Employee Benefits | FJG/FYI Articles
Benefits Compliance FAQ
Q. Can an employer charge a higher health
insurance premium for a smoker vs. a nonsmoker?
A. HIPAA prohibits a health plan from charging individuals different premiums based on a health status or standard (26 USC 9802 (b)). However, there is an exception when provided under a wellness program. The wellness program would need to comply with the Final Nondiscrimination and Wellness Program Regulations jointly issued on December 13, 2006 by the Department of Labor, Department of Health and Human Services, and Department of the Treasury.
If a wellness program provides a reward for individuals satisfying a standard related to a health factor (in this case, the health factor being a non-smoker), then the program must meet 5 requirements in order to comply with the HIPAA nondiscrimination rules:
- The premium differential may not exceed 20%
- The program should be designed to “promote health and prevent disease”
- Participants must be offered an opportunity at least once annually to meet the standard and thus qualify for the reward
- If it is unreasonably difficult for an individual to meet the standard due to a medical condition (or if it medically unadvisable), the program must offer a reasonable alternative standard [Note:
- The DOL maintains that addiction to nicotine is a medical condition (71 Federal Register 75037). Therefore, a physician could certify that it is unreasonably difficult for an individual to quit smoking. An alternative must be offered, such as completing a smoking cessation program.]
- All program materials must include information on the availability of a reasonable alternative standard