What You Need to Know About Smoking and Health Insurance


Smoking and health insurance doesn't exactly go hand-in-hand. But understanding how one relates to the other will help you identify how tobacco use affects your finances. You're probably curious how smoking impacts the cost of medical coverage. You might also be wondering how insurance companies determine health insurance rates for smokers.

 Hand blotting out cigarette in ashtray after learning about smoking and health insurance

HealthMarkets Insurance Agency has the answers for you. You can get help by contacting us at (800) 827-9990If you'd like to further educate yourself about health care for smokers, keep on reading.

What Describes Tobacco Use?

Tobacco use is defined as “any tobacco product, including cigarettes, cigars, chewing tobacco, snuff, and pipe tobacco, used four or more times a week within the past 6 months.” The term smoking, however, can extend to other types of products.

Electronic Cigarettes (E-cigarettes) and Vapor Products

Stack of electronic cigarettes and refill fluid representing their role in smoking and health insurance

E-cigarettes are battery-operated nicotine inhalers. So, are E-cigarettes and other vaping items considered tobacco products? Because they contain no tobacco, the jury is still out on how to classify these products. At the moment, the U.S. Food and Drug Administration has plans to regulate them like cigarettes and cigars. This could affect how these products get classified in the future.

Are you trying to use e-cigarettes or vapor devices to try and kick the habit? Smokers often use these devices to transition away from traditional cigarette use. Unfortunately, some studies show this to be an ineffective approach to quitting smoking. In fact, compared to people who didn't use e-cigarettes, smokers who did use them were 49% less likely to decrease cigarette use and 59% less likely to quit.

The Cost of Health Insurance for Smokers Vs. Nonsmokers

Under the Patient Protection and Affordable Care Act (ACA), health insurance premiums are based on the following factors: plan category, the number of individuals on the policy, age, location, and tobacco use. When it comes to health insurance rates for smokers, many insurance companies can also factor in tobacco use in order to increase premiums.

The practice of charging tobacco users more is called tobacco rating. The ACA allows for insurance companies to charge smokers up to 50% more than non-smokers through a tobacco surcharge. Although this is allowed, it doesn't mean that all states have decided to implement this charge. As demonstrated below, tobacco surcharges can vary from state to state.

States Charging Below 50%:

  • Arkansas – 20%
  • Colorado – 15%
  • Kentucky – 40%

States Charging the Maximum 50%:

  • Alabama
  • Alaska
  • Arizona
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Maryland
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Mexico
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming 

States Which Prohibit Tobacco Rating Completely:

  • California
  • Connecticut (plans sold in state marketplace only)
  • Massachusetts
  • New Jersey
  • New York
  • Rhode Island
  • Vermont
  • Washington D.C.

Arguments for and Against Tobacco Rating

There are arguments both for and against tobacco rating, as summarized by the Commonwealth Fund. Arguments in favor of tobacco rating suggest that without it costs connected with tobacco-related illness and disease would be spread across the population. This would raise health insurance premiums for everyone, including non-smokers. Some believe that a tobacco surcharge creates a financial incentive for smokers to quit. They also think the surcharge could discourage non-smokers from beginning the habit.

But arguing points concerning smoker versus nonsmoker health insurance rates is never a one-sided battle. Those arguing against tobacco rating believe that punitive charges do not curtail addictive behavior. Instead, they feel these surcharges disenfranchise the poor. There is concern that if you charge a smoker rates they deem unaffordable, he or she might be tempted to skip buying coverage.

Some also cite that insurance companies' ability to raise premiums based on smoking is a way to get around the ACA's provision against health status rating. In 2014, insurance companies were no longer able to charge higher premiums based on health risk or status (health status rating). Some argue smoking should not be excluded from this provision.

Subsidies and Tobacco Surcharges

Did you know that subsidies are affected too? Smokers bear the full cost of the tobacco surcharge. This is because premium tax credits are calculated after the insurance company adjusts the premium for age and geographic region but before tobacco use. So, the tax credit is not applied to any tobacco surcharges.

How Do Insurance Companies Know Who Smokes?

Clouds resembling question marks concerning smoking and health insurance

Matters concerning smoking and health insurance generally rely on the honor system. When you apply for health insurance, you are required to report whether or not you are a smoker. Insurance companies usually ask two questions. 1) Are you a smoker? 2) Have you used tobacco products in the last 6 months?

While you may be tempted to lie about tobacco use in order to receive lower insurance premiums, misrepresentation of your smoking habits is considered insurance fraud. This type of deception, known as soft fraud, may not be as serious as other types of insurance fraud, but it can still carry a serious penalty. Committing an act of soft fraud is usually viewed as a misdemeanor. Consequences could include community service, probation, and even jail time. Deception is also likely to result in loss of some or all of your benefits (perhaps when you need coverage the most). Plus, insurance companies could force you to pay back lost surcharge fees.

If you receive group health coverage through an employer, your answers could be verified through a routine medical exam. During this exam, nicotine use can be tested through a blood or urine sample.

Who Does Smoke?

Data regarding cigarette smoking correlates to some specific demographics.

  • 18% of U.S. adults smoke (21% of men and 16% of women).
  • More than one quarter (28%) of all smokers fall below the poverty line, while 17% are at or just above the poverty line.
  • 25% of all smokers hold no high school diploma and are 42% GED recipients.
  • 23% of smokers have their high school diploma, 9% have an undergraduate degree, and 6% have a post-graduate degree.

Tobacco Use and Women

Group of women standing with arms crossed wondering about smoking and health insurance

While tobacco use is higher among men, the gap is beginning to close. There's only a 5% difference between the percentage of men who smoke versus women. This is believed to be at least partially due to women being targeted through tobacco marketing campaigns. Advertisements depict slim, attractive, model-looking females smoking. These themes suggest an association between smoking, social desirability, independence, and weight control.

But smoking isn't an accessory. There are some alarming concerns for women who do smoke. For instance, lung cancer has surpassed breast cancer as the leading cause of cancer among females. Increases in tobacco-related behavior and disease definitely impacts the cost of smoker health insurance for women.

Other Ways Smoking Costs You Money

The average cost of a pack of cigarettes in the U.S. is $5.51. In states with higher tobacco taxes, the cost can be even higher. But smoking has been known to cost people dollars through more than just cigarettes. For instance, smoking can:

  • Cause you to have a lower resale value on your car
  • Make your home more difficult to sell
  • Make the cost of life insurance more expensive
  • Cause decreased productivity at work

Smoking on the Decline

A positive statistic for tobacco users shows daily consumption of cigarettes dropping over the past few decades. In 1980, U.S. smokers consumed an average 12,000 cigarettes—more than a pack and a half a day. By 2012, per-smoker consumption had fallen to 8,200 cigarettes—just over a pack a day.

Many attribute the decline to prevention efforts targeted at young people. These efforts include things like banning smoking in public schools. Film and TV stars no longer smoking on screen have also made smoking less glamorous to the youth population. As for adults, continued hikes in tobacco taxes have encouraged many long-time smokers to slow down or quit.

How The Affordable Care Act Helps Smokers

HealthMarkets supports the positive effects the Affordable Care Act has had on smoking and health insurance. For instance, before the passing of the ACA, health insurance providers could take your health risks and history into account when deciding whether or not to deny coverage. Luckily, coverage can no longer be denied to current or former smokers. This means smokers have prevention and treatment options available to them through their insurance.

Additionally, the law includes smoking cessation therapy as part of the ten essential benefits, which is available to smokers at no cost. The American Lung Association keeps a database of smoking cessation programs for every state. Click on your state for more information.

Reasons to Quit

Girl breaking cigarette in half after learning about smoking and health insurance

You've probably heard it all before, but maybe not. According to the Centers for Disease Control and Prevention, cigarette smoking is the leading preventable cause of death in the United States. Smoking increases your risk of heart disease, stroke, cancer, and can cause a litany of other health complications.

The good news is that it's never too late to quit! Studies show that within as little as a year of quitting smoking you can see health risks drop significantly. According to the American Cancer Society:

  • 20 minutes after quitting smoking, your heart rate and blood pressure drop.
  • 12 hours after you quit smoking, carbon monoxide levels in your blood drop.
  • Within 3 months of quitting, your circulation and lung function improves.
  • Within 9 months, your coughing and shortness of breath decreases.
  • 1 year after quitting, your risk of a heart attack drops sharply.
  • 5 years after quitting smoking, the risk of mouth, throat, esophagus, and bladder Cancer are cut in half.
  • 10 years after quitting, your risk for Lung Cancer drops by half.
  • Within 15 years of quitting, your risk for coronary heart disease is back to that of a non-smokers.

Plus, you could start saving money on health insurance!

Check out the video below for tips to help you to stop smoking.

Help Finding Tobacco Health Insurance

Whether you currently use tobacco or have recently quit, healthcare for smokers is paramount. Because there are health complications that can arise from current or former tobacco use, it is important to have protection.

Are you concerned about how much smoking and health insurance will cost you? HealthMarkets can help you evaluate costs, look for savings, and offer guidance on the best possible protection. Call us today at (800) 827-9990 and speak to one of our licensed agents.

author headshot

About the Author: Kat McKinley

Kat is a customer service aficionado (15+ years!). Native Texan. Lifelong animal lover. MBA candidate. Fervent foodie. Always bringing her best and sharing joy.

HMIA002397

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Sources:

"Insurance Premium Surcharges for Smokers May Jeopardize Access to Coverage." The Commonwealth Fund. 2015.

"ObamaCare No Discrimination." Obamacare Facts. 2016.

"ObamaCare and Smokers." Obamacare Facts. 2016.

"Who smokes in the US?" CNN Money. 2016.

"Women and Tobacco Use." American Lung Association. 2016.

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