Tobacco and System Interventions: Healthcare Purchaser

Importance to Employers (Healthcare Purchasers)

Tobacco-related deaths, injuries and poor health not only affect the tobacco user but also have direct and indirect costs for employers. Direct costs include payments made out-of-pocket on healthcare benefits, disability, and workers' compensation. The direct medical costs associated with smoking total approximately $75.5 billion (average 1997-2001).1 Additionally, businesses pay an average of $2,189 in workers' compensation costs for smokers, compared with $176 for nonsmokers.2 Indirect costs include lost wages, lost workdays, costs related to using replacement workers, overtime premiums, productivity losses related to unscheduled absences, and productivity losses of workers on the job. It is estimated that each employee who smokes costs employers $1,897 in lost productivity each year.1

What Does Tobacco Cost Your Business?

Have you thought about how much tobacco use costs your organization? These factors include, greater healthcare costs, increased absenteeism, work time spent on smoking breaks, higher life insurance premiums, increased risk of occupational injuries, increased cost of disability, increased disciplinary actions. Use this calculator as a guide to estimating these costs.


 The U.S. Public Health Service (USPHS) report Treating Tobacco Use and Dependence: A Clinical Practice Guideline, recommends the inclusion of tobacco cessation treatments (both pharmacotherapy and counseling) in employee health benefit packages.3 By adhering to the following recommendations, employers can potentially reduce the negative health and economic effects of tobacco use.   

Recommendation: Employers should request or select health plans that cover all effective tobacco cessation treatments and allow employees to choose their preferred approach.3, 4

  • Seven medications and three types of counseling are recommended to treat tobacco dependency. Nicotine replacement therapies (NRTs) are available over-the-counter (patch, gum, lozenge) and by prescription (nasal spray, inhaler), while bupropion (Zyban) and varenicline (Chantix) are two non-nicotine, prescription-only options.3
  • The types of counseling include individual (either face-to-face or telephone) and group counseling.
  • Coverage should be provided for at least two smoking cessation attempts per year.5

Recommendations: Employers should educate all employees about the availability of tobacco cessation benefits and encourage employees to use the benefits.3

  • Employees need to know that the coverage exists to use it. Inform employees directly and regularly about available cessation treatments and programs.
  • Publicize the coverage through newsletters, emails and other communications
  • Information about cessation benefits should be presented in a way that is easy for employees to understand and obtain. 
  • Inform employees that individual and group counseling is available through Tobacco Free Florida. Employees can call (individual telephone counseling through the Florida Quitline), click (individualized online program) or come in (face-to-face group counseling) to receive cessation assistance. 6

Recommendation: Employers should consider making their workplaces tobacco free. 4,7

  • Instituting workplace bans on tobacco use creates a supportive, conducive environment for smokers and other tobacco users that are trying to quit.
  • Workplaces that are tobacco free promotes a healthy workplace and protects all employees from being exposed to the harms of secondhand smoke.

Benefits of Adopting the Recommendations

By investing in tobacco cessation treatment benefits, employers improve employee health and reduce the significant direct and indirect cost associated with tobacco use. Paying for an employee’s tobacco cessation treatment is the single most cost-effective health insurance benefit for adults that can be provided by employers and it is considered the benefit with the most positive impact on health.4, 8, 9, 10 Business providing tobacco cessation benefits have seen increases in the number of tobacco users willing to get treatment and decreases in rates of tobacco use among employees.11, 12

Furthermore, over time, tobacco cessation benefits generate financial returns for employers in:

  • Reduced health care costs 13, 14
  • Reduced absenteeism 13, 15, 16
  • Increased on-the-job productivity 13, 15, 16
  • Reduced life insurance costs 13, 15

Immediate benefits for employers include:

  • Increases in employee productivity 13, 16
  • Reductions in smoking-attributed neonatal health care costs 17
  • Employers who provide a smoke-free workplace may also realize savings on fire insurance and costs related to ventilation services and property repair and upkeep 13, 15

How to Obtain the Benefit

An employer has several options for obtaining and administering tobacco dependency treatment benefit coverage for its employees. Employers can:

  • Utilize the employer’s existing health benefits carrier or insurer 18
  • Utilize behavioral carve-out companies, Employee Assistance Plans (EAPs) or special wellness programs 18

 Employers that offer a choice of benefit options may find that not all carriers offer a tobacco dependency treatment program. Therefore, an employer may choose to use a carve-out company to retain consistency across plans.18 Employers should carefully examine the available prices and program designs to find the right fit for their business. A benefits consultant or actuary can assist in evaluating vendors’ bids and help assess the costs, benefits and potential benefit trade-offs for the business.18


For further information or technical assistance regarding the adoption of the recommendations, please contact Karen Geletko at 850-645-1490 or .

  1. US Department of Health and Human Services. The health benefits of smoking cessation: a report of the Surgeon General. 1990.
  2. Cromwell J, Bartosch WJ, Fiore MC, Hasselblad V, Baker T. Cost-effectiveness of the clinical practice recommendations in the AHCPR guideline for smoking cessation. Agency for Health Care Policy and Research. JAMA. Dec 3 1997;278(21):1759-1766.
  3.  Fiore MC, et al. Clinical Practice Guideline: Treating tobacco use and dependence: 2008 Update. Rockville, MD: US Dept of Health and Human Services, Public Health Service; 2008.
  4. Center for Prevention and Health Services, Center for Disease Control and Prevention. The National Business Group on Health, Washington, DC: Reducing the Burden of Smoking on Employee Health and Productivity, Volume 1, Number 5, May 28, 2003.
  5.  George Washington University Center for Health Services Research and Policy. Sample Purchasing Specifications Related To Tobacco-Use Prevention And Cessation: a Technical Assistance Document. October 2002. 
  6. Tobacco Free Florida 
  7. American Lung Association. Helping Smokers Quit: State Cessation Coverage; 2011.
  8. Warner KE. Cost effectiveness of smoking-cessation therapies. Interpretation of the evidence and implications for coverage. Pharmacoeconomics 1997;11(6):538–49.
  9. Cummings SR, Rubin SM, Oster G. The cost-effectiveness of counseling smokers to quit. Journal of the American Medical Association 1989;261(1):75–79.
  10. Coffield AB, Maciosek MV, McGinnis JM, et al.. Priorities among recommended clinical preventive services. American Journal of Preventive Medicine 2001;21(1):1–9.
  11. Curry SJ, Grothaus MA, McAfee T, Pabiniak C. Use and cost effectiveness of smoking-cessation services under four insurance plans in a health maintenance organization. New England Journal of Medicine 1998; 339(10):673–79.
  12.  Professional Assisted Cessation Therapy (PACT). Employers’ Smoking Cessation Guide: Practical Approaches to a Costly Workplace Problem.
  13. Warner KE, Smith RJ, Smith DG, Fries BE. Health and economic implications of a work-site smoking-cessation program: a simulation analysis. Journal of Occupational and Environmental Medicine 1996;38(10):981–92.
  14. Wagner EH, Curry SJ, Grothaus L, Saunders KW, McBride CM. The impact of smoking and quitting on health care use. Archives of Internal Medicine 1995;155(16):1789–95.
  15. Centers for Disease Control and Prevention, American Cancer Society, and Wellness Councils of America. Making Your Workplace Smokefree—A Decision Maker's Guide. 1996.
  16. Halpern MT, Shikiar R, Rentz AM, Khan ZM. Impact of smoking status on workplace absenteeism and productivity. Tobacco Control 2001;10:233–8
  17. Marks JS, Koplan JP, Hogue CJR, Dalmat ME. A cost-benefit/cost-effectiveness analysis of smoking cessation for pregnant women. American Journal of Preventive Medicine 1990;6(5):282–9.
  18. The American Legacy Foundation (2006). Covering Smoking Cessation as a Health Benefit: A Case for Employers. MIlliman, Inc. New York