Reference no: EM133097152

Healthcare and Personal Behavior

As the Employee Benefits Manager at Immense Multinational Business (IMB), you are responsible for trying to hold down the cost of employee medical insurance while still providing comprehensive quality medical care to IMB employees. Lately, you have noticed that some employees, usually those who smoke, have significantly higher medical claims than nonsmokers. Studies indicate that employees who smoke a pack of cigarettes a day have claims that are 18 percent higher than those of nonsmokers; smokers are 29 percent more likely than nonsmokers to have annual medical claims over $5,000. Estimates by the American Lung Association indicate that the medical benefits for smokers cost at least $1,000 more per year than for nonsmokers.

Based on such information, you are considering whether IMB should impose an additional annual charge of $500 for medical benefits and insurance coverage on employees who are smokers.

1. Would such an additional charge for smokers be legal? What arguments can you make for imposing the additional charge on smoker? What arguments can you make for not imposing the additional charge?
2. Should IMB impose the additional charge? Explain your answer.
3. Do your healthcare premiums (or those of anyone you know) increase or decrease based on nicotine usage?
4. From a personal perspective, what is your opinion of increased premiums (or premium discounts) based on personal behaviors?