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July 22, 2013

The smoker dilemma for health insurance

(Continued)

What might this mean financially for a smoker?

The annual premium for a 40-year-old nonsmoker with a $35,000 income would be $3,857 for a typical plan that will be available on state exchanges, according to the Kaiser Family Foundation's exchange subsidy calculator. This person would be eligible for a $532 tax credit, reducing his payment to $3,325.

But if that individual smoked, his cost would increase substantially. He would get the same $532 tax credit, but the premium would be 50 percent higher, or $5,786, meaning he'd have to pay $5,254.

The toll from the surcharge, however, may be tempered, at least temporarily, for some smokers. Last week, the Obama administration announced that some technical problems would make it difficult to process some older smokers' premiums, and it told insurers not to charge older smokers more than three times what younger smokers pay, at least for now.

So how will insurers know if someone smokes?

"It's going to be an honor system, basically, with people acknowledging that they're a smoker," Woodruff says.

If an insurer finds out that someone hasn't told the truth, it can charge the policyholder for any surcharge amounts that should have been paid that year. But the insurer can't rescind the policy or deny the liar continued coverage, according to the final rule governing the issue.

— — —

This column is produced through a collaboration between The Post and Kaiser Health News. KHN, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy organization that is not affiliated with Kaiser Permanente.

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