What happens if I disclosed that I smoked when I bought the policy, but now I’ve successfully quit?
The insurer is not required to lower your premium until you renew your policy the following year.
What happens if I take up smoking after I bought the policy?
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You would be subject to the tobacco surcharge when you renew your plan the following year.
I smoke but I’m trying to quit. What happens if I don’t disclose to an insurance company that I use tobacco?
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If you report inaccurate or false information about your tobacco use on an application, an insurer is allowed to retroactively impose the tobacco surcharge to the beginning of the plan year. However, the insurer is not allowed to cancel your coverage because of the false or incorrect information.
The tobacco surcharge makes my health insurance unaffordable so I can’t buy coverage. Even after taking into account the tax credit, my premium will cost more than 8.16 percent of my income. Will I owe a penalty?
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No. If the cost of health insurance, taking into account both your premium tax credit and the tobacco surcharge, exceeds 8.16 percent of your income in 2017, you will not be subject to the penalty for failure to obtain insurance that year.
My income is less than 400% of the FPL and I smoke. Will the tobacco surcharge to the premium be covered by my premium tax credit?
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No. A tobacco surcharge is not covered by the health insurance premium tax credits. The premium tax credit will reduce what you have to pay for the regular health insurance premium, but you will have to pay the entire additional tobacco surcharge. For example, if the regular premium for a policy is $200 per month and you qualify for a premium tax credit of $75 but you also use tobacco and so would be subject to a 50% tobacco use surcharge, you would have to pay $225 for that policy ($200 for the regular premium minus $75 for your premium tax credit plus $100 for the tobacco surcharge.)
What does it mean to “use tobacco?” I’m pretty sure my teenager has smoked at least a couple of times. Do I have to pay a higher rate because of her?
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“Tobacco use” means a person has used a tobacco product an average or four or more times per week for the past six months. A state can increase the number of times per week or reduce the “look-back” period to less than six months. Check with your state Marketplace to learn more about tobacco surcharges and how they work.
The surcharge on tobacco users can only be applied to an individual who can legally purchase a tobacco product in the state. Thus, the surcharge does not generally apply to a person under age 18.
Can I be charged higher premiums in the Marketplace if I smoke?
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In most states, yes. Generally, an insurer can charge as much as 50% more for a person who uses tobacco products. For example, if the premium for somebody your age (before any tax credits are applied) would otherwise be $200 per month, if you are a tobacco user your premium could be increased to $300 per month. States can prohibit insurers from applying a tobacco surcharge or further limit the tobacco penalty and some have done so. (For example, California, Massachusetts, Rhode Island, Vermont and the District of Columbia prohibit tobacco rating for their Marketplace plans.] Also, some insurers who do charge more for tobacco users are charging the less than maximum amount they can under the law. Check with your state Marketplace to learn more about tobacco surcharges and how they work.
If you qualify for premium tax credits to reduce the cost of Marketplace coverage, this tax credit amount will be based on the premium before the tobacco surcharge is applied, which means that a smoker must pay the full cost of the surcharge.
I enrolled in a Marketplace policy with premium tax credits in 2018, even though my employer offers health benefits, because the employer coverage was unaffordable (more than 9.56% of my income in 2018). Then mid-year I started a second part-time job. As a result my annual income will be higher than I originally estimated, and, at this higher income, the cost of enrolling in my job-based plan would be less than 9.56% of my income. Unfortunately, I can’t sign up for my employer plan until the next open season. What should I do? When I file my taxes will I be required to pay back my premium tax credits because I had access to affordable job-based coverage after all?
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First, you should report your income change to the Marketplace. The Marketplace will determine your new eligibility for premium tax credits, based on your higher income, and adjust the level of subsidy going forward. If you make this adjustment promptly, it’s likely you won’t receive any more advanced premium tax credit during the entire year than you’re eligible for based on your annual income.
As for the new “affordability” of your job-based coverage option, that won’t be taken into account when you file your taxes. As long as the Marketplace determined you were not eligible for affordable job-based coverage when you initially applied for Marketplace coverage and subsidies, that determination will hold for the remainder of the year. The IRS refers to this as a “safe harbor,” and won’t require you to go back and re-compute the affordability of your job-based coverage at year end when you file your taxes.
My spouse and I earn so little we are not required to file an income tax return. Do we have to file anyway to receive premium tax credits?
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Yes, even if you don’t earn enough to owe taxes, you must file a tax return in order to receive a premium tax credit.
How often during the year can I adjust my premium tax credit amount? What documentation is required to make an adjustment? How long after I request the adjustment will it take effect?
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There is no limit to the number of times a person may report income, family or insurance-eligibility changes to the Marketplace. Changes that are reported by enrollees will be verified by the Marketplace. Then the Marketplace will send you a notice (called a redetermination notice) showing your revised eligibility for premium tax credits and cost-sharing reductions. In addition, people can always ask the Marketplace to provide them with a monthly advance premium credit below the amount the Marketplace determines based on the household’s income if they want to minimize the chance of needing to owe money at the end of the year.
The adjustment will take effect by the first day of the month following the date of the redetermination notice. For example, if an enrollee reports a change in income on June 25 and the Marketplace verifies the change and sends a redetermination notice to the enrollee on July 3, the change will be implemented on August 1.