tobacco surcharge rules by state

[5][6] Over 54% of the country's population lived in states that had signed legislation setting 21 as the tobacco restriction age at the time the federal law set the nationwide tobacco age restriction. , We examined the impact of state level tobacco surcharge policy on health insurance enrollment decisions among smokers. Setting up a tobacco surcharge may seem straight forward but for it to be effective, you need to be strategic. 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. Employees hired on or after January 1, 2019 who participate in the City 's medical insurance program and use tobacco will be charged a twenty-five dollar ($25.00) per month surcharge. 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. The nationwide average pre-subsidy premium in 2020 is about $576 per month for health plans sold in the exchange. Ballotpedia features 393,617 encyclopedic articles written and curated by our professional staff of editors, writers, and researchers. All regressions are weighted using the appropriate weights from the Current Population Survey. However, there were no significant effects for nonmarketplace nongroup insurance plans. Agents are available: Mon - Fri, 8 AM - 8 PM ET. 14 The lawsuits also teach us that wellness programs must not only offer a reasonable alternative standard but must make sure that anyone who completes that reasonable alternative standard qualifies for the entire reward for that plan year. 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. Figure1 shows the results from our survey of uninsured tobacco users with incomes above 138% FPL. 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. Please email us if you would like to suggest a revision. 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. Tobacco products are mostly used by lower-income Americans than higher-income Americans. One important limitation of our study is that although we compare enrollment rates by smoking status, smoking status is not experimentally varied across groups. Moreover, the employers failed to give participants who met the RAS a way to avoid the surcharge retroactively, which is required under HIPAA's wellness rules. Tech: Matt Latourelle Nathan Bingham Ryan Burch Kirsten Corrao Travis Eden Tate Kamish Margaret Kearney Joseph Sanchez. The first law in the United States regulating the sale of tobacco by age was passed in New Jersey in 1883 and set a minimum age of 16. This tax applies to cigars, snuff, chewing tobacco, and any other tobacco product except for cigarettes. 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. These limits may not be binding in all cases, as many plans charge less than the maximum allowed, and there is substantial geographic variation in the amount of the sucharge. Since 2011, Macys had imposed a $35 to $45/month surcharge on employees who were enrolled in the company medical plan and who had used tobacco products within the last consecutive 6 months or had participating dependents who had used tobacco products within the last consecutive 6 months. 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. Consent for marketing calls Additionally, our identification strategy relies on the assumption that states that do not have tobacco surcharges do not have other unobservable characteristics that may differentially impact enrollment for tobacco users and nonusers that are not accounted for in our model. 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. In some of the circumstances, there may not be any surcharge for tobacco users. Standard errors, clustered at the state level are shown in parentheses. By limiting the sample respondents in states with tobacco surcharges, we were able to estimate the effect of the size of the surcharge on insurance enrollment. tobacco surcharge rules by state. This table presents estimates from a differenceindifference linear probability model, examining the likelihood of the outcome of interest for smokers in surcharge states. Kaplan CM, Kaplan EK. Thus, it can be said that employers can charge higher premiums from employees using tobacco but they also have to offer a tobacco cessation program, so that employees have the option to avoid the surcharge by participating in the tobacco cessation program. Geographic Location The costs of health insurance premiums are not the same in every zip code, and vary from one area to another. Family Size The health insurance premiums of a family is determined based on every person in the family. County populations were pulled from the 2014 and 2018 American Community Survey annual county level estimates and aggregated up to the rating area level. 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. Some states have set more restrictive limits on rating for tobacco use, and several states have outlawed tobacco premium surcharges altogether. If dependents (such as spouses and/or dependent children) may participate in the wellness program, the reward must not exceed 30 percent (or 50 percent) of the cost of the coverage in which an employee and any dependents are enrolled. Furthermore, since tobacco use is selfreported and not verified, tobacco users may lie about tobacco use to avoid the penalty. 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 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. Consistent with the family income calculation for health insurance qualification, we excluded income under $12200 for dependents. Under the Affordable Care Act (ACA), group health plans (and self-insured employers) can charge tobacco users up to 50% more for their health insurance premiums than non-tobacco users, and when they do this it is called a tobacco surcharge. But Macys tobacco affidavit also said, I understand that the tobacco surcharge will not be changed retroactively, and no refunds or credits will be issued.. Further, smokers without insurance through an employer or public program were 9.0 percentage points less likely (P<.01) to enroll in a nongroup plan if they were subject to a tobacco surcharge. The cigar and smoking tobacco excise imposed by M.G.L. While these rules may be frustrating to employers, ignoring them is not worth a lawsuit by the DOL. Unable to load your collection due to an error, Unable to load your delegates due to an error, Reasons for not enrolling in marketplace coverage. High premiums and tobacco surcharges are reported by smokers to be barriers to enrollment in marketplace coverage. 2016 Jul 1;35(7):1176-83. doi: 10.1377/hlthaff.2015.1540. Among states that allowed a tobacco surcharge, we also examined the effect of the surcharge size on enrollment, again comparing smokers to nonsmokers. An employer cannot set a deadline by which an employee can no longer use tobacco. It was then decreased from 21 to 19 in 1963. 12 Most exchange plans charge lower tobacco surcharges than allowed, but many tobacco users lack affordable coverage. John Lehman. State of Montana Health Care & Benefits Division 100 North Park Ave ., Suite 320 P.O. One key difference is that tobacco users in small group plans can avoid paying the surcharge by enrolling in a tobacco cessation program. This is due to a "tobacco surcharge". 2022 Mar;41(3):398-405. doi: 10.1377/hlthaff.2021.01313. It is vital to note individuals cannot use their premium subsidies to cover the tobacco surcharge that is generally used by the majority of the enrollees to reduce their monthly premiums. 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. 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. Objective: Recent evidence has suggested that premiums for tobacco users have increased at a faster rate than premiums for nonusers. 2022 News; 2021 News; 2020 News; 2019 News; 2018 News; 2017 News; 2016 News; 2015 News; 2014 News; 2013 News; Sale and distribution of tobacco products-WAC 314-10: The Washington State Liquor and Cannabis Board (WSLCB) regulates the sale and distribution of all tobacco products, and reports enforcement activities to the Department of Health. She is also lead author of the book, Rule the Rules on Workplace Wellness Programs, published by the American Bar Association. Liber AC, Drope JM, Graetz I, Waters TM, Kaplan CM. Arkansas limits it to 20%, and Kentucky limits it to 40%. 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 tobaccorelated disease. Further, smokers without insurance through an employer or public program were 9.0 percentage points less likely (P < .01) to enroll in a nongroup plan if they were subject to a tobacco surcharge. Under the health reform law, private insurers can charge tobacco users no more than 50% more per month than who do not use tobacco. Additionally, after limiting the sample to those most likely to benefit from the marketplace (individuals who did not have insurance through an employer or public program and who had incomes above 138% FPL), we found that the probability that a smoker was enrolled in a nongroup plan decreased by 8.6 percentage points (P=.02) relative to nonsmokers for every 10 percentage point increase in the size of the tobacco surcharge. First, each March, participants respond to the Annual Social and Economic Supplement (CPSASEC), which includes detailed questions about the source and type of health insurance coverage as well as exhaustive income and employment questions. The ACA requires that all health insurance plans provide tobacco cessation and lung cancer screening with no outofpocket costs. HHS Vulnerability Disclosure, Help Data collection: Although evidence suggests that tobacco taxes and other policies that increase the cost of smoking have a direct impact on smoking, 23 These data were only available for the 38 states that participated in the federal exchange. 2018 Mar;37(3):473-481. doi: 10.1377/hlthaff.2017.1062. Additionally, among those facing a tobacco surcharge, a 10 percentage point increase in the size of the tobacco surcharge decreased the likelihood of enrollment in nongroup insurance by 8.6 percentage points (P=.02). , Study design: It has been more than a century since Utah's tobacco age restriction was last 18. Specifically, our model compares the insurance status of smokers to nonsmokers across states with and without tobacco surcharges. Evidence that tobacco surcharges lead to lower takeup of marketplace plans is further bolstered by results from a separate survey of tobacco users. The plaintiffs in this case allege that the employer failed to notify employees of a reasonable alternative standard. Even though federal law permits a tobacco surcharge on health insurance, some states prohibit this. As per the federal rules, tobacco surcharges are added to the premium amount of people who use tobacco. By 1920, 46 states had implemented an age limit for tobacco sales, of which 14 set the limit at 21. 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. You also agree that: (i) [InsureMeNow] may share your personal information with its third-party We also used geographic variation in tobacco surcharges to examine how the size of the surcharge affects insurance coverage, again comparing smokers to nonsmokers. Los Angeles For more information about legal considerations with tobacco surcharges, please connect with me atCenter for Health and Wellness Law, LLC. 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. Learn 4 tips for making your tobacco cessation program more successful. One of the most important aspects of the Affordable Care Act (ACA) was the introduction of modified community rating in the nongroup insurance market, which drastically changed how premiums could be set. Over the last few years, adult tobacco use in the state has steadily declined. 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 tobacco cessation wellness program is designed to promote health and prevent disease. and transmitted securely. , Theoretically, surcharges could also lead to reduction in smoking by imposing a financial penalty for the behavior. State Specific Rating Variations. 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 provide context to our results on the reasons tobacco users did not enroll in health insurance, we also included separate data from a June 2019 online survey conducted using Qualtrics Research Panel. and nonsmokers who use tobacco may be less likely to consider themselves to be regular tobacco users. Finally, in several specifications we excluded families with incomes less than 138% of the federal poverty level for the following two reasons. Health Serv Res. Company employs a couple thousand in the US 26 18. This paper contributes to a small existing literature on the impact of tobacco surcharge laws on health insurance enrollment. The two most recent waves of the CPSTUS in 201415 and 201819 were conducted after the ACA rating rules went into effect. As demonstrated below, tobacco surcharges can vary from state to state. During the 1920s and 1930s, state laws trended towards a limit of 18 years. [4] On December 20, 2019, President Donald Trump (R) signed H.R. Data comes from a June 2019, MeSH Careers. Tobacco Users Pay Health Insurance Surcharges as per State and Federal Rules, Complete Overview on Buying Private Health Insurance Plan, Significant Differences between Public and Private Health Insurance Plan, Master the Tips to Shop for Health Insurance, Get personalized help related to Insurance Products, Service & Claims, Tips to Choose between Obamacare and Employer-sponsored Health Plans, Enrollment in Individual Health Plan is still possible after Ending of COVID SEP in the Most States, Free Health Insurance for Uninsured Americans with Stimulus Package. Please enable it to take advantage of the complete set of features! 102. Share & Print Documents & Downloads Issue Brief - States Vary on Higher Premiums Paid by Tobacco Users Under the ACA Related Tags Affordable Care Act Here are key things you need to know about tobacco surcharges and recent activity with lawsuits. Standard errors, clustered at the state level are shown in parentheses. Within each HIU, we estimated the family income that would be used to determine eligibility for marketplace subsidies or Medicaid enrollment by summing the simulated adjusted gross income (AGI) variable from the CPS across all members of the HIU. affordable care act, enrollment, health insurance, marketplace, premiums, smoking, tobacco surcharge, Reasons for not enrolling in marketplace coverage. The survey included tobacco users age 1864 with incomes above. Loyola Marymount University, The tobacco surcharge is limited to 15% in Colorado, 20% in Arkansas, and 40% in Kentucky. Data comes from a June 2019 online survey of tobacco users using Qualtrics Research Panel collected and analyzed by the authors. Clipboard, Search History, and several other advanced features are temporarily unavailable. The practice of implementing a surcharge to recoup the costs of credit card processing fees was illegal across the country for several decades. First, we used data that link detailed health insurance information including plan type with tobacco use data, which allowed us to examine the impact of tobacco surcharges on enrollment decisions for each market segment, rather than just the likelihood of being insured in any health insurance plan. A few years back it was discovered by a Health Affairs analysis that more than 16% of the small employers were using tobacco surcharge, and about half of them were not offering a tobacco cessation program. 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. 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 This report must include the name of each insurance carrier on behalf of which the TPA paid. 3 Michael F. Pesko, Georgia State University. An official website of the United States government. This surcharge is considered a tax-sheltered amount for payroll. We used two important supplements to the CPS. Rate: 35% of the wholesale purchase price; Both cigarettes and other tobacco products are subject to the 4.5% state sales tax rate plus the general municipal sales tax rates when sold at retail. Premium rating rules for nongroup insurance and small group plans (generally plans provided by employers with fewer than 50 employees) are similar. 2 10 The sample is limited only to states that allowed a tobacco surcharge and participated in the federal exchange. 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. Mokdad AH, Marks JS, Stroup DF, Gerberding JL. -N.J. Stat. This allows us to account for whether the effect is concentrated in the nongroup market or whether there are spillover effects. 5 There has been a flurry of activity lately involving employer wellness programs that impose a tobacco surcharge on health insurance. Columns 3, 4, and 5 show results limiting the sample to individuals with incomes above 138% FPL, which includes those who have incomes too high to qualify for Medicaid under the expansions, but who are eligible for subsidies in the marketplaces and are thus more likely to be affected by tobacco surcharges.