Tobacco surcharges: agencies won’t penalize plans that drop the charge going forward
When an employee finishes a stop-smoking program mid-year, the plan can drop the tobacco surcharge from that point forward.
Status: In effect
Jurisdiction: Federal · Topic: Benefits
Source: U.S. Department of Labor, FAQs Part 74, August 26, 2026
What changed
When an employee finishes a stop-smoking program mid-year, the plan can drop the tobacco surcharge from that point forward. Labor, Treasury and HHS say they will not penalize a plan for not refunding what was charged earlier in the plan year, the question behind dozens of class-action suits. This covers agency enforcement only, not private lawsuits.
What to do
If your health plan charges a tobacco surcharge, confirm it stops as soon as an employee finishes the cessation program, and that plan materials say how to request an alternative.
Primary source: U.S. Department of Labor, FAQs Part 74, August 26, 2026. Part of Compliance Watch, Issue 01 (September 11, 2026). Last reviewed September 11, 2026.
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