If you could have a safer workplace, a cleaner workplace, a healthier workplace, a more productive workplace—and it wouldn’t cost you a dime, would you?

If you could save thousands of dollars a year, would you?

Making your workplace smoke-free can do all that, and more.

Every business, large and small businesses alike, is trying to find ways to make their companies more productive. Health insurance costs impact the revenue of all companies.

In comes down to this: the healthier your staff and workplace environment, the healthier your profits.

What does it cost you to have smokers in your workforce?
There are two types of employer costs to consider caused by tobacco use in the workplace.
  • Direct Costs are those dollars spent on health services. Direct costs include payments made by the company for healthcare benefits, disability, and workers’ compensation.
  • Indirect Costs are expenses not immediately related to treatment of disease. They include lost wages, lost workdays, costs related to using replacement workers, overtime expenditures, productivity losses related to absenteeism, and productivity losses of workers on the job.

Since tobacco use is the number one preventable health issue in the U.S., encouraging workers to quit gives companies the opportunity to improve employees’ health, decrease health insurance costs and increase productivity.

Smoking cigarettes comes with many steep costs. It costs many smokers their health, their money and their time with friends and family. The consequences do not stop there. Employers are paying the price as well. Tobacco use in Indiana is a heavy burden on employers. Average annual healthcare costs due to tobacco use total an estimated $2.9 billion. Tobacco use costs Hoosiers an additional $3.2 billion in lost productivity.

Scientific evidence is painting a clear picture of smoking’s effect on workplace productivity. One study of more than 14,000 workers in Sweden found smokers took an average of 11 more sick days than nonsmokers. Additionally, research published in the prestigious British Medical Journal confirmed “workplace productivity is increased and absenteeism is decreased among former smokers as compared to current smokers.”

Presenteeism, Productivity, and Insurance Costs

Another cost to employers from smoking employees is ‘presenteeism’— lower on-the-job productivity that results from nicotine addiction. Certainly, all employees are occasionally unproductive in one way or another. However, research suggests smoking negatively affects productivity, losing work time due to smoke breaks and absenteeism.

This is because nicotine is a powerfully addictive drug. Although cigarettes satisfy a smoker’s need for nicotine, the effect wears off quickly. While the smoker is craving a cigarette, it is difficult for the employee to concentrate on work. Within 30 minutes after finishing the last inhalation, the smoker may already be beginning to feel symptoms of both physical and psychological withdrawal.

Productivity loss due to smoking breaks is by far the largest single cost that a private employer incurs from a smoking employee. Fortunately, quitting smoking completely eliminates this cost.

Healthcare Costs and Absenteeism Higher Among Former Smokers versus Never-smokers

It’s not only lost productivity that hurts businesses. The increased health care costs of having employees who smoke is another hit to the budget. For an employer, insuring someone who smokes costs $2,000 more every year than insuring a non-smoker. A typical smoker racks up an additional $16,000 in lifetime medical bills. A national survey of over 29,000 workers found tobacco use caused more loss of productivity than alcohol abuse or family emergencies. In sum, between losses in productivity and extra health care costs, an employee who smokes costs a business an average $5,816 per year.

Another example is found when an employee’s disability is exacerbated by second-hand smoke, such as asthma. Employers may need to create a smoke-free work environment under the Americans with Disabilities Act (ADA). The ADA requires employers with 15 or more employees to make reasonable accommodations to allow employees with disabilities to do their jobs.

Additionally, allowing smoking on the work property increases the risk of fires and accidental injuries, which impacts the employer’s insurance costs. Some smoke-free businesses pay 25-30% lower fire and property insurance premiums and reduce cleaning or maintenance costs. Certainly, less time is spent cleaning ashtrays and picking up butts in the parking lot.

Legal Liabilities to Consider

According to the CDC, nonsmokers filed lawsuits when harmed by secondhand smoke and won disability claims against businesses. As early as 1990, a non-smoker working in a California restaurant won a settlement for $95,000 after suffering a heart attack due to working in a smoke filled restaurant. McDonald’s banned smoking in all its corporate-owned restaurants after plaintiffs claimed in federal court argued tobacco smoke violated the American with Disabilities Act.

Some companies and organizations are going beyond the Indiana Tobacco-Free Law by extending their tobacco-free policy to include outside property, parking lots, and even personal vehicles. Saint Joseph Health System staff follow a tobacco-free work-day, not using any tobacco products on any day they work.

Many employers are creating 100% tobacco-free initiatives, supported by a comprehensive program of benefits to help smokers quit. Potentially, these policies decrease health insurance costs while increasing not only the health and productivity of those who quit, also encourage a healthy lifestyle among all workers.

Employers increasingly recognize helping their employees quit smoking provides a noticeable boost to their bottom line. Many workplaces are introducing smoking cessation programs benefitting everyone involved.

There are four key elements to the gold standard for promoting a smoke-free workplace:
  1. Implement a smoke-free workplace policy. Indiana state law prohibits smoking inside most workplaces, but employers can extend smoking bans to the surrounding areas of an office building to protect employees from the deadly effects of secondhand smoke and encourage smokers to quit. Additionally, though the city of South Bend has a model smoke free air policy, smoking is allowed in bars & clubs serving patrons over age 21 throughout the rest of St Joseph and Elkhart Counties.
  2. Clear policies. Whether providing coverage for counseling and medication, or providing materials and information about how to quit smoking, there are many ways to motive smokers to attempt to quit. The money spent supporting these efforts is far less than the costs of productivity loss and health care associated with employees who smoke.
  3. Cessation initiatives. Many employers offer financial incentives and rewards to those who quit smoking successfully and remain smoke-free. When coupled with other healthy habits such as maintaining a balanced diet and exercising regularly, these incentives support other office-wide wellness initiatives.
  4. Work with health care providers. Teaming up with physicians and other health care providers can amplify the impact of cessation initiatives. While creating new workplace programs, particularly regarding health and wellness, can often be a daunting task, many employees appreciate the support. Around 70% of smokers say they want to quit, but only five percent quit in a given year. By supporting effective smoke free workplace initiatives, employers help people quit successfully

While proven, the financial benefits of helping employees quit smoking complement the human benefit of helping a person make a choice that forever improves quality of life. Employers often develop strong friendships and bonds with their employees. Seeing colleagues live happy and healthy means much more than financial rewards.

Adopting a smoke-free policy is not passing judgment on smokers. It doesn’t mean workers who smoke are unwelcome. Referring smokers who try to quit to the help they need may ease push back on the policy. It is also the best way to make sure that your business maximizes the potential health benefits, and cost savings, of your smoke-free policy.

There is no greater way to repay employees’ hard work and dedication than to support them on the long, difficult, but valuable journey to quit smoking.

How do you get started?

Start where you are. First, quantify your current costs for employees who smoke.

To find out how much an employee’s tobacco use costs your company each year, you need to ask a few questions and do some math. See the following survey as examples of worksheets and an Return on Investment (ROI) Calculator to make this process easier.

Here are the questions to ask:

  • How many of your employees currently smoke? Determine this through a survey or focus groups. Find out about the level of interest in quitting and what your employees know about current health plan benefits.
  • How much is tobacco use costing your company each year? Once you know the number of employees who smoke, use the worksheet or enter the information into the ROI Calculator to determine your company’s direct and indirect costs related to tobacco use.
  • How much would a tobacco cessation benefit cost you? To calculate the approximate cost of offering a comprehensive tobacco cessation benefit that covers medicine and counseling, use the worksheet provided or enter the required information into the ROI Calculator.
STEP 1: Employee Survey (sample)

Do you currently use tobacco?

  • YES
  • NO

If so, do you want to quit?

  • YES
  • NO

When do you want to quit?

  • Now
  • Next Month
  • 2-6 Months
  • 6-12 Months
  • Not Sure

Which of the following methods would you consider using to help you quit?

  • Doctor Visit
  • Classes
  • Counseling
  • Telephone Helpline
  • Medication
  • None
  • Support Group
  • Other_______________

What is your health insurance/plan? __________________________________________________

Does your plan provide help to quit smoking?

  • YES
  • NO
  • Don’t know

If so, what do you think your plan provides?

  • Doctor Visit
  • Classes
  • Counseling
  • Nothing
  • Medication
  • Support Group
  • Other_______________

Where would you be most likely to get information on tobacco-cessation benefits?

  • Self-Help Materials
  • Company Meetings
  • Posters
  • Mailed Home
  • HR
  •  Intranet
  • Other

What information would help you?____________________________________________________

What can this company do to help you quit?____________________________________________

Step 2: Do the Math

What are your tobacco-related costs?

__________________   x _____________________   =  _________________________

Total # of Employees        MA Adult Smoking Rate                 Number of Smokers

__________________   x _____________________   =  _________________________

Number of Smokers          Estimated Health Costs               Total Health Care Costs

__________________   x _____________________   =  _________________________

Number of Smokers           Lost Productivity Costs           Total Lost Productivity Costs

Your Total Cost Per Smoker:

__________________   x _____________________   =  _________________________

Total Health Care            Total Lost Productivity                 Total Cost per Smoker


How much would a tobacco cessation benefit cost you?

Number of Employees:     ___________________

33¢* per Month:                  ___________________

Total Cost per Year:             ___________________

* cost of medication and/or phone counseling varies with health insurance contract, assuming no co-pay and 5% employee benefit use

Healthy benefits for your employees. Healthy savings on your Health Plan.
  • Research shows that paying for tobacco cessation treatments through your plan is the most cost-effective health insurance benefit you can provide for your employees.
Offering full cessation benefits:
  • is cost-saving or cost-neutral, as you are likely to break even in 3 years and save money in 5 years
  • costs between 10 and 40 cents per member per month depending on utilization and dependent coverage
  • is more cost effective than other commonly covered disease prevention interventions such as high blood pressure.
  • increases the use of effective treatments and increases successful quit attempts.
Next: Review and evaluate what you have in place.
  • Look at your company’s health plan and assess the tobacco cessation benefits.
  • Evaluate your company’s tobacco-free policies and support their enforcement.
  • Review any smoking cessation programs you may offer your employees.

Now you’re ready to begin the process of expanding, revising and implementing the 3 essential components of an integrated smoking cessation plan at your company: Health Plan, Smoking Policies and Support Programs.

Move beyond a smoke-free workplace to establishing a tobacco-free workforce:
  • Step 1: Review the tobacco-free policies currently in place. Make sure you are in compliance with both state law and local laws. Outline current policies and practices including where employees and visitors may smoke (if any), like just outside the door, the parking lot, in vehicles or in designated areas on your campus.
  • Step 2: Define your company’s approach to becoming tobacco-free. How will encouraging your workforce to go tobacco-free fit with your corporate or organizational culture? This part of the process is often the responsibility of mid and upper level management.
  • Step 3: Develop your goals and objectives for your tobacco-free policies. These could include improving the health of employees that smoke, cost-savings on healthcare premiums and other insurance policies and increased productivity.
  • Step 4: Establish a committee or workgroup made up of members from various departments throughout the company including representatives from Human Resources, Employee Benefits, Facilities and Operations, Health and Safety, Corporate Medical, Training and Communications. Include smokers, non-smokers and former smokers. The information they gather and their input will give decision makers a clear view of workers’ perceptions of the current policies as well as any concerns they may have about new tobacco-free policies.
  • Step 5: Draft your company’s tobacco-free policies with a timeline for implementation.
    • Every company is different. Think about a timeline that makes sense for your corporate culture. Take into consideration that preparing your company for policy change is usually an educational process. Encouraging your workforce to go tobacco-free is more than building an awareness and understanding of the change. You are asking employees to change their behavior and manage long term habits along with physical addiction.
    • Allow about 4 months to lay the groundwork for the implementation; consider longer if you are a large company. To maximize motivation, plan to implement the policy in conjunction with national events like the American Cancer Society’s Great American Smokeout in November or around New Year’s Day when people are making New Year’s resolutions.
    • Developing and rolling out a clear communications plan that will encourage and support your employees in their effort to quit is critical for success.
What would a workplace tobacco-free policy cover?
  1. The purpose of the policy
  2. A link between the tobacco-free policy and the company’s overall mission and workforce/ human resource management strategy
  3. Where smoking is prohibited
  4. Where smoking is permitted (outside the building or on the grounds, if allowed)
  5. Enforcement methods and consequences of non-compliance
  6. Support available for smokers who want to quit, including counseling, health plan coverage
  7. Contact person who can answer questions on the new policy (name, telephone number, email)
  8. Effective date*