[7][8] The tobacco age restriction remained at 19 until federal law raised it to 21 in December 2019. Other states like Kentucky, Arkansas, and Colorado allow a lower premium differential than federal law. This surcharge is considered a tax-sheltered amount for payroll. First, there is known overreporting of nongroup health insurance plan participation among Medicaid eligible respondents in survey data including the CPS. More Benefits Insight Cafeteria Plan COLA May Require . 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. High premiums and tobacco surcharges are reported by smokers to be barriers to enrollment in marketplace coverage. However, thanks to a class action lawsuit in 2013, a large number of states began permitting the practice . During the 1920s and 1930s, state laws trended towards a limit of 18 years. Setting up a tobacco surcharge may seem straight forward but for it to be effective, you need to be strategic. Pesko MF, Maclean JC, Kaplan CM, Hill SC. 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. 9 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. Tobacco surcharges and the state laws that limit them theoretically have varying effects on different segments of the health insurance market. 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. 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. We examined the impact of state level tobacco surcharge policy on health insurance enrollment decisions among smokers. We linked data from two components of the Current Population Surveythe 2015 and 2019 Annual Social and Economic Supplement and the Tobacco Use Supplement, which we combined with data on marketplace plan premiums. 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. Column 3 repeats the specification from column 2 and confirms that the relationship is stronger among this population. This finding was robust across a variety of specifications. Nonetheless, this study shows that lower surcharges were associated with higher enrollment in nongroup plans. Though insurance companies no longer base health insurance premium depending upon applicants medical history and they are not even allowed to reject an application based on their pre-existing conditions or based on their health history, but ACA allows health insurance companies to base premiums depending on factors like age, family size, geographic location, as well as tobacco use. Smoking cessation programs that include tobacco surcharges need to comply with federal rules for workplace wellness programs. 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. Evidence Suggests That The ACA's Tobacco Surcharges Reduced Insurance Take-Up And Did Not Increase Smoking Cessation. Tobacco products are mostly used by lower-income Americans than higher-income Americans. 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. The site is secure. Box 200130 Helena, MT 59620-0130 Directing the third parties regarding how completions of the tobacco cessation programs were reported. Even though federal law permits a tobacco surcharge on health insurance, some states prohibit this. 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,. Tobacco use is the largest cause of preventable disease and death in the United States, 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; column 3 repeats the same model as column 2 for the sample above 138% of the Federal Poverty Level (FPL); columns 4 and 5 show the likelihood of having marketplace (or nonmarketplace) nongroup insurance among those who reported either having nongroup insurance or being uninsured for 2019 only. 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. Approximately every four years, the CPS includes a Tobacco Use Supplement (CPSTUS), which asks questions about smoking and tobacco use. During plan year 2013, Macys included a notice within the Tobacco Affidavit alerting the employee to the availability of a reasonable alternative standard, so it satisfied the notice requirement. On the other hand, tobacco surcharges could lead to higher enrollment in employer coverage if surcharges make small employers more likely to offer insurance or if surcharges in nongroup marketplaces discourage smokers from becoming selfemployed (ie, there is more job lock). Critics of surcharge policies point to data from other health-contingent premium programs showing that they fail to change individuals' behavior. While these rules may be frustrating to employers, ignoring them is not worth a lawsuit by the DOL. and transmitted securely. This is due to a "tobacco surcharge". The sample is limited only to states that allowed a tobacco surcharge and participated in the federal exchange. Although third parties helped administer the tobacco cessation program for Macys, Macys had ultimate control of the wellness program, including: Because of these alleged violations, the DOL is asking the court for the following relief (in relation to the wellness program violations): Also in November 2021, a federal district court in Missouri certified a class action of 1500 casino workers who alleged, similar to the Macys case, that their employer violated ERISA with its tobacco surcharge. USA. Participants overwhelmingly reported that cost of health insurance was a major reason for either not visiting their state's health insurance marketplace website or not purchasing a plan. The surcharges are extra costs that have been added to PEBB benefit eligible WSU employees' standard monthly medical premiums, effective July 1, 2014. It is worth noting that the relative risk ratio for the interaction term was marginally significant for employer sponsored health insurance. All states with a minimum tobacco age of 21 decreased the limit. and state law. 2 Learn 4 tips for making your tobacco cessation program more successful. 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. 24 Data comes from a June 2019 online survey of tobacco users using Qualtrics Research Panel collected and analyzed by the authors. Help expand Ballotpedia's elections coverage - volunteer with us. Our main source of data was the Current Population Survey (CPS). 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. Over the last few years, adult tobacco use in the state has steadily declined. All regressions are weighted using the appropriate weights from the Current Population Survey. 22 Tobacco use is the largest cause of preventable illness in the United States. The employer determined tobacco use status through an affidavit completed by each employee covered under the employer group health plan. FOIA , We also used geographic variation in tobacco surcharges to examine how the size of the surcharge affects insurance coverage, again comparing smokers to nonsmokers. 2 Finally, we ran a model using a definition of tobacco use closer to the definition used for enrollment in the ACA, which includes the use of other noncigarette tobacco products. Clipboard, Search History, and several other advanced features are temporarily unavailable. However, the Centers for Medicare and Medicaid Services has issued a subsequent rule that defines tobacco use as the use of any tobacco product within the last six months with a frequency of at least four times per week. 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. Finally, in several specifications we excluded families with incomes less than 138% of the federal poverty level for the following two reasons. Research: Josh Altic We coded respondents as current smokers if they reported now smoking cigarettes either every day or some days. This definition is slightly different from the definition used to apply the tobacco surcharge, which is the use of tobacco products four or more times, on average, per week within the past six months. We used the narrower definition, considering only cigarette smokers because cigarette smokers make up most of the population of every day tobacco users Allowing tobacco surcharges at all and having larger tobacco surcharges were each associated with lower takeup of insurance. This site needs JavaScript to work properly. Although evidence suggests that tobacco taxes and other policies that increase the cost of smoking have a direct impact on smoking, Principal findings: State agency staff should ensure employees are aware of the tobacco cessation programs available to them. 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. 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. The state lowered the age of majority, which also served as a tobacco age restriction at the time, from 21 to 19 in 1976. [PMC free article] [PubMed] [CrossRef] [Google Scholar], 1 The ePub format uses eBook readers, which have several "ease of reading" features 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. 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. Some of those states later passed a state law raising the state-level tobacco age restriction to 21. Marketing materials may be provided via To learn more: Call 1-866-NY-QUITS (1-866-697-8487) toll free; Text (716) 309-4688; or. 2014 Aug;33(8):1466-73. doi: 10.1377/hlthaff.2013.1338. Our models test the effect of the surcharge on enrollment and do not provide evidence of higher enrollment among nonusers. Share & Print Documents & Downloads Issue Brief - States Vary on Higher Premiums Paid by Tobacco Users Under the ACA Related Tags Affordable Care Act 11 Age The health insurance premiums are based on an individuals age, as older people are charged higher premiums compared to younger people. This table presents estimates from a differenceindifference linear probability model, examining the likelihood of the outcome of interest for smokers in surcharge states. Finally, all models adjusted for year of survey (2015 or 2019). In order to examine health insurance enrollment by tobacco use, we linked data from both CPSASEC and CPSTUS. Tobacco use is the leading preventable cause of death in Georgia and is a modifiable risk factor for many chronic diseases, which costs the state more than 11,700 lives per year and nearly $3.2 billion in direct healthcare and indirect costs, such as lost wages. The plaintiffs in this case allege that the employer failed to notify employees of a reasonable alternative standard. 4 Keck School of Medicine, Specifically, the employer, a casino, imposed a $50/month tobacco surcharge on health insurance on employees who used tobacco. County populations were pulled from the 2014 and 2018 American Community Survey annual county level estimates and aggregated up to the rating area level. We also collected qualitative data from a survey of smokers who did not have insurance through an employer or public program. This means that health insurers can charge individual and small group tobacco users up to 50% more than non-tobacco users. Smokers living in states with high tobacco surcharges are less likely to have health insurance. 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. Best steps for trap avoidance: offer a reasonable alternative and notify employees of its availability. We found that the tobacco surcharge rate averaged approximately 14 percent and that it was associated with lower total enrollment as well as a reduced share of total enrollees who reported any tobacco use. Tobacco surcharge may also be incorporated in the employer-sponsored health plans that can increase the standard premium by up to 50% unless a state has implemented a lower tobacco surcharge. New York and Vermont are the two states where health insurance premiums are not based on age. Notably, our point estimates are in line with those reported by Friedman et al September 29, 2021. 7 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. , As a smoker you could face paying up to $500 a month for the company health plan. Come Jan. 1, smoking is one of the few allowable factors . Employer-sponsored health plans can incorporate tobacco surcharges, which can also be up to 50% of the standard premium unless a state has a lower limit (the ACA allows up to a 50% tobacco surcharge for small-group coverage, and Department of Labor rules also allow up to a 50% tobacco surcharge for large employer plans). 14 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. The survey included tobacco users age 1864 with incomes above 138% FPL who reported being uninsured or insured through a marketplace plan. Joint Acknowledgment/Disclosure Statement: This study was funded by a grant from the American Cancer Society (RSGI1723401CPHPS). Respondents also listed tobacco surcharges as a major factor. Tobacco use is the largest cause of preventable illness in the United States. and quitting smoking can significantly improve health outcomes. Duncan MS, Freiberg MS, Greevy RA, Kundu S, Vasan RS, Tindle HA. We first examined the impact of tobacco surcharges on the likelihood of having any type of health insurance. 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. , Health Aff (Millwood). 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. This tax applies to cigars, snuff, chewing tobacco, and any other tobacco product except for cigarettes. 41% of respondents said this was the main reason they did not enroll, and 54% said it played a factor in their decision. romantic things to do in dubuque, iowa. 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. Instead, the notice materials stated employees would only avoid the tobacco surcharge on a prospective basis. 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