Technical Glitch provides older smokers savings under Obamacare
A technical glitch with the smokers’ penalty program that will determine premium amounts for individuals that smokes means many older smokers will get a premium reprieve, potentially saving them around $4,000- $5,000 a year on premiums.
According to the Associated Press; A June 28 report by the Department of Health and Human Services discovered the smokers’ glitch, It is expected to take up to a year for the administration to fix the glitch.
The Patient Protection and Affordable Care Act allows health plan providers to charge smokers up to a 50% higher premium on their coverage plan, however due to the technical glitch the system limits these penalties and will benefit older Americans who smoke.
“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 insurance company tries to charge a smoker higher premiums, “the submission of the (insurer) will be rejected by the system,” the guidance added.
As part of the guaranteed coverage provision all insurance providers are required to accept all applicants, regardless of their pre-existing condition, medical history, and lifestyle. For example a non-smoker in their sixties will pay about $9,000 a year for a standard “silver” insurance plan. The same smoker in their sixties could face up to 50 % penalty on their insurance premium. This would add $4,500 to their annual health insurance costs, bringing the total to nearly $13,600.
However the computer glitch prevents insurers from charging older customers more than three times what they charge the youngest. To allow the system to approve the insurance plans, a young smoker in their twenties and an old smoker in their sixties will be charged the same penalty until the glitch is resolved.
Health experts originally predicted that companies would charge young smokers lower penalties and older smokers’ higher penalties as an older smoker would cost more to insure
“Generally a 20-year-old who smokes probably doesn’t have much higher health costs than someone who doesn’t smoke in any given year,” said Larry Levitt, an insurance market expert with the nonpartisan Kaiser Family Foundation. “A 60-year-old is another story.”
Based on these finding The Department of Health and Human Services suggested a 20 % penalty for both older and younger smoker. This provides a savings of up 30% to older smokers who would have been forced to pay 50% percent.
A smoker in their sixties based on the same scenario described above with a 20 % insurance penalty could pay $10,900 a year, compared to $13,600 they would pay under a 50% penalty.
This discovery is followed by the unexpected announcement of a one-year delay of the provision that would mandate larger employers provide coverage for their workers or pay the employer mandate.