Migliaccio & Rathod LLP is investigating whether Reece USA’s employee health plan administers its tobacco surcharge program in compliance with the Employee Retirement Income Security Act (“ERISA”) and federal wellness program regulations.
Federal regulations generally permit employers to charge tobacco-related health insurance surcharges through outcome-based wellness programs, but they also require employers to provide every participant who does not satisfy the tobacco-free standard with a reasonable alternative standard (“RAS”) for earning the full premium discount.
Publicly available 2026 benefits materials indicate that Reece USA imposes a $45 per pay period tobacco surcharge. The guide reportedly states that tobacco cessation support is available if employees or covered dependents “decide to quit.” That language raises questions regarding whether employees receive the full premium discount simply by participating in a reasonable alternative program—as generally required by federal regulations—or whether surcharge relief may instead depend upon successfully quitting tobacco. The publicly available materials also reportedly do not clearly explain physician accommodations, refund procedures, or other reasonable alternatives.
What Employees Report
Employees report:
- Paying a tobacco-related health insurance surcharge each pay period.
- Believing they had to successfully quit tobacco to eliminate the surcharge.
- Receiving limited information regarding reasonable alternatives.
- Uncertainty regarding physician accommodations or other available options.
- Continuing to pay increased premiums despite participating in cessation efforts.
- Difficulty determining whether previously paid surcharges would ever be refunded.
Why Employees Should Be Concerned
Federal wellness program regulations generally require outcome-based tobacco programs to provide every participant who does not satisfy the tobacco-free standard with a reasonable alternative standard that allows the participant to earn the full premium reward.
If employees are effectively required to quit tobacco rather than merely participate in an approved alternative, or if reasonable alternatives and physician accommodations are not adequately disclosed, employees may have paid health insurance premiums that exceeded what federal law permits.
This investigation seeks to determine whether Reece USA properly administered its tobacco surcharge program and whether affected employees may be entitled to reimbursement of improperly assessed premium surcharges.
Potential Claims May Include
- ERISA Violations
- Failure to Provide a Reasonable Alternative Standard
- Improper Wellness Program Administration
- Breach of Fiduciary Duty
- Recovery of Improperly Assessed Tobacco Surcharges
- Declaratory and Injunctive Relief
Signs You May Be Affected
You may be affected if:
- You participated in Reece USA’s employee health plan.
- You paid a tobacco-related premium surcharge.
- You participated in a tobacco cessation program.
- You believed you had to completely quit tobacco to eliminate the surcharge.
- You were not informed about another reasonable alternative or physician accommodation.
- You still possess payroll records, enrollment materials, or communications regarding the surcharge.
If you believe you encountered these issues, we would like to hear from you. Please complete the contact form on this page, send us an email at [email protected], or give us a call at (202) 470-3520.