Tobacco age restrictions can take the form of limits on the sale of tobacco by age, limits on tobacco possession by age, or a combination of the two. See details about the 5-factor test in my previous blog post, What Is a Tobacco Surcharge and How Does My Company Offer One? 22 Access to insurance and health care may be particularly important for tobacco users because they are at higher risk of developing numerous chronic health conditions and because all health insurance plans are required to provide tobacco cessation as an essential health benefit with no outofpocket costs. Albeit if a person with an average premium is subjected to a 50% tobacco surcharge, then their monthly premium would increase to $864 per month, and their premium subsidy would not change. The plaintiffs are seeking a refund of all the tobacco surcharges collected by the employer since 2016. In the 37 states that use the federal insurance exchange, HealthCare.gov, the tobacco surcharge was paid by about 7 percent of 5.1 million consumers who enrolled, according to federal data. One of the most important aspects of the Affordable Care Act (ACA) was the introduction of modified community rating in the nongroup insurance market, which drastically changed how premiums could be set. Column 4 shows that smokers were 11.5 percentage points (P<.01) less likely to be enrolled in a marketplace plan if they lived in a state with a tobacco surcharge than if they lived in a state without a tobacco surcharge. Here are key things you need to know about tobacco surcharges and recent activity with lawsuits. High premiums and tobacco surcharges are reported by smokers to be barriers to enrollment in marketplace coverage. In states with surcharges, enrollment among smokers was 3.4 percentage points lower (P < .01) for every 10 percentage point increase in the tobacco surcharge. It is currently unclear what amount of incentive is permissible under these ADA rules. We examined the impact of state level tobacco surcharge policy on health insurance enrollment decisions among smokers. Specifically, the employer, a casino, imposed a $50/month tobacco surcharge on health insurance on employees who used tobacco. 26 In order to assess the impact of state policy on enrollment, we used a differenceindifference specification, comparing enrollment among smokers and nonsmokers in states that did and did not allow tobacco surcharges. Instead, the notice materials stated employees would only avoid the tobacco surcharge on a prospective basis. In order to aggregate surcharge data to the state level, we first computed the median surcharge in each marketplace rating area by calculating the ratio between the plan premiums offered to tobacco and nontobacco users for a 45years old. The survey included tobacco users age 1864 with incomes above 138% FPL who reported being uninsured or insured through a marketplace plan. Minors are prohibited from buying alternative nicotine products, including e-cigarettes.6 Establishments are required to post signs stating that sales to minors are prohibited.6 Local tobacco laws States, however, can set their own rules to reduce or eliminate that surcharge and so far at least 10 have done so, including most notably California, where the permissible surcharge has been cut to to zero. Abbreviations: AGI, Adjusted Gross Income; FPL, Federal Poverty Level; HIU, Health Insurance Unit; SD, standard deviation. Since the ACA allows states to set their own policy regarding tobacco surcharges, it is one aspect of the ACA that may be more amenable to modification, especially during times when partisan divide in congress makes it difficult to amend federal regulations. First, we used data that link detailed health insurance information including plan type with tobacco use data, which allowed us to examine the impact of tobacco surcharges on enrollment decisions for each market segment, rather than just the likelihood of being insured in any health insurance plan. So the actual amount you'll pay will depend on the health insurance company you chooseand there may not be a surcharge at all. Employees should also be aware they are required to certify tobacco use for themselves and their dependents. We compared insurance enrollment in states that did and did not allow tobacco surcharges, using a difference-in-difference approach to compare the policy effects among smokers and nonsmokers. 41. After calculating AGI, we excluded adults over 65 since they would likely be covered by Medicare. John Lehman. You may switch to Article in classic view. Tobacco Surcharges Associated With Reduced ACA Marketplace Enrollment. The American Cancer Society opposed the tobacco rating provision during the congressional debate about the health-care law. To learn more, visit our Employers page, Determining which participants were charged the tobacco surcharge, Determining which participants were reimbursed the tobacco surcharge, Withholding the tobacco surcharge from a participants paycheck and placing it in the health plan trust account; and. CarterHarris L, Slaven JE Jr, Monahan PO, SheddSteele R, Hanna N, Rawl SM. Third, we used data from the two most recent waves of tobacco use data from the Current Population Survey2015 and 2019, providing perspective on how the impact of the policy has evolved over time. Thus, perhaps somewhat counterintuitively, eliminating or limiting surcharges could potentially lead to an increase in quitting. 8 Members Currently Paying the Tobacco Surcharge: If a member is currently paying the tobacco surcharge and does not make an active election during Open Enrollment, the current enrollment will default to the new Plan Year and the member will continue to pay the tobacco surcharge. Among states that allowed a tobacco surcharge, we also examined the effect of the surcharge size on enrollment, again comparing smokers to nonsmokers. Nineteen of those states set the tobacco age restriction to 21 before the federal law took effect, while the other 19 did so after the federal law took effect. The University of Southern California Institutional Review Board approved the survey data collection and deemed the analysis of data from the CPS as exempt from full review, and the relevant part of the survey questionnaire is included in Appendix S2. According to our estimates, the presence of a tobacco surcharge decreased the likelihood of enrollment in a nongroup plan by 9.0 percentage points (P<.01) among smokers without insurance through an employer or public program. Eight states increased their restrictions under a Democratic trifecta, four increased their restrictions under a Republican trifecta, and seven increased their restrictions under divided government. We limited the sample to individuals in states with tobacco surcharges, comparing the impact of the size of the average tobacco surcharge on differences in insurance coverage between smokers and nonsmokers. Other states like Kentucky, Arkansas, and Colorado allow a lower premium differential than federal law. Will the premium surcharges be split and collected from each paycheck? if(document.getElementsByClassName("reference").length==0) if(document.getElementById('Footnotes')!==null) document.getElementById('Footnotes').parentNode.style.display = 'none'; Communications: Alison Graves Carley Allensworth Abigail Campbell Sarah Groat Lauren Nemerovski Caitlin Vanden Boom It is important to know that premiums are added for up to three children under the age of 21, so a family having five children under the age of 21 will pay the same premium as a family having three children under the age of 21-year. Share & Print Documents & Downloads Issue Brief - States Vary on Higher Premiums Paid by Tobacco Users Under the ACA Related Tags Affordable Care Act Macys offered a tobacco cessation program to employees, but the only way to avoid the surcharge was for the employee to declare that all covered members in his or her family remained tobacco free for a period of six consecutive months during the health plan year. First, there is known overreporting of nongroup health insurance plan participation among Medicaid eligible respondents in survey data including the CPS. If people avoid health insurance simply because they cant afford it, then they will also not able to access the coverage for the free tobacco cessation that is included with ACA-compliant health plans. This table presents estimates from a differenceindifference linear probability model, examining the likelihood of the outcome of interest for smokers in surcharge states. Data comes from a June 2019 online survey of tobacco users using Qualtrics Research Panel collected and analyzed by the authors. , Modification in the tobacco surcharge has been prohibited in some of the states. Providing adequate notice about the reasonable alternative standard is also mandatory. All regressions are weighted using the appropriate weights from the Current Population Survey. Finally, we supplemented our main findings with qualitative data from a survey that provides more contexts for how tobacco surcharges may influence enrollment in nongroup plans. We assigned primary coverage to each respondent based on the following hierarchy: Medicare, employer, nongroup, Medicaid, other public, and uninsured. Alabama's tobacco age restriction had been above 18 since at least the 1960s. The Affordable Care Act allows insurers to charge up to 50% higher premiums to tobacco users, making tobacco use the only behavioral factor that can be used to rate premiums in the nongroup insurance market. 28 The federal law gives insurers the right to add up to 50 percent to the cost of individual health care coverage. 8600 Rockville Pike Additionally, increased enrollment in nongroup plans in states that did not allow surcharges was not offset by a decrease in the likelihood of having other types of insurance like employer provided insuranceif anything, employer insurance takeup was higher in states without surcharges. The ACA's individual mandate in retrospect: what did it do, and where do we go from here? Mokdad AH, Marks JS, Stroup DF, Gerberding JL. It is vital to note individuals cannot use their premium subsidies to cover the tobacco surcharge that is generally used by the majority of the enrollees to reduce their monthly premiums. Plan members need to attest to their tobacco status in their Virgin Pulse portal by May 31, 2022. Our models test the effect of the surcharge on enrollment and do not provide evidence of higher enrollment among nonusers. The inclusion of state fixed effects holds constant any state specific factors that might affect differential insurance enrollment choices between smokers and nonsmokers. Employees at several companies are pushing back on employer wellness programs that require higher health insurance premiums for tobacco users. An employee must be able to avoid the surcharge by completing the alternative, even if the employee fails to quit smoking. Reasons for not enrolling in marketplace coverage. Liber AC, Hockenberry JM, Gaydos LM, Lipscomb J. 4. and nonsmokers who use tobacco may be less likely to consider themselves to be regular tobacco users. Evidence that tobacco surcharges lead to lower takeup of marketplace plans is further bolstered by results from a separate survey of tobacco users. In states that allow tobacco surcharges, tobacco users pay substantially higher premiums for nongroup health insurance than nonusers. Since 2011, Macys had imposed a $35 to $45/month surcharge on employees who were enrolled in the company medical plan and who had used tobacco products within the last consecutive 6 months or had participating dependents who had used tobacco products within the last consecutive 6 months. Additionally, tobacco surcharges function to increase the cost of health insurance for smokers, which was the most commonly cited reason for not choosing to enroll in a nongroup plan. Premium rating rules for nongroup insurance and small group plans (generally plans provided by employers with fewer than 50 employees) are similar. States that prohibit tobacco surcharges completely are California, Massachusetts, New Jersey, New York, Rhode Island, Vermont, and Washington, D.C. Connecticut also prohibits tobacco surcharges, but only for health plans sold in the states health insurance exchange (Access Health CT). , Now is a good time to review whether your wellness program is compliant with ERISA and other wellness program laws, including HIPAA, ADA, and GINA. Among the uninsured, respondents were asked to provide the main reason why they did not enroll in a marketplace plan from a list of options and then asked to check all reasons they did not enroll[Color figure can be viewed at wileyonlinelibrary.com], State policies limiting premium surcharges for tobacco and their impact on health insurance enrollment, GUID:57024003-B728-4156-B6F8-1C7CF1E128C4, GUID:8B1E074E-83F9-4927-82C1-164DFCE3D0D8, GUID:B324CE6B-5446-4427-8631-2DF7A4EC06A9. Among states that allowed a tobacco surcharge, the statewide average of the median rating area surcharge ranged from 0% to 29.6% in 2015 and 7.0% to 32.3% in 2019. Health Aff (Millwood). The employer can apply the tobacco surcharge only if the employees do not participate in the tobacco cessation program. We also collected qualitative data from a survey of smokers who did not have insurance through an employer or public program. By 1920, 46 states had implemented an age limit for tobacco sales, of which 14 set the limit at 21. If you would like to help our coverage grow, consider donating to Ballotpedia. Column 1 shows the effect of tobacco surcharges on the differences in insurance rates between smokers and nonsmokers for the full sample of nonelderly adults. The first law in the United States regulating the sale of tobacco by age was passed in New Jersey in 1883 and set a minimum age of 16. The 2019 ASEC included variables that specifically identify marketplace coverage, so we examined whether the effect is driven by those with marketplace plans using the 2019 data only. Low and modest-income people buying health insurance may qualify for premium subsidies that cover the majority or even all of their health insurance premiums. Study design: 102. Surveys. Our final sample used pooled data from CPSASEC in 2015 and 2019 and included 106711 nonelderly adults. The prevalence of tobacco surcharge among small employers has significantly dropped mainly because the Department of Labor has become strict in enforcing provisions according to which tobacco cessation programs should be offered in conjunction with tobacco surcharges. Please email us if you would like to suggest a revision. The tobacco age restriction across the country is 21 as a matter of federal law. Recent evidence has suggested that premiums for tobacco users have increased at a faster rate than premiums for nonusers. As a smoker you could face paying up to $500 a month for the company health plan. Tom Wolf (D) on November 27, 2019, Pennsylvania's tobacco age restriction was set to increase from 18 to 21 on July 1, 2020. Agents are available: Mon - Fri, 8 AM - 8 PM ET. In addition, 14 percent used . While in most states a tobacco surcharge is permitted, the rules have become quite complex. In plan years 2011 and 2012, the program failed to offer employees a reasonable alternative standard and notice of that reasonable alternative standard. However, it is the case only if they dont use tobacco but if they do use tobacco then the tobacco surcharge may result in unaffordable health insurance premiums for these people. Clipboard, Search History, and several other advanced features are temporarily unavailable. If the program imposes a tobacco surcharge based on whether participants smoke (or otherwise use tobacco), participants who request an alternative standard must be offered a reasonable one,. USA, 2 The surcharge is an extra charge on your health plan if you're a tobacco user or for those who don't partake, they may receive a discount. HOME; STATE BY STATE; NEWS ARCHIVE. [11] However, the state's tobacco age restriction was raised to 21 in December 2019 by federal law. The functionality is limited to basic scrolling. The practice of implementing a surcharge to recoup the costs of credit card processing fees was illegal across the country for several decades. 2020;55:983992. Come Jan. 1, smoking is one of the few allowable factors . Nearly Half Of Small Employers Using Tobacco Surcharges Do Not Provide Tobacco Cessation Wellness Programs. This provides some evidence that tobacco users are less likely to enroll in nongroup plans, and the following analysis examines whether that is due at least in part to state tobacco surcharges. Due to a "ObamaCare smoking glitch" where programmers couldn't get the charge to calculate correctly the tobacco surcharge wasn't implemented until 2015 in many states. 20 and transmitted securely. Reasons for not enrolling in marketplace coverage. Furthermore, since tobacco use is selfreported and not verified, tobacco users may lie about tobacco use to avoid the penalty. Our results are robust to these alternative specifications. Some of those states later passed a state law raising the state-level tobacco age restriction to 21. We found that living in a surcharge state decreased the probability of enrolling in a nongroup plan by 13.3 percentage points (P<.01) among these individuals who are most likely to benefit from the marketplacesthose with incomes over 138% FPL who do not have insurance through their employer or a public program. This is due to a "tobacco surcharge". The plaintiffs state that the law requires the full reward be available upon completion of the reasonable alternative standard, which means the plaintiffs would be entitled to a refund of the $50/month penalty that they had already paid during that plan year. Due to the sampling design of CPS, all households from CPSASEC can theoretically be linked to the CPSTUS in either January or May of 2015 or 2019. Under the Affordable Care Act (ACA), group health plans (and self-insured employers) can charge tobacco users up to 50% more for their health insurance premiums than non-tobacco users, and when they do this it is called a tobacco surcharge. And in states like California, Rhode Island, Vermont, the District of Columbia, Massachusetts, New York, and New Jersey are not allowed to charge higher premiums from tobacco users. 7 Because tobacco surcharges are changing over time, this specification also allowed us to include state fixed effects. This site needs JavaScript to work properly. and state law. CA, A number of states have passed laws prohibiting the rate increase for tobacco users or allowing a rate increase of less than 50%.
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