Northwest Charges Smoker Employees to Cover Health Insurance

Northwest Airlines plans to begin charging some of its workers who smoke an additional fee for health insurance, according to Knight-Ridder Newspapers.

The Eagan, Minn.-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.

Northwest’s 35,000 salaried employees will begin paying the fee Jan. 1, 2006, 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.
Health-care costs in 2006 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.

However, most employers still prefer 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.
Other companies use a surcharge against employees who smoke as a way to encourage employees to be healthy or simply to cut costs.
For instance, General Mills, the Golden Valley, Minn.-based food giant, charges smokers a surcharge of $20 per month for salaried employees and $10 per month for production employees.

Northwest declined to discuss specifics of its tobacco fee, which is among changes Northwest is seeking as it overhauls its medical plan, part of an effort to cut its annual labor costs by $1.4 billion.

As pilots, flight attendants and ground workers unions negotiate new contracts with Northwest, observers say the company is in a strong position to get the changes it wants.

That’s because Northwest is restructuring under bankruptcy court protection, and it already has asked the bankruptcy judge for more leverage in the event it can’t get its unions to agree to cuts.

For 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.