Paying More for Health Insurance Because You Use Tobacco or Nicotine?

Employees across the country may be paying hundreds or even thousands of dollars more each year for employer-sponsored health insurance because they or a covered family member use tobacco or nicotine products.

These charges may appear on a paycheck or benefits statement as a tobacco surcharge, nicotine surcharge, wellness charge, tobacco-user rate, higher health insurance premium, or the loss of a non-tobacco discount. Depending on how an employer’s wellness program is structured and administered, these additional charges may warrant legal review.

Recent 7-Eleven Settlement Highlights Tobacco-Surcharge Issues

A recent proposed class action involving 7-Eleven highlights the potential significance of tobacco-related health insurance surcharges for employees. According to an August 25, 2026 Law360 article, former 7-Eleven employee Barbara A. Baker (“Baker”) filed a lawsuit challenging the company’s tobacco surcharge under the Employee Retirement Income Security Act (ERISA). The case was filed in Pennsylvania federal court in September 2024 and later transferred to federal court in Texas.

According to Law360, Baker alleged that 7-Eleven employees who used tobacco were charged $14 per paycheck, or $720 per year, to remain insured under the company’s health plan. She further alleged that employees who completed the company’s tobacco-cessation program after a specified point in the plan year were not reimbursed for surcharge amounts they had already paid.

According to Law360, in February 2026, U.S. District Judge Brantley Starr denied 7-Eleven’s motion to dismiss, concluding that Baker had alleged sufficient facts showing that the program may not comply with ERISA.

On August 24, 2026, the parties filed a Joint Status Report stating that, following an August 18 mediation, they had reached a settlement in principle to resolve the litigation. The filing states that the parties will draft a class action settlement agreement and that Baker intends to seek preliminary court approval no later than October 5, 2026.

The 7-Eleven case is one example of a broader issue that may affect employees who pay additional health insurance charges because they or a covered family member use tobacco or nicotine products.

Are You Paying a Tobacco or Nicotine Surcharge?

Your health-plan surcharge may warrant legal review if, for example:

• You were charged more for health insurance because you or a covered family member uses tobacco or nicotine;
• You were not clearly told how to avoid the surcharge;
• You participated in or completed a tobacco-cessation or alternative program, but continued paying the surcharge;
• You were required to actually stop using tobacco or nicotine to receive the lower premium; or
• You completed an alternative program, but did not receive the full benefit or reimbursement.

Whether a particular surcharge is improper depends on the health plan’s documents, disclosures, alternative standards, and administration.

You May Be Able to Recover Tobacco-Surcharge Payments

Employees have filed class actions challenging employer tobacco and nicotine surcharges under federal employee-benefit law. Paying a surcharge does not automatically establish a claim, but employees who were charged additional amounts may have legal rights depending on how their employer’s program was designed, disclosed, and administered.

Learn more about Kehoe Law Firm’s investigation: Paying a Tobacco Surcharge for Health Insurance?

Employees: Questions About a Tobacco or Nicotine Surcharge?

Kehoe Law Firm, P.C. is investigating employer tobacco and nicotine-related health insurance surcharges. If you paid a tobacco or nicotine surcharge — or paid more because a family member covered by your workplace health plan used a covered product — Kehoe Law Firm is available to discuss your circumstances.

Contact Kehoe Law Firm, P.C.

For a free, no-obligation legal evaluation, contact:

Michael Yarnoff, Esq.
(215) 792-6676, Ext. 804
[email protected]
[email protected]

About Kehoe Law Firm, P.C.

Kehoe Law Firm, P.C. is a nationally-recognized, plaintiff-side class action law firm representing investors and consumers in matters involving securities fraud, corporate misconduct, mergers and acquisitions, antitrust violations, whistleblower claims, data breaches, consumer fraud, employment law violations, and retirement-plan mismanagement. Its attorneys have served as lead or co-lead counsel in major securities cases, recovering more than $10 billion for institutional and individual investors.

Kehoe Law Firm’s class action legal services are provided on a contingency-fee basis, meaning plaintiffs are not responsible for attorneys’ fees or litigation expenses. Any request for attorneys’ fees and expenses will be subject to court approval. 

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