Should Smokers Pay More For Health Insurance?

Before the implementation of the Affordable Care Act, an individual could pay more for health insurance based on their gender, tobacco status or medical history. Today, with the health law in place for all Americans who purchase their own health insurance, healthcare rates are calculated solely by state of residence, a person’s age and whether the individual uses tobacco. That is, if you live in 40 states that enforce a rate increase for tobacco users on the individual market.

Tobacco use” is defined as using a tobacco product at least four times a week, and is not limited to smoking. It can also include chewing tobacco, cigars, pipes, e-cigarettes, nicotine gum and patches. Insurance companies consider smoking or other types of tobacco use a voluntary action, and a health risk to the individual they are insuring. Statistically tobacco users have a higher rate of health problems over their non-smoking peers. Because of this data, insurance carriers typically place a surcharge on the cost of a health insurance plan, increasing the cost of insurance up to 50% more for tobacco users. It also means that the additional cost added to a monthly health insurance premium because of tobacco use is the full responsibility of the policyholder, and no tax subsidy dollars are provided to pay for the extra cost of the health insurance plan.

However, in 10 states and the District of Columbia, residents who use tobacco receive little or no increase in premium costs for their health insurance. Why? States were given the freedom to decide whether the cost of health plan should cost more if the policyholder used tobacco, and they were given the ability to change the definition of “tobacco” if they found the current definition too expansive. To date no state has altered the definition of “tobacco,” but some have put parameters around how much a health plan can be rated up for tobacco use, arguing tobacco users need affordable health insurance more than anyone. States where the surcharge for tobacco use is lower breaks out as follows:

Lower rate surcharge states: Arkansas (20%), Colorado (15%), Kentucky (40%).

States that do not allow an added tobacco surcharge: California, District of Columbia, Massachusetts, New Jersey, New York, Rhode Island and Vermont.

State that does not allow added tobacco surcharge on state marketplace exchange plans only: Connecticut.

Alex C. Liber, MSPH, a data analyst in the Economic and Health Policy Research program of the American Cancer Society, measured tobacco surcharges around the country in 2015, and found wide variations based on age and location. The study pointed to the fact that older, and potentially sicker individuals might be placed in a situation where they could not afford the monthly cost of their health insurance because of the astronomical surcharge placed on their plan.

Liber summarized, “Our study shows these premiums vary almost randomly across the country and strike some people very hard, while they aren’t being imposed at all on others. These surcharges are likely to harm older tobacco users, the very ones who are most likely to become sick due to their smoking.” Liber also pointed out that given the surcharge, older smokers are faced with a choice to lying about their tobacco usage to their insurance company, or trying to pay the surcharge and bear the financial burden of large monthly premiums.

The Affordable Care Act mandates all qualifying plans include 10 essential health benefits, providing tobacco users access to free preventive screening for lung cancer and other illnesses that correlate with smoking, such as diabetes and colon cancer. However, tobacco rates will continue to be a sticking point for states as legislatures weigh the wellness of their citizens versus the affordability of health insurance for tobacco users.

The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and

Search and compare health insurance plans on
Search and compare health insurance plans on
Colleen McGuire

About Colleen McGuire

Colleen McGuire is an independent consultant who has spent most of her career writing about healthcare and the health insurance industry. For fun she blogs, travels and takes a lot of pictures along the way.