Affordable Care Act and Tobacco Surcharges: What You Need to Know

The average smoker costs an additional $4,260 per year in direct medical costs and lost productivity according to the CDC.  In an effort to reduce tobacco use and the additional costs related to tobacco use, many insurance companies and employers implement a surcharge to users of tobacco.

What is a surcharge?


A tobacco surcharge is an increase in the premium amount paid by users of tobacco. The surcharge can also be referred to as a tobacco premium or premium differential.

How much is the surcharge?

Current federal law allows health insurance plans and companies to charge tobacco users an additional 20%.

Beginning January 1, 2014 health insurance plans and employers will be able to charge up to 50% more.

Will every state implement a surcharge?

Some states have made it illegal for insurance companies to implement a surcharge. Those states include: California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island, Vermont, and Washington D.C.  Employers in these states may still opt to implement a surcharge.

Who is considered to be a “tobacco user?”

A tobacco user is defined as anyone who uses any tobacco product including cigarettes, cigars, chewing tobacco, snuff, pipe tobacco, or hookah, four times per week for the last six months.

What else do I need to know?

Health insurance plans and employers who implement a surcharge are required to offer a reasonable alternative for tobacco users.  If a tobacco user participates in the reasonable alternative program, they will not have to pay the surcharge.  In this case a reasonable alternative is a comprehensive tobacco cessation program.

What should I look for in a tobacco cessation program?

The ultimate goal of the surcharge is to alleviate the country of one of its largest public health concerns. The program you offer is of the utmost importance. You should look for a program from a trusted provider with a long history of success and flexible program options.  The program should provide:

1)      Structure and a proven methodology for quitting.

2)      Telephonic or in-person counseling

3)      Nicotine replacement therapy, either over the counter (patch or gum) or prescription.

The Smokeless® program has helped over 1 million people quit, and stay tobacco free, using the comprehensive approach recommended by the American Lung Association. Learn more about the smokeless program by clicking here.

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