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. 13 Best steps for trap avoidance: offer a reasonable alternative and notify employees of its availability. 2022 News; 2021 News; 2020 News; 2019 News; 2018 News; 2017 News; 2016 News; 2015 News; 2014 News; 2013 News; In order to examine health insurance enrollment by tobacco use, we linked data from both CPSASEC and CPSTUS. Specifically, the employer, a casino, imposed a $50/month tobacco surcharge on health insurance on employees who used tobacco. [9][10] The tobacco age restriction remained at 19 until federal law raised it to 21 in December 2019. Colorado limits the tobacco surcharge to 15%. An employer cannot set a deadline by which an employee can no longer use tobacco. 7 3 Michael F. Pesko, Georgia State University. 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. 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 Actual causes of death in the United States, 2000. Will the premium surcharges be split and collected from each paycheck? By 1920, 46 states had implemented an age limit for tobacco sales, of which 14 set the limit at 21. Since 2014, all nongroup health insurance plans, including those sold on the individual marketplaces, can only rate premiums based on four characteristics: age, family size, geographic region, and tobacco use. 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. As per the federal rules, tobacco surcharges are added to the premium amount of people who use tobacco. 2 This tax applies to cigars, snuff, chewing tobacco, and any other tobacco product except for cigarettes. Although the majority of states do allow insurers to impose tobacco surcharges of up to 50%, many insurers choose to use smaller surcharges or skip them altogether. [14] However, the state's tobacco age restriction was raised to 21 in December 2019 by federal law. Alternatively, a state may require that the tobacco use surcharge be calculated as a share of the consumer's subsidized premium (instead of from the unsubsidized price, as under the default rules). Most of the participants in the recent DOL lawsuits who did not confirm they had quit smoking that is, were tobacco free for some duration, such as six months, had to pay surcharges. As demonstrated below, tobacco surcharges can vary from state to state. The state Legislature included the surcharge requirement in the state budget signed into law on June 30, 2013. Pesko MF, Maclean JC, Kaplan CM, Hill SC. Data comes from a June 2019 online survey of tobacco users using Qualtrics Research Panel collected and analyzed by the authors. 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. This allowed us to examine the impact of surcharges on each type of insurance coverage without worrying about endogenous sample selection that could cause bias in the linear probability models where the sample is limited to individuals with nongroup plans and those who are uninsured. Click here to contact our editorial staff, and click here to report an error. In addition, the complaint alleges that even when the employer offered a reasonable alternative standard (i.e., a smoking cessation program), the employer did not provide employees the full reward once they completed the program. Finally, we examined the impact of the size of tobacco surcharges on enrollment using a linear probability model with a differenceindifference specification to predict the likelihood of any insurance coverage as well as the probability of nongroup coverage among those without insurance through an employer or public program. Finally, we gathered data on tobacco surcharges from the CMS Health Insurance Exchange Public Use Files for 2015 and 2019. The most common options include (i) HSA, HRA or FSA contributions; (ii) a decrease in employee contributions toward medical coverage (often referred to as a tobacco surcharge); and (iii) cash, gift cards or entries into a prize drawing. 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,. 11 there is yet little evidence that insurance surcharges lead to changes in tobacco use. Proponents of tobacco surcharges argue that higher premiums for tobacco users could lead to lower premiums for nonusers, increase insurer participation, and create an incentive for tobacco users to quit. The nationwide average pre-subsidy premium in 2020 is about $576 per month for health plans sold in the exchange. 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. 2023 All rights reserved to InsureMeNow | Terms & Conditions | Privacy Policy. Health Serv Res. Kaplan CM, Kaplan EK. Respondents also listed tobacco surcharges as a major factor. 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. Finally, in several specifications we excluded families with incomes less than 138% of the federal poverty level for the following two reasons. 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. The ePub format uses eBook readers, which have several "ease of reading" features the display of certain parts of an article in other eReaders. Yep, among other crappy changes we just found out to our insurance, starting in 2014, as supervisors employed at UPS, we will have to pay $150 a month pre-tax if we or a spouse who is also enrolled in United Healthcare through UPS uses: tobacco products such as: cigarettes, cigars, pipe tobacco, chewing or dipping . 18. Second, we separately estimated the effect of both the existence and the size of the tobacco surcharge, that is, whether allowing a tobacco surcharge influences insurance enrollment, and how the size of the surcharge implemented by insurers effects enrollment. 20 24 We also used geographic variation in tobacco surcharges to examine how the size of the surcharge affects insurance coverage, again comparing smokers to nonsmokers. Third Party Administrators (TPAs) that make payments to hospitals and ambulatory surgical centers on behalf of one or more insurance carriers (not self-insured plans) must file an annual electronic report with the HSN. Thus, a family of five will pay a higher monthly premium compared to a family of three. A $25 tobacco use premium surcharge is required in addition to your medical plan premium if you or a dependent (age 13 and older) enrolled on your PEBB medical uses a tobacco product. We then asked respondents to select all reasons they did not enroll in a marketplace plan. Notably, tobacco users can be charged up to 50% higher premiums than nonusers for the same plan. To be in full compliance with the ERISA wellness incentive rules, wellness programs that impose a tobacco surcharge on employees who use tobacco must pass a 5-factor test. Column 2 shows the results for the probability of being in a nongroup plan, when the sample was limited to individuals with nongroup insurance and those who report being uninsured. State policies limiting premium surcharges for tobacco and their impact on health insurance enrollment. These data were only available for the 38 states that participated in the federal exchange. Thus, people who use tobacco are advised to not just avoid health insurance because many health insurers have implemented smaller surcharges or some have also sip them altogether. The surcharges are extra costs that have been added to PEBB benefit eligible WSU employees' standard monthly medical premiums, effective July 1, 2014. Visit www.nysmokefree.com, for information, to chat online with a Quit Coach, or to sign up for Learn2QuitNY, a six-week, step-by-step text messaging program to build the skills you need to quit any tobacco product. As such, several previous studies have shown that gaining access to health insurance can have large effect on both quitting smoking and cancer screening. 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. Download our quit-smoking calendar and tip sheet for creative ideas on how and when to promote quitting tobacco to maximize engagement. 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. More specifically, our results show that tobacco surcharges have a large negative impact on enrollment in nongroup plans sold on the ACA marketplaces among those without insurance through an employer or public program. See this image and copyright information in PMC. Standard errors, clustered at the state level are shown in parentheses. USA, 2 As additional robustness checks, we also examined subsamples including individuals with incomes between 138% FPL and 400% FPL, who are most likely to qualify for subsidies and those older than 25 who no longer qualify for dependent coverage. State by State Tobacco Laws, Taxes, and Statistics. The tobacco products that are counted include traditional cigarettes, cigars, chewing tobacco, e-cigarettes, vaping, and pipe smoking. Premium rating rules for nongroup insurance and small group plans (generally plans provided by employers with fewer than 50 employees) are similar. We used two important supplements to the CPS. Health Aff (Millwood). Table1 compares sample characteristics across insurance type. However, our models adjusted for other state policies that may affect insurance enrollment and tobacco use. The American Lung Association calls for the following actions to be taken by Idaho's elected officials to reduce tobacco use and exposure to secondhand smoke: Treat electronic nicotine delivery devices consistent with traditional tobacco products in all areas under state law; This table presents estimates from a differenceindifference linear probability model, examining the likelihood of the outcome of interest for smokers in surcharge states. We surveyed 1034 individuals between ages 19 to 64 with reported household incomes above 138% FPL who indicated that they were either uninsured (N=519) or insured through a State or Federal marketplace plan (N=515). Click here to contact us for media inquiries, and please donate here to support our continued expansion. 22 64C increased to $3.51 per pack. Federal government websites often end in .gov or .mil. Tobacco use is the largest cause of preventable illness in the United States. 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. Notably, our point estimates are in line with those reported by Friedman et al Table3 presents results from a multinomial logit regression, allowing for a more comprehensive picture of the impact of surcharges on insurance selection. She is also lead author of the book, Rule the Rules on Workplace Wellness Programs, published by the American Bar Association. The cigar and smoking tobacco excise imposed by M.G.L. , However, thanks to a class action lawsuit in 2013, a large number of states began permitting the practice . [4] On December 20, 2019, President Donald Trump (R) signed H.R. Thursday, Feb 7 2013 Assembly Bill Would Block ACA Tobacco Surcharge Last week, Assembly member Richard Pan (D-Sacramento) introduced a bill ( AB 1X2) that would block an Affordable Care Act provision that allows insurers to charge smokers with an individual policy up to 50% more in premiums from being implemented in California. Clipboard, Search History, and several other advanced features are temporarily unavailable. Other states like Kentucky, Arkansas, and Colorado allow a lower premium differential than federal law. Column 1 shows the likelihood of having any insurance in our full sample; column 2 shows the likelihood of having nongroup insurance among a sample of individuals with either nongroup insurance or no insurance; columns 3 and 4 show the likelihood of having marketplace insurance among those reporting having nongroup insurance or being uninsured. Jun 28, 2013. Data collection: Please email us if you would like to suggest a revision. 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. Allowing a tobacco surcharge reduced insurance enrollment among smokers by 4.0 percentage points (P=.01). The two most recent waves of the CPSTUS in 201415 and 201819 were conducted after the ACA rating rules went into effect. The Potential and peril of health insurance tobacco surcharge programs: evidence from Georgias state employees health benefit plan, https://www.kff.org/other/stateindicator/individualmarketraterestrictionsnotapplicabletohipaaeligibleindividuals/, https://www.cms.gov/files/document/4120healthinsuranceexchanges2020openenrollmentreportfinal.pdf. **, Founder and President, Center for Health and Wellness Law, LLC. 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. Compliance Overview: Tobacco Surcharges Legal Rules April 30, 2019 By Lesa M. Votovich As employers continue to show more interest in adding wellness programs to their employee benefit plans, they must also be cognizant of any federal and/or state laws that could impact the components of these programs. The employer can apply the tobacco surcharge only if the employees do not participate in the tobacco cessation program. States that did not sign legislation had their age restriction raised to 21 by federal law in December 2019. September 29, 2021. Table TableA2:A2: AppendixS1 presents results from these regressions separately for the 2015 and 2019 samples. Standard errors, clustered at the state level are shown in parentheses. All columns are derived from a single multinomial logit regression, and each column presents the relative risk ratios (RRR), comparing the risk of being in the insurance type of interest and being uninsured. Those on employer health plans can avoid the surcharge by joining an employer based tobacco cessation program. The most common options include (i) HSA, HRA or FSA contributions; (ii) a decrease in employee contributions toward medical coverage (often referred to as a tobacco surcharge); and (iii) cash, gift cards or entries into a prize drawing. Some states have set more restrictive limits on rating for tobacco use, and several states have outlawed tobacco premium surcharges altogether. 7 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 Additionally, the fact that the inclusion of state fixed effects in our model of the impact of surcharge size produced nearly identical results to the same model without state fixed effects gives us confidence that this identification assumption holds. The sample is limited only to states that allowed a tobacco surcharge and participated in the federal exchange. Like the Macys case, this case is still pending. Each column is a separate regression, and the interaction term between surcharge state and current smoker shows the key differenceindifference coefficient. Descriptive statistics from linked CPSASEC and CPSTUS data pooled across 2015 and 2019. For more information about legal considerations with tobacco surcharges, please connect with me atCenter for Health and Wellness Law, LLC. Most states, however, follow the federal law and allow insurers to impose tobacco surcharges of up to 50% but employer wellness programs must follow certain rules for those surcharges to be legal. HHS Vulnerability Disclosure, Help You will be charged a $25 tobacco use premium surcharge in addition to your monthly medical plan premium if you or any dependent (age 13 and older) who is enrolled on your SEBB medical coverage uses a tobacco product. 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. It is currently unclear what amount of incentive is permissible under these ADA rules. 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