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Smoking and health insurance don’t exactly go hand-in-hand. But understanding how one relates to the other will help you identify how tobacco use can affect your finances. You’re probably curious how smoking can affect 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

What Describes Tobacco Use?

The Centers for Medicaid and Medicare Services (CMS) for defines ‘tobacco use’ as the “use of a tobacco product or products four or more times per week within no longer than the past 6 months by legal users of tobacco products (generally those 18 years and older) and includes all tobacco products.”1 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 electronic nicotine delivery systems (ENDS). The U.S. Food and Drug Administration (FDA) considers e-cigarettes and vapes to be “noncombustible tobacco products.”  

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, two recent studies show this to be an ineffective approach to quitting smoking.3

“In each of these two publications, we carefully matched each smoker who used e-cigarettes as a cessation aid with one or more similar smokers who tried to quit without using e-cigarettes,” said Karen Messer, PhD, Professor of Family Medicine and Public Health, Director of Biostatistics at UC San Diego Moores Cancer Center, and senior author on both papers. “Our results suggest that these smokers would have been just as successful in quitting smoking without the use of e-cigarettes.”3

The Cost of Health Insurance for Smokers Vs. Nonsmokers

Under the 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. Many insurance companies can factor in tobacco use in order to increase health insurance rates for smokers. 

The practice of charging tobacco users more is called tobacco rating. The ACA allows for insurance companies to charge smokers up to 50% more (or premiums that are 1.5 times higher) than non-smokers through a tobacco surcharge.4,5 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%:6

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

States Charging the Maximum 50%:7

  • Alabama
  • Alaska
  • Arizona
  • Connecticut
  • (surcharges prohibited on plans sold on state exchange)6
  • 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:6

  • California
  • Massachusetts
  • New Jersey
  • New York
  • Rhode Island
  • Vermont
  • Washington D.C.

Subsidies and Tobacco Surcharges

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

How Smoking Can Cost You Money

The average cost of a pack of cigarettes in the U.S. is $6.28. In states with higher tobacco taxes, the cost can be even higher.8 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

How Do Insurance Companies Know Who Smokes?

Clouds resembling question marks concerning smoking and health insurance

Currently, insurance companies 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, “Have you used tobacco in the last six months?” 

Misrepresentation of your smoking habits may be considered insurance fraud. Depending on your state of residence, dishonesty in answering this question could be a felony, which could result in thousands of dollars in fines and prison time, as well as legal 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. 

How The Affordable Care Act Helps Smokers

Coverage cannot 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 10 essential benefits, which is available to smokers at no cost. The American Lung Association keeps a database of smoking cessation programs for every state. Check your state for more information.

Start Comparing Tobacco Health Insurance Plans

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 coverage. Begin reviewing your options with HealthMarkets today.


1.“Overview: Final Rule for Health Insurance Market Reforms.” CMS. Retrieved from Accessed June 9, 2021. | 2.“Vaporizers, E-Cigarettes, and other Electronic Nicotine Delivery Systems (ENDS).” FDA. September 2020. Retrieved from | 3.“Two big national studies show E-cigarettes Won’t Help Smokers Quit, but they may become Addicted to Vaping.” UCSF. September 2020. Retrieved from | 4.“Marketplace Premiums Rise Faster For Tobacco Users Because Of Subsidy Design.” HealthAffairs. September 2020. Retrieved from | 5.“2021 Unified Rate Review Instructions.” CMS. Retrieved from Accessed June 9, 2021. | 6.“Health Insurance Surcharges for Tobacco Users: State and Federal Rules.” December 2020. Retrieved from | 7.“Market Rating Reforms.” CMS. Retrieved from Accessed June 9, 2021. | 8.“How Much Will You Save?” Retrieved from Accessed June 9, 2021. 

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