Northwest Airlines plans to begin charging some of its workers who smoke an additional fee for health insurance.
The Minnesota-based airline will be joining a small but growing number of companies targeting smokers as they look for ways to tap workers for a growing share of the escalating cost of health care.
Salaried workers, a sliver of the 35,000 people who work at Northwest, are scheduled to begin paying the fee Jan. 1, according to an internal company memo. The airline's proposals to revamp its union contracts also include the tobacco-use fee, which means it's eventually likely to apply to all Northwest workers.
"It is something a lot of companies are looking at," said Blaine Bos, the office business leader for Mercer Health & Benefits in Minneapolis.
Next year, health care costs are expected to increase another 8 percent, more than twice the rate of inflation, reports Towers Perrin, a benefits consulting firm. That comes after a string of double-digit increases that has made rising health care costs a key competitive issue for companies.
"With the redesign of our health plan, employees who utilize more health care will pay more of the cost," Northwest told its salaried workers in the memo, signed by senior vice president Mike Becker. "As a result of the redesigned medical plan, many employees will actually see a reduction in their monthly premium contribution rate."
Tapping smokers isn't popular with some Northwest workers. "Where does it stop?" grumbled Ronald Giovanetti, a striking mechanic at Northwest who describes himself as an on-again, off-again smoker. Soon, he predicted "they will start charging you on your lung capacity."
Even in this era of passing along health care cost increases, slapping a fee on smokers remains uncommon.
Most companies still embrace options that encourage smokers to kick the habit, such as covering a portion of the cost for nicotine patches and other remedies and providing smoking-cessation classes.
Research is clear: Financial incentives motivate smokers to try to quit, whether it is a tax on cigarettes or a surcharge on their health care premiums, said Michael Scandrett, a health policy consultant with Halleland Health Consulting in Minneapolis.
Northwest has some company in targeting smokers. General Mills, the Minnesota-based food giant, charges a smokers' surcharge of $20 per month for salaried employees and $10 per month for production employees. To apply the fee, the company asks workers whether they smoke.
Minnesota law permits employers to charge different premium rates for smokers as long as the rates reflect the actual increased costs to the employer.
For Northwest workers, the smoking fee comes on top of demands for pay cuts ranging from 5 percent to 28 percent and potentially thousands of additional job cuts the airline says it needs to survive. Northwest Airlines will begin charging smokers higher premiums for company-provided health insurance. Few companies do this now, but analysts expect more to do so.