A computer glitch that limits the penalties insurers are allowed to charge could save older smokers about $4,500 a year on premiums under President Barack Obama’s Affordable Care Act.
A late June report from the Department of Health and Human Services noted the glitch, which could take Obama’s administration a year to fix, according to the Associated Press. Even though the law allows insurers to charge smokers up to 50 percent higher premiums, the glitch in the system limits the penalties and benefits older smokers.
Although older smokers are more likely to benefit from the glitch, it’s possible that younger smokers could higher penalties than they otherwise would have.
Some are seeing a pattern of last-minute switches and delays as the Obama administration tries to prepare for the October 1 launch of new health insurance markets for people who don’t have job-based insurance. Just last week, the White House announced a one-year postponement of a major provision in the law that requires larger employers to offer coverage or face fines.
The smokers’ glitch is “a temporary circumstance that in no way impacts our ability to open the marketplaces on Oct. 1,” Health and Human Services spokeswoman Joanne Peters said in a statement, according to The Daily Caller.
The reason for the glitch is a provision in the health care law that indicates insurers can’t charge older customers more than three times what they charge the youngest adults. The government’s computer system has been unable to accommodate the two.
Older and younger smokers can still be charged different penalties, but if the total of penalties and premiums is more than three times greater for older smokers, the system will reject it. Insurers were not expecting such limitations and before the glitch experts noted that companies would probably charge low penalties for young smokers and much higher ones for older smokers.
“Generally a 20-year-old who smokes probably doesn’t have much higher health costs than someone who doesn’t smoke in any given year,” Larry Levitt, an insurance market expert with the nonpartisan Kaiser Family Foundation, said. “A 60-year-old is another story."
It’s unclear at this time what insurance companies will do.