There has been a rash of Class-Action Lawsuits. Nicotine Surcharges are permissible only as part of a wellness program that meets specific legal standards, primarily under the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA). Specifically, these surcharges need to be tied to a health-contingent wellness program, which must adhere to guidelines ensuring that they don't discriminate against employees who are unable to meet the health-based criteria for the surcharge.
- Wellness Program Compliance: Any tobacco/nicotine surcharge must be part of a HIPAA-compliant wellness program.
- Health-Contingent Program: The surcharge must be part of a health-contingent wellness program, meaning it is based on achieving a specific health outcome (e.g., quitting smoking) or making reasonable efforts toward the outcome (e.g., attending a smoking cessation program).
- Reasonable Alternatives: Employees who cannot meet the program's tobacco-related requirements (such as quitting smoking) must be offered a reasonable alternative standard to avoid discrimination. This ensures compliance with the ACA’s rules against discrimination based on health status.
- Program Communication: Employers must clearly communicate the availability of reasonable alternatives, and the steps employees can take to meet the program’s requirements. This communication is essential to avoid potential legal risks.
- Verification with a Qualified Wellness Team: It’s crucial to involve a Qualified Wellness team to verify the wellness program and any nicotine/tobacco surcharges are compliant with regulations, especially concerning the availability and communication of reasonable alternatives.
- Engage a Qualified Wellness Team: Before applying any nicotine or tobacco-related surcharges, verify with the team that the program is structured to comply with HIPAA, ACA, and other applicable regulations.
- Document Reasonable Alternatives: Ensure that there is a clear process for employees who cannot meet the smoking cessation requirement, such as offering a tobacco cessation program or alternative means of compliance.
- Review Communications: Check that employees are adequately informed about the program, including details on reasonable alternatives, through various communication channels (email, website, meetings, etc.).
By keeping these guidelines in mind, employers can avoid the legal risks posed by improper nicotine/tobacco surcharge administration.
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