Affordable Care Act: Smoking sends health premiums higher
BY FRANCINE KNOWLES Staff Reporter October 19, 2013 9:32AM
Tabacco and smoke
Updated: November 21, 2013 6:23AM
If you light up, prepare to get burned with higher premiums when buying insurance in the new health insurance marketplaces.
Under rules of the Affordable Care Act, in Illinois and most other states, insurers can charge smokers and other tobacco users as much as 50 percent more on their premiums due to the higher health risks they face compared to non-tobacco users.
In some cases, the surcharge wipes out the subsidy for which some smoking health plan enrollees would qualify in the marketplaces, said Karen Pollitz. She is senior fellow at Kaiser Family Foundation, a nonprofit focused on health-care issues.
“So you’d be back up to the sticker price,” Pollitz said. “The tobacco add-on is not covered by the tax-credit subsidies.”
Some insurers have imposed surcharges below 50 percent. Meanwhile Washington D.C. and states, including California, Massachusetts, Rhode Island, and Vermont have prohibited insurers from applying a tobacco surcharge. Other states lowered the maximum surcharge allowed.
There were 1.8 million smokers in Illinois in 2012, or 18.6 percent of adults 18 and older, and nearly 240,000 residents used smokeless tobacco, according to the Illinois Department of Public Health.
Blue Cross and Blue Shield of Illinois, among six insurers in the Illinois Health Insurance Marketplace, imposes a surcharge on tobacco users ranging from 10 percent at age 27 to 32 percent at age 54, according to BCBS spokeswoman Mary Ann Schultz.
“Generally, the effects of tobacco use are cumulative, so the costs increase with the length of time one has used tobacco,” she said in an email explaining the insurer’s rationale for the variance. “Since the length of time someone has used tobacco is reasonably well-correlated with age, the effect is for costs to increase with the member’s age. We don’t see many people in their later years who choose to start using tobacco.”
Coventry Health Care Inc. imposes a 20 percent surcharge on premiums for all smokers above age 21 who purchase insurance in the Illinois marketplace, Coventry spokesman Walter Cherniak Jr. said.
For a 55-year-old smoker choosing a Coventry silver PPO, the monthly cost would be $699.78 compared with $583.15 for a nonsmoker, he said. That’s $1,400 more a year for smokers.
Health Alliance Medical Plans, the insurance arm of Carle Foundation, imposes an 18 percent surcharge, said spokeswoman Kelli Anderson. Tobacco use is defined as using an average of four or more times per week in the past six months, excluding religious or ceremonial use, she said.
Humana Inc., Aetna Inc. and Land of Lincoln Health Inc. Co-op, all impose a 10 percent surcharge on smokers’ premiums, representatives said.
Consumers applying for insurance self-report whether they use tobacco. “They need to check off a box on the form,” said Schultz.
When making a policy purchase, insurance shoppers don’t have to prove whether they use tobacco. But smokers who might consider lying about tobacco use to cut their premium rates should think again.
“If a tobacco user does not check the box, and we later found out through a review of medical records or other reasons that he or she is a tobacco user, that is considered fraud,” Schultz said. “An insurance policy may be terminated if one commits fraud and does not share accurate medical information.”
Humana policyholders would be required to pay the difference in premium, according to spokesman Jeff Blunt.
Tobacco users who buy insurance have access to help in kicking the habit as part of their benefits. All health plans must cover 100 percent of the tab for smoking cessation programs with no co-pay, Pollitz said.
At Humana, members who participate in its smoking cessation programs who become tobacco-free are eligible for plan savings upon renewal, Blunt said.