Smokers Face Big Penalty Under Health Reform

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

Is it really fair to charge a significantly higher premium for smokers who will buy health insurance on the state exchanges next year? Some analysis suggests not.

This post comes from Mark Chalon Smith at partner site

Add another exclamation point to smoking’s hazards: The habit may mean you pay a lot more for health insurance as provisions of the Patient Protection and Affordable Care Act roll out.

More than 440,000 people die each year because of tobacco use, which also costs about $96 billion in health care, according to the U.S. Centers for Disease Control and Prevention.

The Affordable Care Act allows insurers to charge smokers up to 50 percent more on their premiums when they’re purchasing coverage through a health insurance exchange.

Exchanges are online marketplaces where individuals and small businesses employing up to 50 people can shop for health plans. They will begin operating in October.

At issue: Is the smoking surcharge fair?

The smoking surcharge could end up erasing subsidies for low-income smokers who can’t afford to buy health insurance on their own, says Karen Pollitz, a senior fellow with the Henry J. Kaiser Family Foundation.

She gave the example of someone who can pay only $3,000 for a health plan that costs $6,000, but qualifies under the federal health law for a $3,000 subsidy to cover the difference. After the premium hike, “the tobacco surcharge would knock it back up to $6,000 again,” a full out-of-pocket expense for the smoker, Pollitz says.

The surcharge, which has been criticized by some as discriminating against low-income tobacco users, was included in the ACA to discourage unhealthy behavior and give insurers a way to help control costs associated with this risky — but voluntary — habit, says Pollitz.

“But there may be better ways to get people to stop smoking, like charging more for cigarettes through higher taxes or increasing public awareness campaigns,” she says.

Rick Curtis, president of the Institute for Health Policy Solutions, believes the 50 percent hike would most harm those the ACA was designed to help — people with modest means in need of medical care.

“For somebody who is totally hooked (on smoking) after many years and who is older — and those kinds of people are more expensive (to cover) and often do need more medical care — they have two bad choices. Go without health insurance and be impoverished that way or get health insurance and be impoverished,” Curtis told National Public Radio.

A few states — Massachusetts, Rhode Island, Vermont and the District of Columbia — have already banned tobacco surcharges for plans on their exchanges. California is considering legislation that would do the same.

An analysis of the smoker surcharge under health reform

Curtis and Ed Neuschler, an Institute for Health Policy Solutions colleague, studied the provision’s potential impact in California. Their report, “Tobacco Rating Issues and Options for California Under the ACA,” looks at both sides of the issue.

Calculations based on available data indicate that a 50 percent increase in premiums for smokers could significantly exceed the higher health care costs caused by tobacco use, according to the report.

The authors also say that insurers might use a high tobacco-rating factor as an indirect way to charge more for people with expensive health conditions, such as mental disorders, who are much more likely to smoke. “While charging higher premiums based on health conditions is prohibited under ACA rating rules, the tobacco-rating factor might be used as a legally permitted proxy for health status,” says the report.

More on

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Lookin’ Good! How to Get a Killer Deal on Eyeglasses

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,911 more deals!