We all know that smoking has a major effect on health insurance and on the premiums that you will pay for it. The issue is a lot more involved than is commonly assumed, and more important, it’s likely to only get worse in the future. As the weight of evidence on the effects of smoking on health continues to mount, premiums for smokers will get even higher.
How smoking affects your health and your premiums
Setting aside the high cost of health insurance for smokers for just a moment, let’s take a look at some of the reasons why they pay more. Smoking has been closely tied to a battery of serious illnesses, including:
- cancer (especially lung cancer)
- heart disease
- other respiratory illnesses and complications
There’s also evidence that smoking can contribute to osteoporosis and pregnancy complications in women.
When you consider the magnitude of these illnesses – and the higher mortality rates they carry – it’s easy to see why insurance companies charge smokers higher premiums.
You will pay more for health insurance – but how much more?
On average, smokers will typically pay 15-20% higher premiums than non-smokers with equivalent demographics and health conditions. If the monthly premium for a non-smoker is $500 per month, it will be upwards of $600 for a smoker.
The health insurance companies face a double-edged sword when it comes to insuring smokers. Not only will they typically pay more for health claims, but they also collect less in premium revenue since smokers have a higher mortality rate than non-smokers. Insurers must build both factors into a smoker’s rates in order to make the funding adequate to cover claims by the insured and a profit for the company at the same time.
Increased premiums for smokers aren’t a flat amount, since there are different levels of smokers. A current smoker will generally pay the highest premium. A previous smoker will pay lower rates than a current smoker, but more than someone who has never smoked. And even if you quit smoking, you will still pay a higher premium based on how long you were a smoker, and how long ago you quit.
What a smoker can do to help lower health insurance premiums
Even though you will pay more for health insurance as a smoker, you will generally still be able to get coverage. You do have options if you’d like to lower your premiums.
Look for smoker-friendly insurance companies. Believe it or not, the smoking population is large – more than 20% of US adults smoke. That is a substantial market for insurance companies, which is why they provide coverage despite the increased claims risk. But some companies are more aggressive in attracting the smoker market than others, and will charge lower premiums in order to capture a larger share of the market. Shop around and find out who the smoker-friendly insurance companies are and see if you can get a better deal.
Join a supervised smoking cessation program. Some employers and insurance companies offer smoking cessation programs that will lower your health insurance premiums. You will generally need to show that you have quit for at least two years before your premiums will fall. If you’re in an employer sponsored plan now – and not paying higher premiums for smoking – this is an excellent opportunity to participate in a cessation program just in case you may need to have a private health insurance plan in the future.
Bundle your health insurance with other policies. Even non-smoker-friendly insurance companies might cut you a break on your smoking habit if you bundle your health policy with homeowners, auto, life insurance, or business coverage. Think of it as a volume discount.
Will “Obamacare” change anything?
If you’re hoping that the unfolding Patient Protection and Affordable Care Act (PPACA) – also known as Obamacare – will solve the smoker’s health insurance premium dilemma, don’t count on it. In fact, the premiums might well be even higher than they are now.
Even though PPACA will prevent health insurance companies from rejecting an applicant for pre-existing conditions, or for increasing premiums to compensate for them, there are exceptions. Insurers will be able to increase premiums for age, family size, geographic location, and – you guessed it – smoking!
Insurance companies will have greater latitude to increase premiums for smoking than for any other factor. The law will allow them to charge as much as 50% more for smokers than for non-smokers.
If you add the cost of higher health insurance premiums to the ongoing cost of cigarettes – not to mention the direct healthcare costs along the way – smoking can be a lot more expensive than most smokers realize. Since the expense won’t get better with healthcare reform, that makes now an outstanding time to quit smoking.
It will eventually save you a lot of money, and it just might prolong your life.
Neal here. If you have specific questions on life insurance or face hurdles getting coverage - email me please. As an alternative, we could jump on the phone (888-613-4999) for a few minutes. Either way, I'm happy to do my best to point you in the right direction.