tobacco surcharge rules by state

More Mercer posts 10.1111/1475-6773.13577 Pesko MF, Maclean JC, Kaplan CM, Hill SC. The survey included tobacco users age 1864 with incomes above 138% FPL who reported being uninsured or insured through a marketplace plan. These tobacco surcharges can be substantial, especially for older tobacco users, and they have increased over time. 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. The prevalence of tobacco surcharge among small employers has significantly dropped mainly because the Department of Labor has become strict in enforcing provisions according to which tobacco cessation programs should be offered in conjunction with tobacco surcharges. 8 Thus, a family of five will pay a higher monthly premium compared to a family of three. 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. Notably, smoking rates were higher among those without health insurance than those with nongroup coverage. The surcharge is an extra charge on your health plan if you're a tobacco user or for those who don't partake, they may receive a discount. Under a law signed by Gov. Our results are robust to these alternative specifications. Thursday, Feb 7 2013 Assembly Bill Would Block ACA Tobacco Surcharge Last week, Assembly member Richard Pan (D-Sacramento) introduced a bill ( AB 1X2) that would block an Affordable Care Act provision that allows insurers to charge smokers with an individual policy up to 50% more in premiums from being implemented in California. Youth access to tobacco law-RCW 70.155: Prohibits the sale and distribution of tobacco products to minors. Liber AC, Drope JM, Graetz I, Waters TM, Kaplan CM. In November 2021, the Ohio District Court ruled that the DOLs case can move forward with the alleged tobacco surcharge violations for plan years 2011-2013. The survey included tobacco users age 1864 with incomes above 138% FPL who reported being uninsured or insured through a marketplace plan. 23 83 votes, 182 comments. Cameron M. Kaplan, PhD and Erin K. Kaplan, PhD. 2 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. 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. Will the premium surcharges be split and collected from each paycheck? 64C increased to $3.51 per pack. Keck School of Medicine, In plan years 2011 and 2012, the program failed to offer employees a reasonable alternative standard and notice of that reasonable alternative standard. The practice of implementing a surcharge to recoup the costs of credit card processing fees was illegal across the country for several decades. 7 Individuals are able to report multiple sources of health insurance in CPSASEC. To learn more: Call 1-866-NY-QUITS (1-866-697-8487) toll free; Text (716) 309-4688; or. tobacco surcharge rules by state. 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. State by State Tobacco Laws, Taxes, and Statistics. We found that living in a surcharge state decreased the probability of enrolling in a nongroup plan by 13.3 percentage points (P<.01) among these individuals who are most likely to benefit from the marketplacesthose with incomes over 138% FPL who do not have insurance through their employer or a public program. surcharge cannot exceed 50 percent of the total cost of health coverage. The challenges and successes of each state's fight against tobacco use, and tobacco prevention efforts. The site is secure. 7 What is the amount of the tobacco surcharge? Massachusetts has many laws that govern tobacco: Tobacco excise taxes. 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 paper contributes to a small existing literature on the impact of tobacco surcharge laws on health insurance enrollment. Qualtrics maintains a nationally representative network of individuals who have previously agreed to participate in survey research. 5 2023 All rights reserved to InsureMeNow | Terms & Conditions | Privacy Policy. 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. Approximately every four years, the CPS includes a Tobacco Use Supplement (CPSTUS), which asks questions about smoking and tobacco use. It is witnessed that among all the exchange enrollees, 86% of people qualify for premium subsidies that amount to an average of nearly $492 per month. The ACA's individual mandate in retrospect: what did it do, and where do we go from here? Data comes from a June 2019 online survey of tobacco users using Qualtrics Research Panel collected and analyzed by the authors. Tobacco users can . Furthermore, since tobacco use is selfreported and not verified, tobacco users may lie about tobacco use to avoid the penalty. 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 state Legislature included the surcharge requirement in the state budget signed into law on June 30, 2013. However, organizations like the American Cancer Society and the American Lung Association believe that higher health insurance premiums for tobacco users make health coverage less accessible to people using tobacco. 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. Column 3 repeats the specification from column 2 and confirms that the relationship is stronger among this population. The results from the linear probability models are shown in Table2. 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. Nineteen of those states set the tobacco age restriction to 21 before the federal law took effect, while the other 19 did so after the federal law took effect. The tobacco cessation wellness program is designed to promote health and prevent disease. 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. 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 wileyonlinelibrary.com], State policies limiting premium surcharges for tobacco and their impact on health insurance enrollment, GUID:57024003-B728-4156-B6F8-1C7CF1E128C4, GUID:8B1E074E-83F9-4927-82C1-164DFCE3D0D8, GUID:B324CE6B-5446-4427-8631-2DF7A4EC06A9. The cigar and smoking tobacco excise imposed by M.G.L. 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. However, thanks to a class action lawsuit in 2013, a large number of states began permitting the practice . We know that compliance issues arise no matter the size of the company and no matter how long a law has been in effect. Specifically, the employer, a casino, imposed a $50/month tobacco surcharge on health insurance on employees who used tobacco. 2018 Mar;37(3):473-481. doi: 10.1377/hlthaff.2017.1062. Though the Affordable Care Act has included a provision to allow insurers to charge higher premiums from tobacco users but has not specified what constitutes tobacco use. 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. , Download our quit-smoking calendar and tip sheet for creative ideas on how and when to promote quitting tobacco to maximize engagement. Agents are available: Mon - Fri, 8 AM - 8 PM ET. Our approach differs from the tripledifference approach used by Friedman et al, which used pre and postACA implementation as a third difference. 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. USA. 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. Unfortunately, the prepost approach may not yield accurate estimates because it does not account for the fact that tobacco rating was allowed in the nongroup and small group markets prior to 2014. 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. Health Aff (Millwood). 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. Standard errors, clustered at the state level are shown in parentheses. In states with surcharges, enrollment among smokers was 3.4 percentage points lower (P<.01) for every 10 percentage point increase in the tobacco surcharge. 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. Despite ACA lawmakers strong feeling that an individuals health condition should not be taken into consideration when setting the health insurance premiums, still they allowed health insurers to charge higher premiums from the tobacco users. Surveys. Columns 4 and 5 show results when nongroup plan enrollment was split by whether the plan was offered through the ACA marketplaces for the 2019 sample. An official website of the United States government. Column 4 shows that smokers were 11.5 percentage points (P<.01) less likely to be enrolled in a marketplace plan if they lived in a state with a tobacco surcharge than if they lived in a state without a tobacco surcharge. Thirty-eight states also have laws in place setting the tobacco age restriction to 21. Loyola Marymount University, 10 Tobacco Surcharges. Click here to contact us for media inquiries, and please donate here to support our continued expansion. Ballotpedia features 393,617 encyclopedic articles written and curated by our professional staff of editors, writers, and researchers. In order to aggregate surcharge data to the state level, we first computed the median surcharge in each marketplace rating area by calculating the ratio between the plan premiums offered to tobacco and nontobacco users for a 45years old. We surveyed 1034 individuals between ages 19 to 64 with reported household incomes above 138% FPL who indicated that they were either uninsured (N=519) or insured through a State or Federal marketplace plan (N=515). If people avoid health insurance simply because they cant afford it, then they will also not able to access the coverage for the free tobacco cessation that is included with ACA-compliant health plans. The tobacco surcharge is limited to 15% in Colorado, 20% in Arkansas, and 40% in Kentucky. Evidence Suggests That The ACA's Tobacco Surcharges Reduced Insurance Take-Up And Did Not Increase Smoking Cessation. There is an accommodation made for those it is unreasonably difficult to quit due to medical reasons. The study sponsors had no role in the study design, data collection, analysis, or preparation of the manuscript. In addition, the complaint alleges that even when the employer offered a reasonable alternative standard (i.e., a smoking cessation program), the employer did not provide employees the full reward once they completed the program. Compliance Overview: Tobacco Surcharges Legal Rules April 30, 2019 By Lesa M. Votovich As employers continue to show more interest in adding wellness programs to their employee benefit plans, they must also be cognizant of any federal and/or state laws that could impact the components of these programs. Recent evidence has suggested that premiums for tobacco users have increased at a faster rate than premiums for nonusers. Some of those states later passed a state law raising the state-level tobacco age restriction to 21. Click here to contact our editorial staff, and click here to report an error. Public insurance includes Medicare, Medicaid, VA, CHAMPUS, Tricare, and Indian Health Service. Last updated January 6, 2022 All regressions are weighted using the appropriate weights from the Current Population Survey. Bethesda, MD 20894, Web Policies but it is unknown whether there are differential effects for smokers or those living in high surcharge states. 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. Ten Democratic governors and eight Republican governors signed increases in tobacco age restrictions during this time.[3]. [14] However, the state's tobacco age restriction was raised to 21 in December 2019 by federal law. Providing adequate notice about the reasonable alternative standard is also mandatory. Allowing a tobacco surcharge reduced insurance enrollment among smokers by 4.0 percentage points (P=.01). Data comes from a June 2019 online survey of tobacco users using Qualtrics Research Panel collected and analyzed by the authors. 15 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 . Objective: An employee must be able to avoid the surcharge by completing the alternative, even if the employee fails to quit smoking. Under a law signed by Gov. Tobacco surcharges and the state laws that limit them theoretically have varying effects on different segments of the health insurance market. Tobacco Surcharges - Legal Rules , Our work extends and builds upon this prior work in the following important ways. Access to insurance and health care may be particularly important for tobacco users because they are at higher risk of developing numerous chronic health conditions and because all health insurance plans are required to provide tobacco cessation as an essential health benefit with no outofpocket costs. While these rules may be frustrating to employers, ignoring them is not worth a lawsuit by the DOL. Nearly Half Of Small Employers Using Tobacco Surcharges Do Not Provide Tobacco Cessation Wellness Programs. I'm at work right now, but here is a quick rundown of what we have going on here. To be in full compliance with the ERISA wellness incentive rules, wellness programs that impose a tobacco surcharge on employees who use tobacco must pass a 5-factor test. As of July 1, 2013, the excise tax imposed on cigarettes under M.G.L. 2. Employees that satisfy a reasonable alternative standard specified by the City shall not be subject to the surcharge. The employer determined tobacco use status through an affidavit completed by each employee covered under the employer group health plan. Tobacco surcharges and the state laws that limit them theoretically have varying effects on different segments of the health insurance market. Among other requirements, in order for a tobacco surcharge to be permissible, the employer must offer a reasonable alternative to obtaining the reduced premium. Six states and DC have banned tobacco surcharges in their entire individual market: California District of Columbia Massachusetts New Jersey New York Rhode Island Vermont Virginia lawmakers passed legislation in 2022 that would have banned tobacco surcharges as of 2023, but the governor vetoed the measures. According to our estimates, the presence of a tobacco surcharge decreased the likelihood of enrollment in a nongroup plan by 9.0 percentage points (P<.01) among smokers without insurance through an employer or public program. There has been a flurry of activity lately involving employer wellness programs that impose a tobacco surcharge on health insurance. 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%. Since 2014, all nongroup health insurance plans, including those sold on the individual marketplaces, can only rate premiums based on four characteristics: age, family size, geographic region, and tobacco use. 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. 3 Michael F. Pesko, Georgia State University. More Benefits Insight Cafeteria Plan COLA May Require . Tobacco products are mostly used by lower-income Americans than higher-income Americans. Banning tobacco surcharges may be more effective than having a very low tobacco surcharge, since even asking about tobacco use during enrollment could have an effect on enrollment independent of the size of the surcharge. All regressions are weighted using the appropriate weights from the Current Population Survey. On the other hand, tobacco surcharges may discourage insurance enrollment among tobacco users. , Readers are encouraged to seek legal counsel for any advice or compliance determinations needed on specific situations. How Much Protected Are You After Being Vaccinated against COVID-19? Standard errors, clustered at the state level are shown in parentheses. 24 This table presents estimates from a multinomial logit regression model, comparing the likelihood of being in one of four insurance categoriesuninsured (reference group), nongroup, employer, or public. Careers. This means that health insurers can charge individual and small group tobacco users up to 50% more than non-tobacco users. 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. This allowed us to examine the impact of surcharges on each type of insurance coverage without worrying about endogenous sample selection that could cause bias in the linear probability models where the sample is limited to individuals with nongroup plans and those who are uninsured. However, there were no significant effects for nonmarketplace nongroup insurance plans. [13] However, the state's tobacco age restriction was raised to 21 in December 2019 by federal law. These data were only available for the 38 states that participated in the federal exchange. We limited the sample to individuals in states with tobacco surcharges, comparing the impact of the size of the average tobacco surcharge on differences in insurance coverage between smokers and nonsmokers. 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. Whenever a violation is sustained against you for a sale of tobacco or other age-restricted product to an individual under 21 years of age, besides imposing the payments of a fine and a surcharge, you will be assigned two points, unless you demonstrate that at the time of the sale, the seller possessed a valid certificate from a State certified . 2022 Mar;41(3):398-405. doi: 10.1377/hlthaff.2021.01313. to not pay the monthly surcharge) for 2023. Proponents of tobacco surcharges argue that higher premiums for tobacco users could lead to lower premiums for nonusers, increase insurer participation, and create an incentive for tobacco users to quit. Even though federal law permits a tobacco surcharge on health insurance, some states prohibit this. Our insurance expert will call you soon. State agency staff must ensure the tobacco user premium differential is deducted from employees' net pay when applicable. All states with a minimum tobacco age of 21 decreased the limit. US. However, the interaction term between nonsurcharge state and current smoker was only statistically significant at P<.05 for nongroup insurance, which gives us confidence in the specifications presented in Table2 that excluded individuals with insurance through an employer or public program. As demonstrated below, tobacco surcharges can vary from state to state. The DOL alleged that Macys tobacco cessation program violated the ERISA wellness program incentive rules for numerous reasons. 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). Health Aff (Millwood). Post author By ; Post date western nebraska community college admissions western nebraska community college admissions Overall, this study found that tobacco surcharges led to significantly lower enrollment in nongroup health insurance among smokers. CA, Results showing the impact of the size of tobacco surcharges are presented in Table4. Consent for marketing calls 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. Setting up a tobacco surcharge may seem straight forward but for it to be effective, you need to be strategic. Gehr Family Center for Health Systems Science and Innovation, Would you like email updates of new search results? See details about the 5-factor test in my previous blog post, What Is a Tobacco Surcharge and How Does My Company Offer One? Some states have set more restrictive limits on rating for tobacco use, and several states have outlawed tobacco premium surcharges altogether. and text messages is not a condition for purchase. This allows us to account for whether the effect is concentrated in the nongroup market or whether there are spillover effects. Conditional on allowing a surcharge, higher surcharges result in lower enrollment among smokers in both any insurance plan and in nongroup insurance plans in particular. We compared insurance enrollment in states that did and did not allow tobacco surcharges, using a differenceindifference approach to compare the policy effects among smokers and nonsmokers. 102. 13 The plaintiffs in this case allege that the employer failed to notify employees of a reasonable alternative standard. The .gov means its official. So the actual amount you'll pay will depend on the health insurance company you chooseand there may not be a surcharge at all. 21 Policy: Christopher Nelson Caitlin Styrsky Molly Byrne Katharine Frey Jimmy McAllister Samuel Postell In August 2017, the United States Department of Labor (DOL), which enforces compliance with ERISA, sued Macys, Inc. as well as its third-party administrators for its self-insured health plan: Anthem Blue Cross Life and Health Insurance Company and Cigna. We examined the impact of state level tobacco surcharge policy on health insurance enrollment decisions among smokers. In these years, adult members of households included in the basic monthly CPS were surveyed in June of the first year (2014 and 2018) and January and May of the second year (2015 and 2019). Tobacco. If the program uses a medical test to detect nicotine or tobacco use, it also must comply with the ADA's rules for voluntary wellness plans. Health Aff (Millwood). 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Are encouraged to seek Legal counsel for any advice or compliance determinations needed on specific situations spillover..., ignoring them is not a condition for purchase ten Democratic governors and eight Republican governors signed increases tobacco! The ERISA wellness program incentive rules for numerous reasons & Conditions | Privacy.. Last updated January 6, 2022 All regressions are weighted using the appropriate weights from the probability. Governors signed increases in tobacco age restriction to 21 in December 2019 by federal law permits a tobacco surcharge health. Evidence Suggests that the relationship is stronger among this Population and tip sheet for creative on. Insuremenow | Terms & Conditions | Privacy Policy lie about tobacco use is selfreported and not verified, tobacco may... Used by Friedman ET al, which used pre and postACA implementation as a difference... 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