This guide walks through what's actually required in 2026, why the wave of tobacco-surcharge lawsuits matters to you even if you're a small company, and what a compliant, effective tobacco cessation program looks like, one that fixes the legal exposure and the cost problem at the same time.
The part most employers miss: you already have to cover quitting for free
There are two separate sets of rules here, and mixing them up is where employers get into trouble.
The first is about coverage. Under the Affordable Care Act, almost every employer health plan that isn't grandfathered has to cover FDA-approved tobacco cessation treatment at no cost to the employee. This applies to small-group plans, not just big companies. A compliant benefit covers at least two quit attempts a year, each including counseling sessions and a 90-day supply of any approved quit medication, with no copay and no prior authorization.
This requirement got a lot more solid in 2025. On June 27, the Supreme Court upheld the legal foundation behind the no-cost preventive coverage rule in Kennedy v. Braidwood Management (a 6–3 decision). So the free-cessation-coverage requirement isn't going anywhere, and "we weren't sure it still applied" won't be a great answer if someone asks.
The second set of rules is about surcharges, which is a different thing entirely. Coverage rules say you have to offer quitting for free. Surcharge rules govern whether and how you're allowed to charge tobacco users more. You can keep these straight by remembering: one is about what you give away, the other is about what you charge.
Why tobacco surcharges keep landing employers in court
If your plan charges tobacco users a higher premium, that's a "health-contingent" wellness program, and it comes with strings. To stay on the right side of federal nondiscrimination rules, that kind of program has to do four things:
- Give employees a real way to avoid the surcharge, a "reasonable alternative standard." In plain terms, an employee who completes a tobacco cessation program has to be able to earn back the full reward, even if they haven't actually quit yet.
- Make the full reward available, not a partial or going-forward-only version.
- Spell all of this out clearly in your plan materials, including a note that you'll work with the employee's own doctor if needed.
- Give people a fresh chance to qualify at least once a year.
Here's why this matters right now. Plaintiff firms filed a surge of these class actions in 2025, matching the prior year's full-year pace within the first nine months. The defendants aren't just giant retailers anymore: JPMorgan Chase was hit with a complaint in January 2026 over an $80-a-month surcharge. Almost every one of these suits comes down to the same two failures: not paying back the full reward when someone completes the program, or not giving employees clear notice that the alternative and the doctor-accommodation option even exist.
What's genuinely new is that the courts are now split. In late 2025 a federal court in Rhode Island became the first to throw one of these cases out (a decision now on appeal), and a few other courts have since sided with employers. Others have let the cases move forward. So this isn't "every employer is losing." It's "the rules are contested, the filings keep coming, and tight compliance is the only safe place to stand." For a benefits team, that's the real takeaway: you don't want to be the test case.
What tobacco actually costs your business
Tobacco use is one of the most expensive modifiable habits in any workforce.
You can see the full breakdown across eight common habits on our Cost of Unhealthy Habits page.
The national picture backs this up. The CDC puts the total economic cost of cigarette smoking at more than $600 billion a year, split between healthcare spending and lost productivity. And while adult smoking just hit a record low of under 10% in 2024, vaping is rising, especially among younger workers, so nicotine isn't leaving your workforce. It's changing shape.
Does helping people quit actually work? Yes, when it's structured right
Quitting on willpower alone is brutally hard. Only about 7% of people who try to quit cold turkey are still smoke-free a year later. Casual advice doesn't move that number much.
What does move it is a structured program that combines real behavioral support with the right tools. In a university study of our own tobacco cessation course, the six-month quit rate came in at triple the rate of the American Cancer Society's self-help approach. Across a much larger review of our participants, about a third quit.
The reason structured programs work comes down to how habits are built. A craving isn't just physical, it's tied to a belief like "I can't handle stress without a cigarette," which drives the thought, the urge, and then the behavior. Change the underlying belief and the whole chain loosens. That's the approach behind our courses, and you can read more on our How Habits Work page.
What good ROI looks like
Tobacco cessation is consistently one of the best returns in workplace wellness. Across three years, the cost of a cessation program per smoker is generally offset by healthcare savings alone. One state quitline study found employers got back more than $6 for every $1 spent. General wellness programs tend to return $3–$4 per dollar, and cessation sits at the high end of that range.
Put simply: you're already paying for tobacco use whether you address it or not. A program just redirects some of that spend toward actually fixing the problem, while also keeping your surcharge compliant.
What makes a program both compliant and actually used
A compliant cessation course is only half the job. The other half is the one every benefits lead has been burned by before: getting people to actually use it. A program that satisfies the law but sits unused still leaves you paying the $7,800-per-user cost, you've just added a compliance line item on top of it.
So the bar is higher than "checks the legal box." A program worth launching should:
How Avidon helps you check both boxes
A self-guided cessation course is a textbook example of the reasonable alternative standard the law wants you to offer. So the right program does two jobs at once: it helps your people actually quit, and it gives you a clean, documented alternative that keeps your surcharge defensible if anyone ever questions it.
Avidon's tobacco cessation course is built on more than two decades of behavior-change science and is designed for employers from 50 employees on up. You get the cessation outcomes, the engagement that makes them stick, and the compliance paper trail in one place.
You can see the full results in the Avidon Health Coaching Efficacy Report.
