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How Do Health Insurance Companies Know If You Smoke?

How Do Health Insurance Companies Know If You Smoke? | Very Good Coverage

As a smoker you might be paying higher premiums for health insurance, so it’s time you understand how companies know if you smoke and what that means for you.

In this article, you’ll find everything you need to know about how health insurance companies know if you smoke and what they do with that information. You’ll learn all about the harsh consequences of lying about whether or not you smoke, as well as what insurance companies can do to your premiums as a smoker. You’ll also learn about whether or not you can start saving on your insurance rates if you quit smoking.

Health insurance companies don’t typically screen to see if you’re a smoker and largely rely on your own assertions instead. But if you lie and they find out you’re a smoker, you can be in for serious consequences. If you do smoke, expect to pay up to 50% higher premiums.

The information in this article comes from health insurance companies themselves, various legal authorities, and our own experience in the health insurance field. So you can rest assured knowing you’re getting real info here — facts, not opinions!

How Do Health Insurance Companies Know if You Smoke?

It may seem a little strange to learn, but health insurance companies don’t typically actually screen you or run any tests to see if you’re a smoker. They will usually just ask you during the application process whether you smoke or not and go on from there. So it isn’t like when you’re signing up for health insurance, you’ll need to take some sort of test or they’ll actively monitor you to see if you’re a smoker.

When you’re signing up for health insurance, health insurance companies will typically ask you the same question. If you’ve smoked four or more times a week at any time in the last 6 months. If you say no, then you won’t be subject to any potential hikes in the rates you pay. If you answer yes to that question, then you’ll be noted as a smoker and will potentially have to pay a significant premium for your health insurance.

All that said, it seems like the easiest way to avoid paying a higher premium is just to say that you aren’t a smoker, right? Sure for the time being that might save you some money on your health insurance premiums, but in the end that will likely end up costing you much more. Let’s take a look at what happens if you lie about your smoking habits.

What Happens if You Lie to Your Insurance Company About Smoking?

As alluded to above, you never want to lie to your health insurance company about whether or not you actually smoke. Being labeled as a non-smoker will possibly lower your premiums when your insurance starts, but it could come back to haunt you later in life. The two biggest consequences for lying to your health insurance company about smoking are their refusal to cover your medical bills and the potential of being charged with insurance fraud.

Even if you tell your health insurance company that you are not a smoker, they will sift through your medical records if it ever comes time for them to cover any of your medical bills. So while you might have lied to them about your smoking habits, you probably haven’t lied to your doctor(s) your entire life about smoking as well. So as they are going through your medical records, they’ll likely see that your doctors have noted that you’re a smoker when you came to visit them last. This is when it could all start to unravel and go downhill.

Once they see that you are a smoker, the insurance company will be able to refuse to pay your medical bills based on a policy that you’ve voided. If you carefully read through the terms and conditions of your policy, there’s a good chance that somewhere in the fine print it says something about the policy being voided if fraudulent information is provided to them. So they can cite the fraudulent information and legally refuse to pay your bills, leaving you with a potentially huge medical bill that you weren’t prepared for.

Not only will you potentially have to cover big medical expenses out of pocket, but the insurance company can also charge you with insurance fraud. Healthcare insurance fraud is a crime in all fifty states and is also illegal under federal law, so it is no joke of a crime. You could potentially face serious prison time on top of having to pay fines and your medical bills based on how serious the insurance fraud is.

Those two consequences seem harsh, and they certainly are. But they’re also super easy to avoid. Just don’t lie to your insurance company! If you’re a smoker, just say you’re a smoker and see if there are any additional premiums that you have to pay.

Do Health Insurance Companies Charge Smokers Extra?

Insurance companies are businesses after all, and they’re always looking for ways to make more money whenever possible. With that in mind, they can (and do) charge extra premiums for smokers. The process of charging extra based on tobacco use is called tobacco rating.

What Does Tobacco Rating Mean?

While not all health insurance companies charge extra, the majority of them likely will. Health insurance companies use tobacco rating as a way to charge their clients up to 50% more on their insurance premiums. A 50% rate hike seems excessive, and it really is. The way some insurance companies see it and try to justify it to their clients is that this surcharge is an incentive for their clients to quit smoking, which will greatly benefit their health in the long term.

Insurance premiums in general are determined based on a few different factors. These include how old you are, where you live, what insurance plan you have, if you have any dependents (and how many), and finally, what your tobacco use is like. With all this information in mind, the health insurance companies work their magic and come up with how much to charge you for your insurance, and then how much extra to charge you as tobacco rating.

Is a Tobacco Rating Legal?

Legally, health insurance companies are allowed to charge smokers extra on their premiums just because they used tobacco products. So the short answer is yes, tobacco rating is legal. However, it is not legal in every state. As of 2021, there are 8 places in the United States where tobacco ratings are not allowed: California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island, Vermont, and Washington, D.C.

Other states like Arkansas, Colorado, and Kentucky allow tobacco rating but limit it to less than the 50% rating allowed in most places. So again, yes it is legal for insurance companies to use tobacco ratings, but not everywhere.

If I Stop Smoking Will My Insurance Rates Go Down?

Arguably the highlight of this whole article, the answer to this question is yes! If you’re a smoker and being charged extra due to the insurance company’s tobacco rating, you can start saving money if you quit smoking. If you’re able to quit smoking — back to the common definition of using tobacco four or more times per week in the last six months — you can renegotiate your premiums.

If you can honestly answer no to that question, they will be able to charge you as a non-smoker, which could save you some serious cash. Let’s look at a quick example of what you can save. You’re getting health insurance, and the base premium is $200 per month. As a smoker living in one of the 40 states that allow the max 50% surcharge, you will be paying $300 per month instead.

You decide that you want to get healthier and quit smoking. The added benefit of this is that six months later you can renew your health insurance as a non-smoker. At this point, you’ll go back to only paying $200 per month. This is a whopping $1,200 per year back in your pocket! And at the end of the day, who wouldn’t want a little more cash in their pocket?


Greg McKnight

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