How Tobacco Use Affects Health Insurance

How Tobacco Use Affects Health Insurance text overlaying image of a cigaretteInsurance companies can’t change your premiums based on your medical history or turn you down for any pre-existing conditions. However, they can change your premiums based on other things, such as whether or not you smoke. If you regularly smoke, vape, or even chew tobacco, your health insurance can cost up to 50% more. Companies use this “tobacco surcharge” to try to keep policyholders from smoking, since chronic conditions like COPD that are caused by smoking lead to high medical costs. However, even if you’re a smoker you can still find great health insurance. 

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What Counts As Tobacco Use?

All tobacco products, like vape juice, cigarettes, cigars, chewing tobacco, snuff, e-cigarettes, and pipes, are charged a tobacco fee by insurance companies. If you used any of these items four times a week or more in the last six months, that is considered tobacco use. Only people who use tobacco for religious or spiritual reasons, like Native Americans, are exempt from this surcharge. At the moment, insurance companies depend on people to tell the truth. When you ask for health insurance, you have to tell the company if you smoke or not. “Have you used tobacco in the last six months?” is a question that insurance companies often ask.

 

If you lie about how much you smoke, it could be called insurance fraud. Depending on where you live, giving a false answer to this question could be a felony that could cost you thousands of dollars in fines, jail time, and court fees, as well as a felony charge. If you get health insurance through your job, a regular medical exam could be used to check that your answers are true. During this test, a blood or urine sample can be used to check for nicotine use.

The Cost of Tobacco Use

Under the Affordable Care Act (ACA), health insurance rates are based on the type of plan, the number of people covered by it, their age, where they live, and whether or not they smoke. Many insurance companies can use the fact that a person smokes to raise their health insurance rates. This is called a “tobacco rating”. Subsidies are also affected. The full cost of the tobacco fee falls on people who smoke. The insurance company changes the premium based on age and location, but tobacco use is taken into account before that.

 

The tax credit isn’t used to pay for any of the tobacco fees. Through a “tobacco surcharge,” the Affordable Care Act (ACA) lets insurance companies charge users up to 50% more (or 1.5 times more) than they charge non-smokers. Even though this is legal, not all states have chosen to adopt this charge.  Surcharges on tobacco can be different in each state.

States that charge 50%

The States that charge less than 50%

States That Prohibit Tobacco Ratings Entirely

How Tobacco Affects Your Health

Smoking causes illness and disability, and it hurts almost all of your body’s organs. The Centers for Disease Control and Prevention (CDC) says that more than 16 million Americans have a disease caused by smoking. At least 30 people live with a serious disease caused by smoking for every person who dies because of it. About 41,000 nonsmoking adults and 400 babies die each year because they were around people who were smoking. Adults who are around people who smoke can get a stroke, lung cancer, and arterial heart disease. Children who are exposed to secondhand smoke are more likely to have Sudden Infant Death Syndrome, acute respiratory infections, middle ear disease, more serious asthma, respiratory symptoms, and slower lung growth. Smoking leads to:

Cancer 

When you smoke, you can get cancer and then your body can’t fight it. Toxins in cigarette smoke can damage the body’s immune system, making it harder to kill cancer cells. When this happens, the growth of cancer cells can’t be stopped. Tobacco smoke contains poisons that can damage or change the DNA of a cell. DNA is the “instruction manual” of a cell. It controls how a cell grows and works. When DNA is broken, a cell can start to grow out of control, which can lead to cancer. Cancer can form almost anywhere in your body if you smoke, including:

 

  • Blood (acute myeloid leukemia)
  • Bladder
  • Cervix
  • Colon and rectum
  • Esophagus
  • Kidney and renal pelvis
  • Larynx
  • Liver
  • Lungs, trachea, and bronchus
  • Mouth and throat
  • Pancreas
  • Stomach

COPD

Chronic obstructive pulmonary disease, or COPD, is a group of illnesses that block airflow and make it hard to breathe. Emphysema and chronic asthma are both parts of COPD. COPD is usually caused by smoking, but long-term exposure to other lung toxins, like secondhand smoke, can also lead to COPD. One out of every four Americans with COPD has never smoked. However,up to 8 out of 10 COPD-related deaths are caused by smoking, and 38% of the nearly 16 million U.S. people with COPD who are still smoking. When a child or teen smokes or is exposed to secondhand smoke, it can slow the growth and development of the lungs. This can make it more likely that they will develop COPD as an adult.

Diabetes

Diabetes is a long-term illness that changes the way your body turns food into energy. Most of the food a person eats is turned into glucose, a type of sugar that gives energy to the body’s cells. The pancreas is an organ near the gut that makes insulin. This hormone helps glucose get into the cells of the body. When you have diabetes, your body either doesn’t make enough insulin or can’t use it very well. Too much sugar stays in your system when there isn’t enough insulin or when your cells stop responding to insulin. Over time, this can lead to major health problems like heart disease, vision loss, and kidney disease. 

 

We now know that one thing that can lead to type 2 diabetes is smoking. In fact, people who smoke cigarettes are 30%–40% more likely to get type 2 diabetes than people who don’t smoke. People with diabetes who smoke are more likely to have trouble taking insulin and taking care of their health than people with diabetes who don’t smoke. If you smoke a lot, you are more likely to get type 2 diabetes.

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Gum Disease

Gum disease, also called periodontal disease, is an infection of the gums that can affect the bones that hold your teeth in place. In the worst cases, it can make you lose your teeth. Bacteria (germs) on your teeth get under your gums and cause gum disease. If the germs stay on your teeth for too long, they build up into layers of plaque and tartar. This buildup can lead to gingivitis, which is an early form of gum disease. When gum disease gets worse, your gums can pull away from your teeth and leave places that can get infected.

 

The bone and muscle that hold your teeth in place can break down, and your teeth may become loose and need to be pulled out. In the United States, smoking is a major cause of gum disease. Your immune system, which fights off sickness, gets weaker when you smoke. This makes it harder to get rid of an infection in the gums. If your gums are already damaged, smoking makes it harder for them to get better.

Heart Disease and Stroke

Cardiovascular illnesses (CVDs) include heart disease and stroke. In the U.S., coronary heart disease, also called coronary artery disease, is the most common type. Coronary heart disease happens when plaque builds up on the walls of the arteries that bring blood to the heart. A stroke happens when the brain doesn’t get enough blood or when a blood vessel in the brain breaks, damaging or killing parts of the brain. A stroke can cause death or injury, such as paralysis, weakened muscles, trouble speaking, or loss of memory. One out of every four deaths from cardiovascular disease (CVD) is caused by smoking.

How To Quit

Now is a great time to talk to your doctor if you smoke or use any other kind of tobacco. Under the Affordable Care Act, your health insurance plan can help you stop smoking by giving you the tools you need. One of the best things you can do for your health is to stop smoking or using any kind of tobacco. The faster your body can start to heal, the sooner you should stop. This is what happens after you’ve quit smoking:

 

  • 20 minutes – blood pressure and heart rate lowers
  • 12 hours – the amount of carbon monoxide in your bloodstream reduces
  • 3 months – your lung functions and circulation improve
  • 9 months – coughing and shortness of breath are less common
  • 1 year – your risk for a heart attack drops
  • 5 years – your risk of throat, mouth, bladder, and esophagus cancer severely drops
  • 10 years – lung cancer risk drops
  • 15 years – coronary heart disease risk reduces

Coverage for Quitting

Quitting doesn’t just improve your health it also improves your finances. Pack-a-day smokers can save between $1,380 and $2,540 annually, depending on where you live and the brand you smoke. Most health care plans, including all plans bought through the Marketplace, cover a screening for tobacco use. During this screening, your doctor will ask if you smoke or use tobacco and give you information about how it affects your health and why you might want to stop. Your health insurance may now cover free services that can help you stop smoking. This could include, depending on your plan:

 

  • Cessation counseling
  • Medication to help you quit
  • Nicotine replacements such as gum, lozenges, patches, inhalers, and nasal sprays

Keep in mind that grandfathered health plans, which are those that were in place before the Affordable Care Act was passed and haven’t changed much, are not required to give preventive care like help to quit smoking. Find out if you’re in a grandfathered plan by asking your insurance company or HR department. Also, short-term health plans don’t have to cover any preventative care including smoking cessation. 

EZ Can Help

No matter if you use tobacco products now, just quit, or are on your way to stopping, it is important to have health insurance. Many health problems can be caused by tobacco products, so it’s better to have insurance than to not have it and risk having medical bills pile up. If you smoke and want health insurance, but are worried about how much it will cost, EZ.Insure can help. We’ll look at the prices, compare plans in your area in minutes, and find you a plan that will save you money. Enter your zip code in the bar below to compare free quotes right away, or call 877-670-3557 to talk to a qualified agent.

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8 Million People Could Get A Health Insurance Rebate This Year

Health insurance companies are projected to owe rebates to almost 8 million people this year. Are you one of them? According to the Kaiser Family Foundation, 7.9 million policyholders will receive some money back from an estimated $2.7 billion in premium rebates. This year’s rebate for those with individual policies or who participated in small or large group plans is twice what it was last year, but it is unclear whether the amount will continue to rise.

many question marks forming a large one

Why The Rebates?

Insurance companies that sell individual or group policies are required by law to spend a certain percentage of the premiums they collect on healthcare costs, as opposed to on their own administrative costs.  This “medical loss ratio” is usually 80/20, meaning insurance companies are allowed to put only 20% of premiums paid by enrollees towards their own marketing, administration, and profits. The rest has to go towards medical costs and quality improvements. If insurance companies do not meet this standard, then they must give a rebate to their policyholders. 

How Much Will The Rebate Be?

Each year, the medical loss ratio rebate is calculated based on a three-year average of insurance companies’ financial data. The rebates this year are based on data collected from 2017, 2018, and 2019. Insurance companies who were not in compliance with the 80/20 rule during these years will either send a check to policyholders or deduct a rebate from premiums. The average rebate for 2019 was $208, depending on the state and the insurance company.

So will rebates remain the same for next year or will they be affected by the coronavirus pandemic? Right now, it’s unclear, because it’s unclear how the health crisis will end up affecting the price of insurance premiums.  According to Karen Pollitz, a senior fellow with the Kaiser Family Foundation, “Insurance companies aren’t having a bad year, profit-wise. While they’ve paid out for claims related to treatment of coronavirus patients, they’ve paid far less than projected on claims related to elective medical procedures.”

Pollitz suggested that early estimates by insurers have been all over the board as to how much monthly 2021 premiums will cost. So far, insurers have changed their cost-sharing structures in order to reduce the amount that policyholders will have to pay out-of-pocket. “The thought was that people who are struggling during the economic crisis would appreciate this relief and help some to maintain coverage they might not otherwise be able to afford,” Pollitz said.

caucasian woman's eyes staring at twenty dollar bills in her hand.

It is estimated that next year there will be an even bigger rebate due to the pandemic, but “if insurers do reduce their premiums now, then the medical loss ratio looks better,” meaning that there is still a chance that the rebate will be smaller next year. 

Why Do Health Insurance Premiums Go Up Every Year?

Health insurance is worth the cost. Paying your monthly premiums can mean the difference between having your medical emergencies or chronic conditions covered, or being hit with huge medical bills and possibly even bankruptcy. As with many things that are worth having, healthcare doesn’t come cheap, and almost every year health insurance companies raise insurance premiums and other rates. Multiple factors go into how insurance companies calculate your premiums, and there are multiple reasons that rate rise. 

How Premiums Are Calculated

different analytics with calculator and graphs and a hand holding a pen.
Insurance companies will first develop a profile of all their consumers to calculate costs.

To determine how much they will charge for premiums, insurance companies have to figure out how much it will cost them to cover their customers’ healthcare costs, plus how much it will cost them to run their business. Your premiums will go towards both of these costs. But while they generally know how much their administrative costs (such as employee salaries) will be, they need to calculate how much it will cost to pay for their customers’ healthcare needs. To do this, an insurance company will first develop a profile of all their consumers. Then they figure out how much each patient group will cost to cover, factoring in doctor visits, vaccines, and any future medical expenses. 

For example, insurance companies might group women in their late 50s and 60s together, and take into account their need for mammograms and yearly checkups with lab tests. They will also consider that older women might need medications for cholesterol or heart problems, might possibly need surgeries, or have accidents. They do these calculations for all patient groups. After all the calculations are complete, health insurance companies will multiply these costs by the number of patients that they are insuring in each profile group and estimate how much costs will be. 

Ultimately, your health insurance premiums will be calculated based on your profile group. Your insurance company will look at:

  • Your age– the older you are, the higher your premium.
  • If you or your spouse smokes– if you are a regular smoker, or were one within the last 12 months, an insurance company can increase your premium rate. Some companies charge a tobacco surcharge, which can be as high as 50%.caucasian dad kneeling down to tie his daughters cleat., who is in soccer uniform.
  • How many children you have to insure and their ages– health insurance companies take into consideration your children’s ages and account for things like stitches, falls, and sports injuries that they may need care for as they grow. 
  • Your location– the more health insurance companies there are competing for business in your area, the lower your premiums will be.

Why Premiums Go Up

When your insurance rates go up, inflation is usually the culprit. Recent rises, though, have been due to other factors. One of these factors is that, because of advances in medicine and technology, people are living longer now than in the past. Not only are there more people to cover, but these people may be older and more in need of medical care.

caucasian mans hand holding a prescription pill bottle pouring meds into his hand
People who receive treatment and live longer consume more healthcare dollars.

 

People who receive treatment and live longer consume more healthcare dollars, meaning that everyone else has to throw more money into the pot to help  insurance companies cover costs for older people. In addition, while the ACA’s rule that insurance companies cannot turn someone down due to pre-existing conditions was great for expanding coverage, it also meant that more people with ongoing health issues joined the insurance pool.

Recent rate raises are not only due to who is being covered, but also how insurance companies cover their costs. The government had been supplying subsidies to insurers to help reduce their costs and these subsidies are ending. Because insurance companies will have to make up the difference, they have been raising  premiums by 4-7%.

How You Can Lower Your Premiums

You should review your coverage every year during the health insurance open enrollment period. Calculate the cost of premiums, copays, and deductibles and see if you could save money with another plan. Also check for any tax incentives that can help you save money. 

If you are relatively healthy, and under 30 or in need of financial assistance, then a catastrophic plan might work best for you. These plans have high deductibles and low monthly premiums. If you need a more comprehensive plan, there might be one in your area that will provide the right coverage at a better price than you’re paying now.illustration of a business man standing in the middle of a scale with money sign on one side and clock on the other.

You could be saving hundreds of dollars just by switching to a different plan. When you’re ready  to compare all the health insurance options in your area, EZ.Insure is here to make the process quick and easy. We go over all available plans and direct you to a quality plan that will not only cover your needs, but also save you more money than your current plan.  Our trained licensed agents will do all the work for you, for free. No need to worry or stress yourself out researching and comparing. To get your free quotes, enter your zip code in the bar above, or to speak to an agent, call 888-350-1890.

Trump’s Plan for Health Insurance to Be Sold Across State Lines is Becoming Reality

While announcing the proposal of association health plans amongst small businesses, the Trump Administration is also aiming to facilitate health insurance policies across state lines. The rule will allow insurance companies to sell plans across state lines. The goal is to be able to provide plans and coverage that cost less.

Trump plans to allow insurance cpmanies to sell plans across state lines.
Trump plans to allow insurance cpmanies to sell plans across state lines.

Trump stated “I have private insurance companies coming and will sell private health care plans to people through associations. That’s going to be millions and millions of people. People have no idea how big that is. And by the way, and for that, we’ve ended across state lines. So we have competition.”

The issue that Trump is referring to is the state regulations that each state has. Each state differs in the requirements of what must be covered by insurance companies.

The association health plans would be considered under the federal law that allows large employers the freedom from state regulation. This way, these health plans can be sold across state lines.

Issues that lies with these plans are the fact that they can surpass the ACA’s requirement of providing the 10 essential benefits such as maternity care, mental health care, and emergency services to name a few. This allows the plans to offer fewer benefits, therefore costing much less. But the association plans cannot discriminate or overcharge individuals with pre-existing conditions.

These health plans can be structured across state lines, giving them the opportunity to market anywhere in the country. They may also set up to serve communities, or span several states. However, pricing is uncertain whether people in Manhattan will be priced the same as those in Texas.

“We are concerned that this could create or expand alternative, parallel markets for health coverage, which would lead to higher premiums for consumers, particularly those with pre-existing conditions,” according to a letter last month to state regulators, signed by America’s Health Insurance Plans and the Blue Cross Blue Shield Association. “Further, these actions destabilize the health insurance markets that guarantee access to comprehensive health coverage regardless of health status.”

Allowing this new rule will hopefully help Americans save money on health inurance.
Allowing this new rule will hopefully help Americans save money on health inurance, says Trump.

Pennsylvania’s acting insurance commissioner, Jessica Altman, voiced her opinion on the matter. “Generally speaking, these types of plans are exempt from state law and outside my jurisdiction,” Altman stated. “That means any issues that consumers have, I won’t be able to help them. More and more people would fall under the jurisdiction of the federal government, and I think state regulators would say we really do it better.”

The opportunity for health insurance plans to be sold across state lines will have an impact on the market. People will be able to purchase less comprehensive plans at a cheaper rate. But this can cause customers with extensive health issue or needs a hard time finding affordable plans. Healthier individuals will leave the marketplace for the skimpier non-regulated health plans, which will create a rise in premiums for those who need it- the sick.

Details on the rule must still be worked out by Congress and voted on, but if passed, it will change the health insurance market.