In addition, there is large variation in tobacco surcharges even within states that allow surcharges since most insurers do not charge the maximum allowable surcharge. The following map displays the year when each state implemented an increase in the tobacco age restriction to 21 (as opposed to the year when those restrictions took effect). Tobacco Surcharges. Each column is a separate regression, and the interaction term between the percent surcharge and current smoker shows the key differenceindifference coefficient. 54:40A-4.1 The survey included tobacco users age 1864 with incomes above 138% FPL who reported being uninsured or insured through a marketplace plan. 10.1111/1475-6773.13577 They found that 16 percent of the 278 small employers used tobacco surcharges, yet 47 percent of those companies failed to offer tobacco cessation counseling. 20 Tobacco surcharges on 2015 health insurance plans sold in federally facilitated marketplaces: variations by age and geography and implications for health equity, Marketplace premiums rise faster for tobacco users because of subsidy design, Putting policy theory to work: tobacco control in California, Most exchange plans charge lower tobacco surcharges than allowed, but many tobacco users lack affordable coverage, Health insurance surcharges for tobacco use declined among small employers in 2018: an analysis of trends in small employer tobacco surcharges and cessation programs, Nearly half of small employers using tobacco surcharges do not provide tobacco cessation wellness programs, Evidence suggests that the ACAs tobacco surcharges reduced insurance takeup and did not increase smoking cessation. Call KT, Davidson G, Sommers AS, Feldman R, Farseth P, Rockwood T. Uncovering the missing Medicaid cases and assessing their bias for estimates of the uninsured, The uninsured and the affordability of health insurance coverage: examining subgroups of uninsured Americans uncovers certain patterns of coverage gaps, but affordability remains a key concern, Response error and the Medicaid undercount in the current population survey, Tobacco product use among adultsUnited States, 20122013, Selfidentified tobacco use and harm perceptions among US youth, Individual Market Rate Restrictions (Not Applicable to HIPAA Eligible Individuals), Survey of NonGroup Health Insurance Enrollees, Health Insurance Exchanges 2020 Open Enrollment Report, Demand for health insurance marketplace plans was highly elastic in 20142015, Premium subsidies, the mandate, and Medicaid expansion: coverage effects of the Affordable Care Act, Demand for health insurance: evidence from the California and Washington ACA exchanges. Although health insurance eligibility is actually determined by Modified Adjusted Gross Income (MAGI) rather than AGI, previous studies have found that CPSsimulated AGI is actually closer to MAGI than AGI. Share & Print Documents & Downloads Issue Brief - States Vary on Higher Premiums Paid by Tobacco Users Under the ACA Related Tags Affordable Care Act Youth access to tobacco law-RCW 70.155: Prohibits the sale and distribution of tobacco products to minors. 18% said that having to pay more for premiums due to tobacco use was a reason that they did not enroll, and 7% said it was the main reason they did not enroll. [7][8] The tobacco age restriction remained at 19 until federal law raised it to 21 in December 2019. 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. We used linear probability models with a differenceindifference specification. At incomes over 138% FPL, insurance eligibility is substantively similar across states. Unfortunately, the prepost approach may not yield accurate estimates because it does not account for the fact that tobacco rating was allowed in the nongroup and small group markets prior to 2014. Though the Affordable Care Act has included a provision to allow insurers to charge higher premiums from tobacco users but has not specified what constitutes tobacco use. If the program uses a medical test to detect nicotine or tobacco use, it also must comply with the ADA's rules for voluntary wellness plans. Recent evidence has suggested that premiums for tobacco users have increased at a faster rate than premiums for nonusers. Current federal law allows health insurance plans and companies to charge tobacco users an additional 20%. [2] After June 2015, eighteen other states raised their tobacco age restriction to 21. After calculating AGI, we excluded adults over 65 since they would likely be covered by Medicare. The table presents relative risk ratios from a differenceindifference specification similar to the one presented in Table2 and including all income levels. 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. Some states have set more restrictive limits on rating for tobacco use, and several states have outlawed tobacco premium surcharges altogether. In some of the circumstances, there may not be any surcharge for tobacco users. Theoretically, surcharges could also lead to reduction in smoking by imposing a financial penalty for the behavior. States Charging Below 50%:6 Arkansas - 20% Colorado - 15% Kentucky - 40% States Charging the Maximum 50%:7 States Which Prohibit Tobacco Rating Completely:6 California Massachusetts New Jersey New York Rhode Island Vermont Washington D.C. Subsidies and Tobacco Surcharges Finally, we calculated income as a percentage of the federal poverty level (FPL) using family income, the number of people in the HIU, and the appropriate FPL based on year and state of residence. 12 Employees at several companies are pushing back on employer wellness programs that require higher health insurance premiums for tobacco users. 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. 2 Individuals are able to report multiple sources of health insurance in CPSASEC. By clicking "Submit", you agree to our Terms of Use and acknowledge our Privacy Policy. 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. Last updated January 6, 2022 We linked data from two components of the Current Population Survey-the 2015 and 2019 Annual Social and Economic Supplement and the Tobacco Use Supplement, which we combined with data on marketplace plan premiums. We also calculated state policy variables to adjust for differences that may be correlated with tobacco surcharge policy and health insurance enrollment including whether the state was a Medicaid expansion state and the use of a statebased marketplace. 6 While in most states a tobacco surcharge is permitted, the rules have become quite complex. Over 150000 emails were sent out to individuals who resided in the United States and were thought to be under 76years old. Federal government rules let employers charge smokers up to 50 percent of the cost of their health insurance benefits. 64C increased from 30% to 40% of the wholesale price of the products, and smokeless tobacco products increased from 90% to 210% of the wholesale price. State tobacco surcharge policy may have a substantial impact on whether tobacco users choose to remain insured and consequently their ability to receive care critical for preventing and treating tobacco-related disease. See details about the 5-factor test in my previous blog post, What Is a Tobacco Surcharge and How Does My Company Offer One? States Vary on Higher Premiums Paid by Tobacco Users Under the ACA Kansas insurers applying up to 44 percent surcharge for tobacco users in 2015 11 Min Read Sep 09, 2015 By Linda J. Sheppard, J.D. For the purposes of this study, we limited the sample to uninsured individuals (N=519). You do not have to pay this surcharge if you attest (respond) that: You and all enrolled dependents ages 13 and older do not use tobacco products. The Affordable Care Act brought dramatic changes to the individual and small group health insurance premiums still, the use of tobacco by a person can affect the price one pays for the health coverage. Ten Democratic governors and eight Republican governors signed increases in tobacco age restrictions during this time.[3]. Our contribution is particularly important to state policy makers because they may want to understand the comparative effectiveness of banning tobacco rating versus limiting the size of potential surcharges. This surcharge is considered a tax-sheltered amount for payroll. It is worth noting that the relative risk ratio for the interaction term was marginally significant for employer sponsored health insurance. [9][10] The tobacco age restriction remained at 19 until federal law raised it to 21 in December 2019. 17 This allows employees to avoid the surcharge by participating in the cessation program. We assigned primary coverage to each respondent based on the following hierarchy: Medicare, employer, nongroup, Medicaid, other public, and uninsured. During the 1920s and 1930s, state laws trended towards a limit of 18 years. The health insurance premiums are low for people under the age of 21, and there is a cap of three times the rates that apply to a 21-year old. Notably, our point estimates are in line with those reported by Friedman et al We used demographic variables including age, sex, race (White, Black, Asian, Hispanic, and Other), and education (less than high school, high school graduate, some college, and college graduate) as well as characteristics related to insurance and subsidy eligibility including HIU size and income. Operations: Meghann Olshefski Mandy Morris Kelly Rindfleisch Instead, the employer gave employees only two options: 1) dont use tobacco and avoid the surcharge; or. Americans Make Use of your Health Coverage Even while Being Healthy. We also used geographic variation in tobacco surcharges to examine how the size of the surcharge affects insurance coverage, again comparing smokers to nonsmokers. The tobacco cessation wellness program is designed to promote health and prevent disease. 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. County populations were pulled from the 2014 and 2018 American Community Survey annual county level estimates and aggregated up to the rating area level. 7 Thank you. You do not have to pay this surcharge if you attest that: Neither you nor any of your enrolled dependents age 13 and older use . surcharge cannot exceed 50 percent of the total cost of health coverage. Income eligibility for assistance under the affordable care act: technical memorandum on estimates for nonelderly adults. It is currently unclear what amount of incentive is permissible under these ADA rules. The challenges and successes of each state's fight against tobacco use, and tobacco prevention efforts. The Affordable care Act allows health insurers to charge a 1.5-to-1 ratio for tobacco use. 4 Our estimates indicate that the probability that a smoker had insurance decreases by 3.4 percentage points (P<.01) relative to nonsmokers for a 10 percentage point increase in the size of the tobacco surcharge. Compared to those with insurance, uninsured individuals tended to be younger, have smaller family sizes, lower levels of family income and education, and they are more likely to be male and nonwhite. Descriptive statistics from linked CPSASEC and CPSTUS data pooled across 2015 and 2019. You may switch to Article in classic view. For example, tobacco surcharges could lead to less employer coverage as a result of higher premiums for tobacco users in the small group market or if large employers were more likely to charge surcharges in states that allowed them in small group and nongroup markets. Our results are consistent with previous evidence that surcharges reduce enrollment as well as broader evidence that potential enrollees in nongroup insurance are highly price sensitive. In order to focus on health insurance coverage among individuals most likely to be affected by tobacco surcharges, we made several sample exclusions. and quitting smoking can significantly improve health outcomes. Our results are robust to these alternative specifications. Smokers living in states with high tobacco surcharges are less likely to have health insurance. The tobacco surcharge only applies to UAB employees. We hypothesized that there would be lower enrollment among smokers, relative to nonsmokers, in states that allowed tobacco surcharges compared to states that outlawed rating by tobacco use. 9 Allowing tobacco surcharges at all and having larger tobacco surcharges were each associated with lower takeup of insurance. Banning tobacco surcharges may be more effective than having a very low tobacco surcharge, since even asking about tobacco use during enrollment could have an effect on enrollment independent of the size of the surcharge. Thus, a family of five will pay a higher monthly premium compared to a family of three. This decision of the ACA lawmakers turned out to be controversial, as some people believed that it is fair to charge higher premiums from tobacco users considering the adverse effect caused by the tobacco to a persons health and the additional cost incurred upon tobacco-related health problems. This is due to a "tobacco surcharge". -N.J. Stat. The survey included tobacco users age 1864 with incomes above 138% FPL who reported being uninsured or insured through a marketplace plan. 24 These data were only available for the 38 states that participated in the federal exchange. CA, Column 3 repeats the specification from column 2 and confirms that the relationship is stronger among this population. 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 Since tobacco surcharges can be set at the state level, this policy may be more easily altered than other aspects of the ACA which are subjected to federal regulation. , This finding was robust across a variety of specifications. As such, several previous studies have shown that gaining access to health insurance can have large effect on both quitting smoking and cancer screening. Smokers could find themselves burned by the Affordable Care Act. Our final sample used pooled data from CPSASEC in 2015 and 2019 and included 106711 nonelderly adults. 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. More Benefits Insight Cafeteria Plan COLA May Require . , Health Serv Res. Because the State Plan program does not use medical tests to detect nicotine usage, the amount of the tobacco surcharge can be as much as 50% of the total cost of employee-only health coverage. It was then decreased from 21 to 19 in 1963. Among states that allowed a tobacco surcharge, we also examined the effect of the surcharge size on enrollment, again comparing smokers to nonsmokers. Employees should also be aware they are required to certify tobacco use for themselves and their dependents. 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