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Texas Payroll/Personnel Resource

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Voluntary Deductions
Tobacco User Premium Differential Deductions

Background

Senate Bill 1664, 82nd Legislature, Regular Session, established authority for the Employees Retirement System of Texas (ERS) to offer tobacco users in the Group Benefits Program coverage for prescription drugs to help them quit tobacco use.

It also authorizes charging higher premiums for people who continue to use tobacco, beginning Jan.1, 2012. ERS established a coverage review period during which covered employees and their covered dependents who use tobacco had to certify the tobacco usage. Based on the certification of tobacco use, a new Tobacco User Premium Differential deduction began on Jan. 1, 2012, for certain employees.

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Employee Responsibilities

Employees who either use tobacco products or whose covered dependents (spouses and children) use tobacco products must certify that usage using the ERS website. Once the certification is made, ERS assesses a tobacco user premium differential to be deducted from payroll in the same manner as the employee-paid insurance premiums.

If an employee or his or her dependents are successful in stopping tobacco use, the employee can notify ERS and the Tobacco User Premium Differential will be changed.

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State Agency Responsibilities

State agency staff should ensure that employees are aware of the programs available to them for assistance in tobacco cessation. Employees should also be aware they are required to certify tobacco usage for themselves and their dependents.

State agency staff must ensure that the Tobacco User Premium Differential is deducted from employees’ net pay where applicable. State agency staff can assist employees in self-reporting but are not required to independently report tobacco usage by another employee.

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Comptroller’s Office Responsibilities

Comptroller’s office staff provides assistance to state agencies in resolving questions on how the deduction is withheld by the payroll systems.

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Information About the Deduction

The Tobacco User Premium Differential Deduction is a pre-tax deduction and is included in the “all-or-nothing” rule that applies to insurance deductions.

The all-or-nothing rule states that if there is not sufficient net pay to deduct the entire employee portion of the insurance premium, then none is deducted and the employee must pay ERS directly. The Tobacco User Premium Differential Deduction only applies when the employee has a health insurance deduction; therefore, it is not applied during the 90-day wait and is not applicable when an employee has chosen to opt out of health insurance.

There are seven levels of coverage for the Tobacco User Premium Differential Deduction, determined by the identity of the tobacco user:

  • Member Only – Only the covered employee uses tobacco products. The additional deduction is $30 per month.
  • Member and Spouse – The covered employee and spouse both use tobacco products. The additional deduction is $60 per month.
  • Member and Child – The covered employee and any covered child or children use tobacco products but the spouse does not. It does not matter how many covered children use tobacco products. The additional deduction is $60 per month.
  • Member and Family – The covered employee and covered dependents (spouse and at least one child) use tobacco products. The additional deduction is $90 per month.
  • Spouse Only – Only the covered spouse uses tobacco. The additional deduction is $30 per month.
  • Child Only – At least one of the covered children uses tobacco products. The additional deduction is $30 per month.
  • Spouse and Child Only – The covered employee does not use tobacco products, but the covered spouse and at least one covered child uses tobacco. The additional deduction is $60 per month.

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Additional Resources

For more information on the Tobacco User Premium Differential, see Tobacco Policies on the ERS website.

Sources

Employees Retirement System of Texas Tobacco Policies; Texas Insurance Code, Chapter 1551, Section 1551.3075 (Vernon 2012).