WASHINGTON (AP) — Some smokers trying to get coverage next year under the Patient Protection and Affordable Care Act (PPACA) may get a break from tobacco-use penalties that could have made their premiums unaffordable.
The Obama administration — in yet another health care overhaul delay — has quietly notified insurers that a computer system glitch will limit penalties that the law says the companies may charge smokers. A fix will take at least a year to put in place.
Older smokers are more likely to benefit from the glitch, experts say. But depending on how insurers respond to it, it’s also possible that younger smokers could wind up facing higher penalties than they otherwise would have.
Some see an emerging pattern of last-minute switches and delays as the administration scrambles to prepare the Oct. 1 launch of new exchanges, or health insurance supermarkets. People who don’t have coverage on the job will be able to shop for private insurance, with tax credits to help pay premiums. Small businesses will have their own insurance markets.
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Last week, the White House unexpectedly announced a one-year postponement of a major provision in the law that requires larger employers to offer coverage or face fines. Officials cited the complexity of the requirement as well as a desire to address complaints from employers.
“This was an administration that was telling us everything was under control,” health care industry consultant Robert Laszewski said. “Everything was going to be fine. Suddenly this kind of stuff is cropping up every few days.”
A June 28 U.S. Department of Health and Human Services (HHS) document couched the smokers’ glitch in technical language:
“Because of a system limitation … the system currently cannot process a premium for a 65-year-old smoker that is … more than three times the premium of a 21-year-old smoker,” the industry guidance said.
If an insurer tries to charge more, “the submission of the (insurer) will be rejected by the system,” it added.
Starting in 2014, the law requires insurance companies to accept all applicants regardless of pre-existing medical problems. But it also allows them to charge smokers up to 50 percent higher premiums — a way for insurers to ward off bad risks.
For an older smoker, the cost of the full penalty could be prohibitive.
Premiums for a standard “silver” insurance plan would be about $9,000 a year for a 64-year-old non-smoker, according to the online Kaiser Health Reform Subsidy Calculator. That’s before any tax credits, available on a sliding scale based on income.