Agents are available: Mon - Fri, 8 AM - 8 PM ET. Last updated January 6, 2022 States that prohibit tobacco surcharges completely are California, Massachusetts, New Jersey, New York, Rhode Island, Vermont, and Washington, D.C. Connecticut also prohibits tobacco surcharges, but only for health plans sold in the state's health insurance exchange (Access Health CT). 8 Even though we wont know the final outcomes of either case described above for a while, we can still draw lessons from these cases. 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. One important limitation of our study is that although we compare enrollment rates by smoking status, smoking status is not experimentally varied across groups. Albeit, the use of tobacco for religious or ceremonial purposes are excluded from the rule. , , Reasons for not enrolling in marketplace coverage. 3 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. To learn more: Call 1-866-NY-QUITS (1-866-697-8487) toll free; Text (716) 309-4688; or. While in most states a tobacco surcharge is permitted, the rules have become quite complex. All regressions are weighted using the appropriate weights from the Current Population Survey. 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. Data comes from a June 2019 online survey of tobacco users using Qualtrics Research Panel collected and analyzed by the authors. Health Aff (Millwood). 25 The tobacco surcharge only applies to UAB employees. 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. In some of the circumstances, there may not be any surcharge for tobacco users. 19 Jun 28, 2013. government site. Employees are hiring attorneys who are familiar with the wellness incentive rules under the Employee Retirement and Income Security Act (ERISA) and are challenging employer wellness programs that are allegedly not in full compliance. 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. The site is secure. Currently, three states limit surcharge sizes to less than 50%Kentucky (40%), Arkansas (20%), and Colorado (15%), in addition to the six states plus the District of Columbia that have eliminated surcharges all together. Notably, smoking rates were higher among those without health insurance than those with nongroup coverage. Tobacco use is the largest cause of preventable illness in the United States. State government tax collections by source, State spending by function as a percent of total expenditures, Financial regulation in the United States, Education statistics in the United States. You also agree that: (i) [InsureMeNow] may share your personal information with its third-party Tobacco use is the largest cause of preventable illness in the United States. This table presents estimates from a differenceindifference linear probability model, examining the likelihood of the outcome of interest for smokers in surcharge states. The ERISA wellness incentive laws have been in effect in their current form since 2013, which is a long time to get into compliance. As of January 1, 2021, 32 states and the District of Columbia set the minimum sales age at 21 years old; Mississippi set the minimum sales age at 21 for some tobacco products and 18 for others; two states set the minimum sales age at 19 years old and 15 states set the minimum sales age at 18 years old. 2. September 29, 2021. 4. These people are also less likely to receive timely medical treatment at the time when they will need it. Additionally, the elimination of the individual mandate has led to a decrease in enrollment, 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. affordable care act, enrollment, health insurance, marketplace, premiums, smoking, tobacco surcharge, Reasons for not enrolling in marketplace coverage. See details about the 5-factor test in my previous blog post, What Is a Tobacco Surcharge and How Does My Company Offer One? Accessibility Impact of allowing a state surcharge on enrollment in a health insurance planresults from differenceindifference linear probability model, Relative risk ratios from multinomial logit regression on type of health insurance plan. For more information about legal considerations with tobacco surcharges, please connect with me atCenter for Health and Wellness Law, LLC. 4 , 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. Here are key things you need to know about tobacco surcharges and recent activity with lawsuits. The federal law gives insurers the right to add up to 50 percent to the cost of individual health care coverage. 64C increased to $3.51 per pack. 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. 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. The Office on Smoking and Health conducts and supports national and international surveys on tobacco use, smoking cessation, secondhand smoke exposure, and other tobacco-related topics among youth, adults and specific populations. It is important to know that premiums are added for up to three children under the age of 21, so a family having five children under the age of 21 will pay the same premium as a family having three children under the age of 21-year. Because tobacco surcharges are changing over time, this specification also allowed us to include state fixed effects. Over 150000 emails were sent out to individuals who resided in the United States and were thought to be under 76years old. We also considered a comprehensive model of health insurance selection, by utilizing a multinomial logit regression to examine the likelihood of being covered under various types of insuranceemployer, nongroup, public, or uninsured. Allowing a tobacco surcharge reduced insurance enrollment among smokers by 4.0 percentage points (P=.01). A new study by researchers at the Yale School of Public Health reveals an unexpected consequence of the Affordable Care Act's (ACA) tobacco surcharges: High surcharges resulted in lower rates of insurance enrollment among smokers in the first year of the ACA's implementation, without increasing smoking cessation. Please enable it to take advantage of the complete set of features! Tobacco use is the largest cause of preventable disease and death in the United States, Table TableA3:A3: AppendixS1 presents results excluding individuals under 26 and classifying tobacco use as the use of any tobacco product rather than cigarettes only. 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. Even though federal law permits a tobacco surcharge on health insurance, some states prohibit this. 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. Under a law signed by Gov. After calculating AGI, we excluded adults over 65 since they would likely be covered by Medicare. Careers. States, however, can set their own rules to reduce or eliminate that surcharge and so far at least 10 have done so, including most notably California, where the permissible surcharge has been cut to to zero. Download our quit-smoking calendar and tip sheet for creative ideas on how and when to promote quitting tobacco to maximize engagement. and quitting smoking can significantly improve health outcomes. official website and that any information you provide is encrypted We also collected qualitative data from a survey of smokers who did not have insurance through an employer or public program. 27 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. 8600 Rockville Pike As demonstrated below, tobacco surcharges can vary from state to state. We used linear probability models with a differenceindifference specification. Data comes from a June 2019 online survey of tobacco users using Qualtrics Research Panel collected and analyzed by the authors. Abbreviations: AGI, Adjusted Gross Income; FPL, Federal Poverty Level; HIU, Health Insurance Unit; SD, standard deviation. The employer determined tobacco use status through an affidavit completed by each employee covered under the employer group health plan. Geographic Location The costs of health insurance premiums are not the same in every zip code, and vary from one area to another. 7 However, the employers imposing a tobacco surcharge are also supposed to offer a tobacco cessation program. Over the last few years, adult tobacco use in the state has steadily declined. 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. 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. 2022 Mar;41(3):398-405. doi: 10.1377/hlthaff.2021.01313. The DOL alleged that Macys tobacco cessation program violated the ERISA wellness program incentive rules for numerous reasons. Each column is a separate regression, and the interaction term between the percent surcharge and current smoker shows the key differenceindifference coefficient. 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. Data collection: 26 FPL=Federal Poverty Level. Objective: An employee must be able to avoid the surcharge by completing the alternative, even if the employee fails to quit smoking. 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 This tax applies to cigars, snuff, chewing tobacco, and any other tobacco product except for cigarettes. Tobacco Surcharges. 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. 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). State agency staff should ensure employees are aware of the tobacco cessation programs available to them. 102. By 1920, 46 states had implemented an age limit for tobacco sales, of which 14 set the limit at 21. 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 finding was robust across a variety of specifications. It does not apply to dependents covered under the medical plan. Additionally, recent research has cast doubt on whether small employers complied with either the rating rules or the exemption for tobacco cessation, particularly in the early years of the ACA. 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. We examined the impact of state level tobacco surcharge policy on health insurance enrollment decisions among smokers. Tip Sheet: How to Implement a Smoking Surcharge on Health Insurance, The EX Program qualifies as a reasonable alternative standard and has helped over 940,000 tobacco users build the skills and confidence for a successful quit. This option wouldn't change the amount of the federal premium tax credit, a move foreclosed by federal law. Liber AC, Drope JM, Graetz I, Waters TM, Kaplan CM. This means that health insurers can charge individual and small group tobacco users up to 50% more than non-tobacco users. 7 Reasons for not enrolling in marketplace coverage. 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. Alaska increased its tobacco age restriction from 16 to 19 in 1988. Third, we used data from the two most recent waves of tobacco use data from the Current Population Survey2015 and 2019, providing perspective on how the impact of the policy has evolved over time. 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). During the 1920s and 1930s, state laws trended towards a limit of 18 years. PMC 2. All models used CPSASEC weights, and standard errors are clustered at the state level. Thirty-eight states also have laws in place setting the tobacco age restriction to 21. 18. 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. Pesko MF, Maclean JC, Kaplan CM, Hill SC. Generating an ePub file may take a long time, please be patient. The University of Southern California Institutional Review Board approved the survey data collection and deemed the analysis of data from the CPS as exempt from full review, and the relevant part of the survey questionnaire is included in Appendix S2. First, there is known overreporting of nongroup health insurance plan participation among Medicaid eligible respondents in survey data including the CPS. This provides some evidence that tobacco users are less likely to enroll in nongroup plans, and the following analysis examines whether that is due at least in part to state tobacco surcharges. 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. USA, 2 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. You may switch to Article in classic view. State agency staff must ensure the tobacco user premium differential is deducted from employees' net pay when applicable. 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). 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. Descriptive statistics from linked CPSASEC and CPSTUS data pooled across 2015 and 2019. The survey included tobacco users age 1864 with incomes above. marketing materials using the information you provide. Plans in both market segments are allowed to charge enrollees different rates based on the same four factors. 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. A $50 monthly tobacco surcharge will be applied to employees who declare tobacco usage. (ROC Cabinet OKs [] 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. [7][8] The tobacco age restriction remained at 19 until federal law raised it to 21 in December 2019. 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