concerns.


If a wellness program is going to offer rewards or increase contribution amounts based on whether an employee has achieved a required outcome of the program (for example, successfully quitting smoking), the conditions listed below must be met:


  • Provide an opportunity once per year to qualify 

  • Program must be designed to promote health and prevent disease 

  • Reward must not exceed 30 percent of the total cost of employee-only coverage for their lowest cost plan option (even if the employee is not enrolled in that particular plan option) or 50 percent if tobacco is included

  • Rewards must be available to all similarly situated individuals or allow alternatives

  • Plans must disclose in all materials that alternatives are available  

  • Contact information for obtaining alternatives must be provided on all materials describing the plan

    Please keep in mind that wellness programs are subject to laws such as the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act and HIPAA.


    If you have any questions, please contact your Client Solutions team.


    This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.