The Affordable Care Act brings unprecedented changes for counties as employers. One area that profoundly impacts the premiums of employees is tobacco use. When premiums are calculated, family size, age, geographic location, and tobacco use are the factors taken into consideration. Tobacco usage is one of the most avoidable risk factors for heart disease, stroke, and cancer. Since treating these conditions can be costly, reducing and/or eliminating the use of tobacco may be an area employers may seek to address to promote employee health and well-being. The questions and answers below address tobacco use premiums and tobacco cessation programs.
Q: Are employers allowed to charge higher rates to employees who use tobacco?
Answer:With the exception to tobacco use, as of 2014, health insurers can no longer charge premiums based on an individual's health status. The Affordable Care Act allows insurers to charge tobacco users 50 percent higher premiums than nonsmokers for new policies sold to individuals and in small employer groups. Employers should also follow the Health Insurance Portability and Accountability Act of 1996 (HIPAA) nondiscrimination requirements and their state's smokers' protections laws, if any. The list of states with smokers' rights laws can be found here.
Q: What is tobacco use?
Answer:The Centers for Medicaid and Medicare Services (CMS) defines tobacco use "as the use of a tobacco product or products four or more times per week within no longer than the past 6 months by legal users of tobacco products (generally those 18 years and older) and includes all tobacco products." Tobacco use is based on when a product was last used. At this time, e-cigarettes are not included in the definition of tobacco use. In addition, tobacco used for religious or ceremonial purposes is excluded.
Q: Why is tobacco use an exception to the rule?
Answer:Tobacco use is the leading cause of preventable death in the United States, according to the Centers for Disease Control and Prevention . Tobacco use is estimated to cause more than $96 billion in health care costs and $97 billion in lost productivity due to sickness and premature death each year.
Q: Is the tobacco premium the same as the nonsmoker discount?
Answer:Yes, tobacco surcharges can be referred to as nonsmoker discounts, premium incentives, or tobacco premiums.
Q: Are employers required to report tobacco users to their health insurers?
Answer:Yes. Employers need to determine their employees' tobacco use status.
Q: Can a wellness program specifically target smokers under the Affordable Care Act?
Answer:Yes, as long as the wellness program has the following components according to the Department of Labor:
- The difference s in premiums are not more than 20 percent of the total cost of employee-only coverage or 20 percent of the cost of coverage if dependents can participate in the wellness program.
- The tobacco cessation wellness program is designed to promote health and prevent disease. An employer cannot set a deadline by which an employee can no longer use tobacco.
- Employees are eligible for a discount/incentive at least once a year
- There is an accommodation made for those it is unreasonably difficult to quit due to medical reasons. For example, if an employee is living with addiction to nicotine, which is a medical condition, and is unable to quit using tobacco through use of tobacco cessation gum the health plan can accommodate the employee in locating an alternative program that may include counseling and education.
- The health plan materials describe a reasonable alternative standard to obtaining a lower premium. If an employer is charging tobacco users higher premiums, then the employer must offer an alternative if the employee is unable to quit. For example, an employer may offer a tobacco cessation program to the employee. If the employee does not quit after participating in the program, the employer may not penalize the employee. The employer may penalize the employee only if s/he has self-reported use of tobacco and does not participate in the program.
 Centers for Disease Control and Prevention. Smoking-attributable mortality, years of potential life lost, and productivity losses United States, 2000-2004. Morbidity and Mortality Weekly Report 2008; 57(45): 1226-1228