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Kicking the habit: Give up tobacco, save on insurance

give up tobacco save on insurance

The Affordable Care Act prevents health insurance companies from excluding pre-existing health conditions from coverage, but many states allow them to levy a surcharge against one thing: tobacco use.

For people who smoke or use tobacco products, insurance companies may boost their premiums up to 50 percent.

Before the ACA was passed, nearly all states allowed insurers to charge people who use tobacco a higher price for coverage, according to The Commonwealth Fund, a private foundation that promotes access to health care. Insurers have long said it's unfair to charge all policyholders the same rate when tobacco use leads to more health insurance claims.

Surcharge gets mixed reviews

Smoking is the leading preventable cause of death in America, causing more than 480,000 deaths each year, according to the Centers for Disease Control and Prevention.

See also: Learn about health insurance in your state

The American Cancer Society says there is no safe way to use tobacco products. Cigarettes, cigars, pipes and smokeless tobacco all cause cancer. The idea behind the ACA surcharge is to encourage people to stop smoking, says Kevin Haney, a health insurance agent in East Brunswick, N.J.

"If you force people to pay more for insurance, the hope is they will stop smoking," he says. "It is another reason to quit, but most smokers already are aware of the costs and the health risks."

The American Lung Association has opposed the use of tobacco surcharges because they're not a proven way to help smokers quit.

Plus, charging higher rates for tobacco users may increase the risk that lower-income smokers won't find affordable coverage and will go uninsured, says Rick Curtis, president of the nonprofit Institute for Health Policy Solutions in Washington, D.C.

"It is a disproportionate surcharge on the poor,” Curtis says. “Lower-income people are more frequent smokers than higher-income people."

The American Cancer Society long has expressed concern that tobacco surcharges could lead to more health problems. Without access to affordable health insurance, tobacco users are less likely to receive the help they need to quit.

"You want people to stop unhealthy behaviors," says Kirsten Sloan, senior policy director for the ACS' Cancer Action Network. "It's not easy to stop smoking. For many people it takes multiple tries. We want to keep them trying and not turn them away." 

States that ban or limit the surcharge

The Commonwealth Fund  has tracked how states deal with the tobacco surcharge. It reported in January 2015 that charging higher premiums to tobacco users is prohibited throughout the individual health insurance market in California; Washington, D.C.; Massachusetts; New Jersey; New York; Rhode Island and Vermont.

In Connecticut, state insurance regulators disallow tobacco surcharges for policies purchased within the state-operated insurance marketplace.

Three states set their surcharge limit below the federal benchmark of 50 percent. Arkansas sets it at 20 percent. Colorado allows a surcharge of 15 percent. Kentucky caps the surcharge at 40 percent of what policyholders normally would pay if they didn't use tobacco products.

The personal cost of smoking

The Centers for Disease Control and Prevention says nearly $170 billion is spent in the U.S. annually on direct medical care for smoking-related illnesses among adults. Tobacco use also creates a drain on individual income.

In February 2015,, a science news website, looked at the cost of smoking for a hypothetical person who started smoking at age 19 and died at age 70. Assuming an average cost of $6 for a pack of cigarettes, a person with a pack-a-day habit would spend $111,690 over 51 years, the article concluded. The annual cost would be $2,190 per year.

Smoking can also limit income by preventing people from getting the jobs they seek, USA Today reported. For instance, some hospitals screen workers for tobacco use and refuse to hire applicants whose urine tests positive for nicotine.

Employers have good reason to be wary of hiring tobacco users. In June 2013, NBC News reported that researchers concluded that smokers, on average, cost employers nearly $6,000 more per year than nonsmokers, in terms of lost productivity and added insurance costs.

Reducing the cost of health insurance for tobacco users

In states where the smoking surcharge is in place, the best option for saving money on health insurance is simply to quit smoking, says Haney.

Joel White, president of the Council for Affordable Health Coverage, an advocacy organization that seeks to lower health care costs, says smokers who get their health insurance through their employers often can save money simply by enrolling in a wellness program that focuses on smoking cessation.

"If you are part of a group health program, the premium that is paid by both you and your employer is eligible for a discount of between 30 and 50 percent," he says.

See also: Obamacare subsidy calculator

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