Tobacco compliance has gotten a little more interesting. The basics remain the same; I’ve blogged about this delightful topic most recently here and here. What’s fascinating is the trend I’ve noticed recently among city and state ordinance that discourages use of tobacco differentials.
Tobacco differentials generally can remain in place for fully insured group plans as long as they comply with ACA and HIPAA guidelines, despite efforts on the state level to reduce surcharge amounts or eliminate the differentials altogether. And self-funded group plans are not subject to state insurance law mandates. When it comes to insurance/benefits guidelines, employer tobacco differentials are likely to be in compliance.
Where things come into question for employers with tobacco surcharges is under state or local employment/labor laws (i.e.: not insurance laws) that limit discrimination against an employee for participating in lawful behaviors when off-duty (such as using tobacco when not working).
An example of this is New York City labor law 201-D(2)(b), which states:
“[I]t shall be unlawful for any employer or employment agency to refuse to hire, employ or license, or to discharge from employment or otherwise discriminate against an individual in compensation, promotion or terms, conditions or privileges of employment because of:
…an individual’s legal use of consumable products prior to the beginning or after the conclusion of the employee’s work hours, and off of the employer’s premises and without use of the employer’s equipment or other property;”
An employer that sponsors a plan that provides a tobacco differential could potentially be in violation of this NYC labor law should the employee argue their compensation and privileges of employment are affected by their legal, off-premises smoking habit. As if regular tobacco differential compliance wasn’t already confusing enough.
Employers should check in with their employment law counsel to determine if their tobacco differential may be impacted by such laws and if they want to proceed despite the potential legal conflict. Be sure to have your legal team review your wellness-related policies against federal regulations such as ACA, ADA, GINA, HIPAA, and ERISA, as well as state and local insurance, employment, and labor laws. It will no doubt be interesting to see how this all plays out – stayed tuned.