When it comes to tobacco use and smoking, the Affordable Care Act includes a couple of key provisions:
- Tobacco use screening for all adults and cessation intervention for tobacco users are included among the ACA’s preventive services, which are included in all Obamacare plans and are covered at no cost to the insured.1
- While the ACA does not allow insurance companies to deny coverage or increase premiums based on health, medical history or gender, premium rates can be impacted by factors such as a customer’s location, age, plan category, and tobacco use. 2,3 Insurers can charge tobacco users up to 50 percent more than non-users.4
It is clear enough that the law wants to discourage tobacco use, we all have a lot of questions—does the smoking penalty apply to smoking more than cigarettes, does it apply in every state, and is it even working?
Charging smokers more for health insurance is nothing new
Tobacco rating (i.e., charging those who use tobacco more) has been around for a while. Before the Affordable Care Act took effect, nearly all states allowed insurance companies to charge users more.5 The difference today is that the ACA actually limits this practice.
Note that supplemental (e.g., medical gap, dental insurance) and short term health plans do not qualify as minimum essential coverage under the ACA, which means you could still owe a tax penalty if you do not meet the individual shared responsibility provision and are not exempt. Also, you can be denied supplemental and short term coverage if you do not meet eligibility requirements.
Tobacco use, defined … and what about marijuana and vaping?
So, what exactly constitutes tobacco use? Are you considered a user if you bum a smoke from your buddy a couple of times a year? What if you smoke pot in a state where it is recreationally or medicinally legal?
According to the Tobacco Control Legal Consortium, for the purposes of the premium surcharge, tobacco use is defined as6:
- Using any tobacco product other than for religious or ceremonial use
- On average four or more times per week
- Within no longer than the past six months
States may provide an alternative definition of tobacco use and are also allowed to require that tobacco use surcharges be calculated as a share of a consumer’s subsidized premium, resulting in a smaller surcharge.7
Those who use or smoke cigarettes, cigars, chewing tobacco, e-cigarettes (i.e., vape pens), and marijuana could be charged more in states that do not prohibit tobacco rating.8,9 However, it ultimately depends on the insurance company.
Which states don’t penalize tobacco users when they buy health insurance?
- Tobacco rating is permitted, but the maximum surcharge an insurer may impose is capped at a level less than the federal default: Arkansas (20 percent), Colorado (15 percent), Kentucky (40 percent)
- Tobacco rating is prohibited throughout the individual market: California, District of Columbia, Massachusetts, New Jersey, New York, Rhode Island, Vermont
- Tobacco rating is prohibited for plans sold in the state’s marketplace only: Connecticut
You can view state tobacco rating ratios at CMS.gov—blank cells indicate a federal default.13 Though these rating ratios and states may change, it is likely that most states will continue to allow insurers to charge smokers more than nonsmokers in 2017.
Are Obamacare smoking penalties working?
While the ACA aimed to reduce tobacco use by imposing a surcharge for smokers and providing cessation to help people quit, a Yale study released this summer shows the healthcare reform law may be missing on both counts. Researchers at the Yale School of Public Health found that in the ACA’s first year of implementation, 2014, tobacco surcharge resulted in lower enrollment among smokers, without an increase in smoking cessation.14
In 2014, the median tobacco surcharge for 49-year-old smokers living in one of the 43 states that allowed surcharges was $70 per month.15 Smokers younger than 40 years old faced the highest surcharges and showed a 20 percentage point drop in their likelihood of having insurance coverage compared with those who would not be penalized.16 As one of the study’s authors noted, this could impact keep younger people who traditionally have lower healthcare costs out of the risk-pool.17
If you have questions about health insurance and tobacco use or need help finding coverage, call the number at the top of your screen to speak with a licensed health insurance producer.