ACA snafu may mean lower premiums for some smokers

Here's a health reform snafu that many Americans will benefit from.

Older smokers are likely to pay less for health insurance in 2014 because of a computer system glitch that the Obama administration said would limit the penalties insurers could charge tobacco users under the ACA.

The Patient Protection and Affordable Care Act allows insurers to charge smokers 50% more than non-smokers. But it does not allow insurers to charge older enrollees premiums more than three times higher than young adults.

Here's what a June 28 HHS industry-guidance document now says about the glitch Associated Press. "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," it said. If an insurer tries to charge more, "the submission of the (insurer) will be rejected by the system.”

So younger smokers and older smokers must be charged the same penalty, or the system will reject it. Insurers had expected insurers to charge higher penalties for older smokers and lower ones for younger smokers because younger smokers generally don't carry the same disease burden.

It could take a year for to solve the glitch, which means some smokers will get the Christmas-in-July gift of lower premiums.

Many insurers planned on charging smokers higher premiums. It's unclear what insurance companies will do. A spokesman for America's Health Insurance Plans said insurers expect the administration to fix the problem eventually.

Under the ACA, smokers can avoid the tobacco penalty completely if they participate in a tobacco cessation program. But this is an easier way.

Follow Ashok Selvam on Twitter: @MH_aselvam