Obamacare Enrollees Should Not Automatically Renew If They've Quit Smoking

For Obamacare enrollees who have quit or reduced their smoking habits in the last year, there may be an opportunity to save hundreds or even thousands of dollars on health insurance this year. Reductions in your tobacco habits could save you as much as 33% on your premiums equating to thousands of dollars over the course of the year. Unfortunately, many existing enrollees may not be aware that this opportunity exists if the exchanges automatically renew them using their enrollment details from 2014 (states using Healthcare.gov will automatically renew enrollees if they take no action by Dec. 15).

To understand how this works, lets look at how the Affordable Care Act handles smoking. Under the law, insurers can consider whether or not you use tobacco in determining the premiums you pay for health coverage. For the purposes of determining if you qualify for this tobacco surcharge, however, the Department of Health and Human Services has a very specific definition for "tobacco use." In its final ruling from last year (found here), the department defined it as the use of a tobacco product or products an average of four or more times per week within a period no longer than the past 6 months. Note: This does not include the use of tobacco products for religious ceremonies. 

Since the exchanges rely on an honor system where consumers indicate that they're a smoker, it is possible that many people self-report as tobacco users when they may not necessarily qualify under the strict definition set up by HHS. Light smokers or anyone who may use tobacco products sporadically should be keep this in mind, since incorrectly indicating tobacco use can be quite expensive. While the actual premiums vary, insurers are allowed to charge up to 50% more for people who self-report as tobacco users. With insurance premiums costing hundreds, if not over a thousand, a month depending on your age, this could cost you additional thousands in premiums annually.

Age 60, Income: $35,000
Plan (monthly premiums) Non-Smoking Smoking Annual Difference
United Healthcare Bronze Compass HSA $204 $307 $1,236
Florida Blue Blue Select Health 1443 (Silver) $277 $394 $1,404
myCigna Copay Assure Gold $639 $781 $1,704

Sample Tobacco vs Non Tobacco Rates in Florida

Consumers May Miss Out If They Renew Automatically

The definition of tobacco use could also have significant financial consequences for anyone already enrolled in an exchange plan. Many of the exchanges are designed to automatically renew or re-enroll consumers in the same or similar plan in 2015. Depending on how your particular exchange is structured, automatic renewals may not require any additional input from consumers. As we alluded to above, this can be problematic for anyone who has reduced their smoking habits in the past year, since they might miss out on thousands in savings due to better tobacco habits.

If you've quit smoking in the past year, the potential to qualify for the non-tobacco rate could mean thousands of dollars in savings in a single year. With the tobacco use look-back period set at 6 months, even consumers who have reduced their usage of tobacco products could potentially fall under the usage threshold and enjoy similar savings. Many consumers who are automatically renewed in plans for 2015 may not be aware that such savings exist.

There is the potential that the exchanges and insurers will simply take your enrollment details from the previous year without accounting for these changes in habits. While the automated renewals are designed to ease the transition of coverage from year to year, it may also bypass potential savings that consumers would otherwise qualify for. Interestingly, tobacco cessation programs are one of the benefits covered under all the health insurance plans, so it would make sense for consumers to take advantage of the savings if they succeed.

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