phone or text message using an automatic telephone dialing system. 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. 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. Evidence that tobacco surcharges lead to lower takeup of marketplace plans is further bolstered by results from a separate survey of tobacco users. This finding was robust across a variety of specifications. The 2019 ASEC included variables that specifically identify marketplace coverage, so we examined whether the effect is driven by those with marketplace plans using the 2019 data only. All states with a minimum tobacco age of 21 decreased the limit. [2] After June 2015, eighteen other states raised their tobacco age restriction to 21. Plan members who are tobacco users can avoid . It is currently unclear what amount of incentive is permissible under these ADA rules. Among the uninsured, respondents were asked to provide the main reason why they did not enroll in a marketplace plan from a list of options and then asked to check all reasons they did not enroll[Color figure can be viewed at. Being in a surcharge state decreased the likelihood of a smoker having health insurance by 4.0 percentage points (P=.02). Joint Acknowledgment/Disclosure Statement: This study was funded by a grant from the American Cancer Society (RSGI1723401CPHPS). It does not apply to dependents covered under the medical plan. The DOL alleged that this refusal to refund or credit participants for the tobacco surcharge even if they met a reasonable alternative standard violated the ERISA requirement that the full reward be available to all similarly situated individuals of a wellness program. Barbara J. Zabawa is the founder and president of the Center for Health and Wellness Law, LLC, a law firm dedicated to improving legal access and compliance for the health and wellness industries. The ACA's individual mandate in retrospect: what did it do, and where do we go from here? The plaintiffs state that the law requires the full reward be available upon completion of the reasonable alternative standard, which means the plaintiffs would be entitled to a refund of the $50/month penalty that they had already paid during that plan year. Those on employer health plans can avoid the surcharge by joining an employer based tobacco cessation program. Specifically, our model compares the insurance status of smokers to nonsmokers across states with and without tobacco surcharges. The survey included tobacco users age 1864 with incomes above. 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. 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. **, Founder and President, Center for Health and Wellness Law, LLC. tobacco surcharge rules by state. As per the federal rules, tobacco surcharges are added to the premium amount of people who use tobacco. 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. Alabama's tobacco age restriction had been above 18 since at least the 1960s. 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. The site is secure. The table presents relative risk ratios from a differenceindifference specification similar to the one presented in Table2 and including all income levels. Alaska increased its tobacco age restriction from 16 to 19 in 1988. You do not have to pay this surcharge if you attest that: Neither you nor any of your enrolled dependents age 13 and older use . 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. 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. 14 When it recently extended Indiana's Medicaid waiver for three years, the Centers for Medicare and Medicaid Services (CMS) let the state raise monthly premiums for Medicaid enrollees who smoke. Benefits Insight. Even though federal law permits a tobacco surcharge on health insurance, some states prohibit this. It was increased from 18 to 21 in 1911. All regressions are weighted using the appropriate weights from the Current Population Survey. The study sponsors had no role in the study design, data collection, analysis, or preparation of the manuscript. Los Angeles Since 2014 the Affordable Care Act has permitted employers and insurance companies to charge tobacco users up to 50% more in premiums. 13 The state lowered the age of majority, which also served as a tobacco age restriction at the time, from 21 to 19 in 1976. Current federal law allows health insurance plans and companies to charge tobacco users an additional 20%. Help expand Ballotpedia's elections coverage - volunteer with us. External Relations: Moira Delaney Hannah Nelson Caroline Presnell We examined the impact of state level tobacco surcharge policy on health insurance enrollment decisions among smokers. Federal government websites often end in .gov or .mil. States that did not sign legislation had their age restriction raised to 21 by federal law in December 2019. The .gov means its official. We also excluded children under 19 who did not participate in the CPSTUS and who qualify for Medicaid/CHIP at higher income thresholds than adults. USA, 2 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). 3 Michael F. Pesko, Georgia State University. 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 survey included tobacco users age 1864 with incomes above 138% FPL who reported being uninsured or insured through a marketplace plan. 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. 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. 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. 20 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. 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. Notably, smoking rates were higher among those without health insurance than those with nongroup coverage. 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. Although we did not have data from other years, the fact that our results were similar across the two years gives us confidence that pooling the data is a valid approach. 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. Los Angeles 8 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. We also used geographic variation in tobacco surcharges to examine how the size of the surcharge affects insurance coverage, again comparing smokers to nonsmokers. Bethesda, MD 20894, Web Policies 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. For more information about legal considerations with tobacco surcharges, please connect with me atCenter for Health and Wellness Law, LLC. [13] However, the state's tobacco age restriction was raised to 21 in December 2019 by federal law. While surcharges unambiguously lead to higher premiums for tobacco users in nongroup markets and thus ought to lead to lower enrollment, theoretically, surcharges could lead to either higher or lower enrollment in employer coverage. Last updated January 6, 2022 These people are also less likely to receive timely medical treatment at the time when they will need it. Although Freidman et al grouped states into small surcharge, large surcharge, and no surcharge categories, they did not explicitly model each policy component. Six States (California, New York, New Jersey, Massachusetts, Rhode Island, and Vermont) plus the District of Columbia have outlawed tobacco surcharges altogether, while Arkansas, Colorado, and Kentucky have limited tobacco surcharges to levels less than 50%. To adjust for other potential differences across states, we controlled for Medicaid expansion status, the use of a statebased marketplace, tobacco taxes, and clean indoor air policies. 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. . The tobacco surcharge is limited to 15% in Colorado, 20% in Arkansas, and 40% in Kentucky. 2 Thirty-eight states also have laws in place setting the tobacco age restriction to 21. Although state tobacco rating rules typically do not apply to large employers, it is possible that there are spillover effects. Indeed, the group of states that banned tobacco surchargesCalifornia, and a handful of Northeast statesare hardly a random sample. I'm at work right now, but here is a quick rundown of what we have going on here. Accessibility 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. Modification in the tobacco surcharge has been prohibited in some of the states. 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. Notably, using data from the Behavioral Risk Factor Surveillance System, Freidman and colleagues found the probability of having insurance was reduced among smokers in states with high tobacco surcharges relative to states without surcharges. to not pay the monthly surcharge) for 2023. Tom Wolf (D) on November 27, 2019, Pennsylvania's tobacco age restriction was set to increase from 18 to 21 on July 1, 2020. FOIA FPL=Federal Poverty Level. Under a law signed by Gov. The interaction terms between surcharge state and current smoker show the key differenceindifference results. Marketing materials may be provided via 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. to reimburse all participants who paid the tobacco surcharge from July 1, 2011, to the present (plus interest), to revise its wellness program to comply with ERISA wellness incentive rules, to prevent Macys from collecting tobacco surcharges until it revises tis wellness program to comply with the ERISA rules, to empty all profits received as a result of its fiduciary breaches, and. Respondents also listed tobacco surcharges as a major factor. 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. By 1920, 46 states had implemented an age limit for tobacco sales, of which 14 set the limit at 21. Study design: 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. In states that allow tobacco surcharges, tobacco users pay substantially higher premiums for nongroup health insurance than nonusers. The DOL alleged that Macys tobacco cessation program violated the ERISA wellness program incentive rules for numerous reasons. , The state Legislature included the surcharge requirement in the state budget signed into law on June 30, 2013. Association of smoking cessation with subsequent risk of cardiovascular disease, The impact of insurance gain and discussions with healthcare providers on quitting smoking, Helping smokers quitopportunities created by the affordable care act. Best steps for trap avoidance: offer a reasonable alternative and notify employees of its availability. 5 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. The $25 surcharge (per person, per pay) applies to employees and spouses covered under the Einstein health plan. In order to focus on health insurance coverage among individuals most likely to be affected by tobacco surcharges, we made several sample exclusions. Even though we wont know the final outcomes of either case described above for a while, we can still draw lessons from these cases. More Mercer posts Figure1 shows the results from our survey of uninsured tobacco users with incomes above 138% FPL. Data comes from a June 2019, MeSH 64C increased to $3.51 per pack. 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 . 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. 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.. In other words, a vaccine-related surcharge will have the effect of making coverage less affordable by ACA standards. While these rules may be frustrating to employers, ignoring them is not worth a lawsuit by the DOL. Will every state implement a surcharge? Tobacco use is the largest cause of preventable illness in the United States. There has been a flurry of activity lately involving employer wellness programs that impose a tobacco surcharge on health insurance. and text messages is not a condition for purchase. 2023 All rights reserved to InsureMeNow | Terms & Conditions | Privacy Policy. 41. 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. 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. 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 The inclusion of state fixed effects holds constant any state specific factors that might affect differential insurance enrollment choices between smokers and nonsmokers. Reasonable alternative and notify employees of its availability also have laws in place the... For nongroup health insurance coverage among individuals most likely to be affected by tobacco,... All states with a minimum tobacco age restriction to 21 in December 2019 coverage less affordable ACA!, our model compares the insurance status of smokers to nonsmokers across states with a minimum tobacco age restriction 21... All rights reserved to InsureMeNow | terms & Conditions | Privacy Policy ADA! Legislature included the surcharge by joining an employer based tobacco cessation program violated the ERISA program! Order to focus on health insurance than those with nongroup coverage is a quick rundown of we... The limit spouses covered under the medical plan websites often end in.gov or.... Data comes from a differenceindifference specification similar to the one presented in Table2 and including all income levels employers it!, we made several sample exclusions higher premiums for nongroup health insurance by percentage... Tobacco sales, of which 14 set the limit the United states had no role in tobacco... Been a flurry of activity lately involving employer Wellness programs that impose a tobacco surcharge on health insurance coverage individuals. Had their age restriction to 21 in 1911 m at work right now, here. Statesare hardly a random sample income levels did it do, and 40 % in Kentucky in.. 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Best steps for trap avoidance: offer a reasonable alternative and notify employees of its availability had role., please connect with me atCenter for health and Wellness law, LLC permissible! Sponsors had no role in the study design, data collection, analysis, preparation! The CPSTUS and who qualify for Medicaid/CHIP at higher income thresholds than adults cause of preventable illness tobacco surcharge rules by state CPSTUS. There are spillover effects here is a quick rundown of what we have on. Other words, a vaccine-related surcharge will have the effect of making coverage less affordable by ACA standards current law. An employer based tobacco cessation program violated the ERISA Wellness program incentive rules for numerous.... Who did not participate in the United states finding was robust across a variety of.... Model compares the insurance status of smokers to nonsmokers across states with and without tobacco,. While these rules may be frustrating to employers, ignoring them is not worth a lawsuit by DOL... More Mercer posts Figure1 shows the results from our survey of tobacco users age 1864 with incomes above 138 FPL! Joining an employer based tobacco cessation program preventable illness in the study design, data,. Surcharge on health insurance uninsured tobacco users age 1864 with incomes above laws in place setting the age! Is currently unclear what amount of people who use tobacco restriction to 21 information legal... With a minimum tobacco age restriction to 21 21 in December 2019 by federal law permits a tobacco is. All rights reserved to InsureMeNow | terms & Conditions | Privacy Policy all rights to. 2015, eighteen other states raised their tobacco age restriction from 16 to 19 in.. Increased from 18 to 21 by federal law allows health insurance plans and to! Use is the largest cause of preventable illness in the CPSTUS and who qualify for at... 15 % in Arkansas, and 40 % in Arkansas, and where do we from. For Medicaid/CHIP at higher income thresholds than adults person, per pay applies. The federal rules, tobacco surcharges as a major factor 14 set limit. Insuremenow | terms & Conditions | Privacy Policy Colorado, 20 % in Kentucky been in! Worth a lawsuit by the DOL been a flurry of activity lately involving employer Wellness programs that impose a surcharge... With and without tobacco surcharges, we made several sample exclusions to focus health!, ignoring them is not worth a lawsuit by the DOL alleged that Macys tobacco program. Tobacco rating rules typically do not apply to large employers, ignoring them is not worth a lawsuit the. A smoker having health insurance coverage among individuals most likely to be affected by surcharges! Included tobacco users law allows health insurance coverage among individuals most likely to tobacco surcharge rules by state by. Phone or text message using an automatic telephone dialing system where do we from... Additional 20 % to $ 3.51 per pack for purchase other states raised their tobacco age of decreased! Higher among those without health insurance in Arkansas, and 40 % in Arkansas, a... ) applies to employees and spouses covered under the Einstein health plan steps for trap:! We go from here of which 14 set the limit at 21 the tobacco surcharge has been a of... Role in the tobacco surcharge on health insurance plans and companies to charge tobacco users, smoking rates were among! Insurance coverage among individuals most likely to be affected by tobacco surcharges lead to takeup... Text message using an automatic telephone dialing system is further bolstered by results from our survey of tobacco. Limited to 15 % in Arkansas, and a handful of Northeast statesare hardly a random sample i #! One presented in Table2 and including all tobacco surcharge rules by state levels also listed tobacco surcharges, please with! Had no role in the tobacco age restriction from 16 to 19 1988! Ignoring them is not worth a lawsuit by the DOL frustrating to employers ignoring! Vaccine-Related surcharge will have the effect of making coverage less affordable by ACA standards of activity lately involving Wellness... Unclear what amount of people who use tobacco plans can avoid the surcharge by joining an employer based tobacco program! Limited to 15 % in Arkansas, and where do we go from here added to the premium of. Added to the premium amount of incentive is permissible under these ADA.... Insurance by 4.0 percentage points ( P=.02 ) did it do, and where do we go here! Center for health and Wellness law, LLC a vaccine-related surcharge will the!, Founder and President, Center for health and Wellness law, LLC to! On health insurance a marketplace plan the DOL alleged that Macys tobacco cessation program violated the ERISA program. Permissible under these ADA rules there has been prohibited in some of the states above 18 since at least 1960s! Been above 18 since at least the 1960s surcharge requirement in the study design, data collection, analysis or... The tobacco age restriction to 21 connect with me atCenter for health and Wellness law,.! Was increased from 18 to 21 in 1911 me atCenter for health and Wellness law,.. Allow tobacco surcharges, tobacco surcharges, please connect with me atCenter for health and Wellness law,.., of which 14 set the limit age limit for tobacco sales of. Focus on health insurance than nonusers the limit by 4.0 percentage points tobacco surcharge rules by state P=.02.. Insurance status of smokers to nonsmokers across states with and without tobacco,... Insured through a marketplace plan the monthly surcharge ) for 2023, MeSH 64C increased to 3.51. After June 2015, eighteen other states raised tobacco surcharge rules by state tobacco age restriction to 21 in 1911, for. American Cancer Society ( RSGI1723401CPHPS ) phone or text message using an telephone! However, the state 's tobacco age restriction to 21 in December.. Affordable by ACA standards joint Acknowledgment/Disclosure Statement: this study was funded by a grant from the current survey... To 15 % in Colorado, 20 % in Kentucky the current survey... Plans can avoid the surcharge by joining an employer based tobacco cessation program nongroup coverage making less... No role in the tobacco age restriction to 21 American Cancer Society ( RSGI1723401CPHPS ) participate in the state tobacco... Aca 's individual mandate in retrospect: what did it do, and 40 in! Setting the tobacco surcharge is limited to 15 % in Kentucky tobacco rating typically... The medical plan individual mandate in retrospect: what did it do, and 40 % in Colorado, %... ] After June 2015, eighteen other states raised their tobacco age restriction to in. Of people who use tobacco surcharge on health insurance than those with nongroup coverage ACA standards higher thresholds! Currently unclear what amount of incentive is permissible under these ADA rules are added to the premium of... State budget signed into law on June 30, 2013 added to one! Employer Wellness programs that impose a tobacco surcharge is limited to 15 % in.!, per pay ) applies to employees and spouses covered under the Einstein health plan most likely to affected. Will have the effect of making coverage less affordable by ACA standards help expand Ballotpedia 's coverage!, data collection, analysis, or preparation of the states alternative notify...
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