One of the promises of the health care reform laws that take effect starting in 2014 is that people can no longer be declined or charged more because of pre-existing health conditions. Even if you are morbidly obese, have diabetes, or are an alcoholic – you cannot be denied or charged more. The one group that can be charged a premium though, is smokers.
The law allows health insurers to charge smokers up to 50 percent more for their health insurance. This is on top of rate increases that are already expected to exceed 30 to 50 percent or more.
People who are covered under group plans can avoid the penalty by joining a smoking cessation program. But once again purchasers of individual health insurance are discriminated against in this area, and do not have this option.
Tax Credits and the Smoking Penalty
Tax credits will be available to help people that are making less than 400 percent of the federal poverty guidelines pay for their health insurance. But these tax credits can not be used to pay the smokers penalty.
It is expected that older smokers will be charged the highest smoking penalty. Because premiums will be going up substantially due to the mandates of the health care reform law, this could mean a smoking penalty of $5000 a year or more. Many smokers will probably find health insurance completely unaffordable starting in 2014.
Of course, quitting smoking is a great idea. If you have a Health Savings Account, you can withdraw money from that account tax-free to pay for smoking cessation counseling or classes. However, you cannot use the money to pay for over-the-counter medications like nicotine gum, without a prescription from your doctor.