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ACA Surcharge Goes Up in a Cloud of Smoke

Do you use any form of tobacco?  I know, it seems like a personal question to ask, but chances are good that if you are a small employer this is a task you have been faced with in the recent past.  Many say it is an invasion of privacy and a vast number of people refuse to answer, but due to regulations in the affordable care act, you have to ask.  Or at least you did. 

The word on the street is that beginning in 2015, there will no longer be a separate tobacco user rate.  While those that have had to go through this process finish celebrating – let’s take a minute to catch everyone else up.  One of the many changes associated with the Affordable Care Act (ACA) is that health insurance issuers are permitted to implement a tobacco use surcharge of up to 50% higher than the non-tobacco user rate.  

Beginning in 2014, all of our local carriers jumped on the tobacco surcharge bandwagon and rated tobacco users at a higher premium.  The problem with this is in identifying tobacco users.  It is all up to the individual to self report their tobacco status and therefore there is no way for any insurance provider to confidently charge all tobacco users a higher rate.  

The carriers have begun to learn that this is not a regulation they can enforce, and some saying that they will not be rating for tobacco in the future.  For right now, we have one carrier that has confirmed this – United Healthcare.  There have been whispers from others, but nothing official – so stay tuned.

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