The Affordable Care Act’s loophole for smokers (cough, cough!)

A woman disposes a cigarette in Los Angeles, California, May 31, 2012.
A woman disposes a cigarette in Los Angeles, California, May 31, 2012.
Jonathan Alcorn/Reuters

Smokers hoping to take advantage of President Obama’s new healthcare legislation may see lower premiums for at least a year, thanks to a computer glitch.

The error arose when implementing two provisions: one which prohibits insurance companies from charging older customers more than three times what they charge their youngest adults in the same insurance pool and another that would allow insurance providers to charge up to 50% more in their premiums for smokers. Both provisions could not be achieved in the same system. Instead, both young and old smokers will be charged the same penalty.

By 2014, the legislation will require insurance companies to take in any customer, regardless of pre-existing conditions—smokers included. Smokers will be exempt from tax credits that help with healthcare costs for non-smokers.

However, smokers seeking health insurance after the glitch is fixed may be charged up to 50% higher premiums, thus keeping high-risk and older applicants away. With the glitch, a younger smoker may be charged as high a penalty as an older smoker. Without the glitch, premiums for older smokers would reach unreasonable costs.

The temporarily capped premium is most likely to benefit older smokers, but could possibly leave younger smokers coughing up more cash.

A June 28 Health and Human Services Department document obtained by the Associated Press gave the technical details of the glitch:

“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.”

If an insurer tries to charge more, “the submission of the (insurer) will be rejected by the system,” it added.

There have been multiple last-minute changes to the healthcare legislation since it started going into effect last October. Most recently, the administration eased requirements on those seeking government aid through Obamacare, and delayed implementation of the rule mandating health insurance for companies’ employees for one year.

The Affordable Care Act's loophole for smokers (cough, cough!)