Cost Savings

How Tobacco Cessation Cuts Costs

Over time, tobacco-use cessation benefits generate financial revenues for employers in four ways:

  • Reduced health care costs
  • Reduced absenteeism
  • Increased on-the-job productivity
  • Reduced life insurance costs
  • Benefits realized more immediately include:
    • Increases in employee productivity
    • Reductions in smoking attributed neonatal health care costs

Employers who provide a smoke-free workplace may also realize savings on fire insurance and costs related to items such as ventilation services and property repair and upkeep.

How Much Do Cessation Benefits Cost? Are They Cost-Effective?

Instituting a tobacco cessation program at your workplace can save you money. Tobacco cessation is more cost-effective than other common and covered disease prevention interventions, such as the treatment of hypertension and high blood cholesterol.

Cost analyses have shown tobacco cessation benefits to be either cost-saving or cost-neutral.

Overall, cost/expenditure to employers equalizes at three years; benefits exceed costs by year five.

Costs for comprehensive tobacco cessation benefits are between 10 and 40 cents per member per month (costs vary based on utilization and dependent coverage). In contrast, the annual cost to the employer of tobacco use is about $3,283 per year in medical costs, plus lost productivity.

Calculating Return on Investment (PDF, 280 KB)
Saving Money and Improving Employee Health (PDF, 135 KB)
Employee Smoking Costs Employers (PDF, 139 KB)

Does Health Care Reform Change How Tobacco Cessation Is Covered?

As of Sept.23, 2010, new health plans in which an individual has enrolled since March 2010 are required to cover tobacco cessation counseling and medications with no co-pay or deductible. As of Oct. 1, 2010, all state Medicaid programs are required to cover cessation benefits for pregnant women with no cost-sharing.

Coverage for Tobacco-Use Cessation (PDF, 213 KB)
Questions to Ask Insurance Plans (PDF, 129 KB)