May 8, 2014 -- Under the Affordable Care Act, insurance companies can charge smokers and other tobacco users up to 50 percent more than non-smokers for a health insurance policy. But where do e-smokers fit in?
E-cigarettes are battery-operated nicotine inhalers that consist of a rechargeable lithium battery, a cartridge called a cartomizer and an LED that lights up during each puff. Although they contain no tobacco, the U.S. Food and Drug Administration plans on regulating them like cigarettes and cigars. This, it turns out, is complicating things for insurance companies.
While the ACA allows insurance companies to charge higher premiums to smokers and other tobacco users, the definition of a “smoker” is unclear under the law.
One way insurance companies could deal with e-cigarettes is to lump them in with tobacco products – a move that would subject so-called vapers to the same higher premiums as cigarette smokers. The companies could also swing the other way and decide to cover the cost of e-cigarettes as a means to help people quit smoking, despite a lack of evidence that the devices work as well as a patch. Insurers could also choose to ignore e-cigs altogether.
”The Affordable Care Act does not specify e-cigarette use for purposes of cessation coverage or tobacco surcharge application,” the American Cancer Society said in a statement to ABC News. “The lack of clarity may allow health plans to try to add the surcharge for e-cigarettes.”
If and when the FDA regulation of e-cigarettes goes into effect, insurance companies could change any of their current policies to reflect the agency’s direction. In the meantime, most companies claim they have too little experience with the devices to have a position, according to an informal poll by the National Association of Health Underwriters.
Carrie McLean, director of customer care for the online health insurance brokerage eHealth, said some insurers are telling their agents to add a smoking surcharge for those who vape.
“If a consumer indicates they use e-cigarettes, the carriers are expecting them to be uprated just as if they are a smoker,” she said, noting that consumers aren’t actually asked about the type of tobacco products they use during the health insurance application process – just whether they use them at all.
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America’s Health Insurance Plans, an association which represents most of the country’s large health insurance companies, recommends that agents ask about regular tobacco use in the last six months and the most recent use. However, if a consumer were to ask for clarification about whether or not e-cigarettes count as tobacco use, then an agent is obliged to add the surcharge, McLean said.
“The problem arises because most people fill out their applications online and, as of now, most applications don’t ask specifically about e-cigarettes,” McLean said. “Consumers are left to decide on their own whether or not they consider themselves a tobacco user.”
It’s an important question to settle, as the price differential can be significant.
For example, a plan for a 40-year-old non-smoker with a $35,000 income that costs $3,857 a year minus a $532 tax credit would rise to $5,254 for someone labeled a smoker, according to the Kaiser Family Foundation's exchange subsidy calculator. In some cases, the rate increase might even be larger than the 50 percent increase the ACA allows because government tax credits only apply to the base premium and not the tobacco surcharge.
Not surprisingly, e-cigarette advocates are fired up about vaping being likened to smoking by insurance companies. Cynthia Cabrera, executive director of the e-cigarette industry organization Smoke Free Alternatives Trade Association, said that e-cigarettes and other vaping products are a healthier lifestyle choice than combustible tobacco cigarettes, and argued that it seems inconsistent to apply the same higher insurance rates to vapers.
“The SFATA does not agree with any policy that positions users of electronic cigarettes and other vapor products in the same category as smokers,” she said. “These products do not emit smoke and do not contain tobacco, tar or any of the many carcinogens known to exist in combustible cigarettes.”
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But the phenomenon of vaping is so new that experts say there’s insufficient science to determine whether e-cigarettes really are a healthier alternative to traditional tobacco products.
Related: FDA Seeks to Regulate Vaping
Dr. Ravi Ram, the chief medical officer for Blue Shield of Northeastern New York, said that although New York has chosen to eliminate rate increases for e-smokers, he suspects most plans would place e-cigarettes on par with cigarettes in terms of their health risk.
“Until you have some long term data and some actuarial differences to health outcomes such as lung cancer, emphysema, heart disease and other conditions which are significantly impacted by smoking, and likely to be impacted by e-cigarettes as well, you have to rate them the same,” he said.
So what do you think? Should vapers be treated the same as smokers by insurance companies? Or do you think e-cigarettes should be considered smoking cessation devices? Sound off in the comments section below.