Many employers consider putting tobacco surcharges into place in hopes of reducing tobacco or nicotine use within their employee population. The decision to implement a surcharge depends on your goals as an employer. If your primary objective is to ensure that employees who engage in unhealthier, higher‑risk behaviors pay what you view as their “fair share” of health plan costs, a tobacco surcharge may accomplish that. However, if your goal is to genuinely support employees in quitting tobacco or nicotine, surcharges may not be the most effective approach.
On average, it takes individuals 8-11 quit attempts before they successfully stop using tobacco or nicotine, according to the American Lung Association. In the science of behavior change, there is no one‑size‑fits‑all approach; each person’s quit journey is unique and requires strategies tailored to their needs. Strategies can involve quitting “cold turkey,” slowly reducing quantity and/or frequency of tobacco/nicotine use, replacing tobacco/nicotine use with a healthier alternative, using nicotine‑replacement therapies (NRTs), working with a behavior‑change coach, or participating in a structured cessation program.
Each of your employees will benefit from different methods at different times, and success often comes from finding the approach (or combination of approaches) that works best for them. That said, the best thing that you can do as an employer is to provide cessation education, resources, and programs that employees can use when they are ready to do so. While many individuals already understand the health risks associated with tobacco and nicotine use, the next step is helping them identify their personal “why” (their reason to quit), assess their readiness to change, and create a plan to use cessation resources when they are prepared to take action.
Understanding that each person’s quit journey is different also matters when considering how incentives influence behavior. Given these individual differences, it’s not surprising that research is mixed on whether tobacco surcharges truly motivate behavior change at scale. Because tobacco and nicotine use is already an expensive habit, individuals who are not ready to quit may simply opt to pay the higher premium and maintain a behavior that is deeply embedded in their routine.
When a habit is firmly integrated into one’s lifestyle, paying more can feel easier than initiating a quit attempt to qualify for a lower premium. The “stick” approach of a tobacco surcharge may motivate some employees, but it is unlikely to be effective across your entire population of tobacco users. Employers must be thoughtful in how they structure any incentives within a population health program because of this, but especially because incentives cannot be designed in a way that feels coercive to employees. The goal should be to support healthier choices, not pressure them. For instance, if a surcharge is set so high that employees participate simply because they cannot afford not to, the program shifts from motivation to coercion. In those circumstances, employees aren’t focusing on changing their behavior—they’re focusing on avoiding a financial penalty which also becomes a legal issue for you as the employer.
It’s also important to note that employees who are defined as tobacco or nicotine users can avoid paying the tobacco surcharge by opting into a reasonable alternative standard (RAS). Under federal wellness program regulations, employees are still entitled to the lower premium even if they do not successfully quit using tobacco, as long as they make a reasonable, good‑faith effort to participate in an approved cessation program or complete another RAS option offered by the employer. This means an employee may demonstrate participation in a cessation program with only minimal engagement—even without a sincere intent to quit—and the employer is still legally required to remove the surcharge once that participation is fulfilled.
Despite the rationale behind surcharges, research shows they do not necessarily lead to actual cessation and often fail to produce the intended behavior change. Findings from A Report of the Surgeon General, Yale University, and the American Heart Association indicate that surcharges did not lead to tobacco or nicotine cessation; instead, they resulted in unintended negative consequences such as employees disenrolling from the health plan, declining workplace culture, negative perception of the employer, dishonest reporting on tobacco affidavits or biometric tests, increased turnover, and reduced engagement in other company programs or initiatives.
Given these challenges, employers who want to support genuine behavior change can consider the following strategies instead of relying on surcharges:
If tobacco or nicotine use (smoking, chewing, pouches, etc.) is common in the workplace, it can become the “social norm” throughout the environment. Employees who are thinking about quitting may feel discouraged when they lack support or are routinely surrounded by the behavior. Creating a workplace environment that reduces cues for tobacco use and supports healthier choices can help employees who are ready to make a change.
Provide employees with practical alternatives to smoking breaks, such as short walks or time outdoors, along with simple behavior‑replacement options like gum, mints, flavored water, or other familiar substitutes. Pair these with stress‑management resources to address stress being one of the most common triggers for tobacco use, and one of the more difficult withdrawal symptoms to manage. This can be compared to the approach some individuals take when reducing alcohol consumption: they may begin by replacing the behavior with soda because it offers an easier, sometimes less noticeable transition, then gradually move toward healthier alternatives like sparkling water, sports drinks, or other non-alcoholic beverages, and eventually increase their overall water intake over time. The key is that the process starts by replacing the behavior with something familiar so it doesn’t feel completely taken away.
Offer employees evidence‑based cessation resources, educational materials, nicotine‑replacement therapies (NRTs), and quit‑support programs so they have multiple pathways to pursue when they’re ready.
Vendors that combine lifestyle coaching, behavior‑change strategies, and NRT access can provide more tailored, comprehensive support for employees and improve engagement.
If you’re recognizing those who have quit using nicotine or tobacco, consider celebrating and acknowledging any quit attempt, even if temporary. Early recognition can build confidence and reinforce positive behavior, especially since most people require several attempts before successfully quitting.
Because health behaviors and participation are often influenced by spouses or partners, involve them in program communication, resources, and educational opportunities when possible.
In the end, tobacco surcharges can lead to unintended outcomes, introduce legal responsibilities that employers must manage carefully, and often do little to improve quit rates or serve as meaningful support for employees.
Interested in learning more? Connect with M3’s Population Health & Condition Management Team.
