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Are smokers unable to afford insurance under the ACA?

Author: Louise Norris | Date Posted: December 9, 2025

Q. I've heard that under the ACA, smokers have to pay 50% more for health insurance – and that, even if they qualify for a tax credit, the subsidy doesn't cover the tobacco surcharge. Does this mean that, under the ACA, smokers can't afford health insurance?

A. The ACA's tobacco surcharge appears to make sense – particularly to non-smokers – because it helps to spread the increased healthcare costs of smokers across only the smoking population, instead of spreading it across the whole population. But because premium subsidies don't cover the surcharge, and because a great many smokers have limited income, the surcharge serves to impede access to health insurance for smokers in many states.¹ In turn, that means they don't gain access to smoking cessation programs offered by health insurance policies, and don't have access to healthcare when they need it most.

However, Medicaid and state-based regulations are improving access to healthcare for some tobacco users.

In the U.S., many adults who smoke are poor: Almost a third of people living below the poverty level are tobacco users, versus less than a quarter of those living above the poverty level.² Many more have income that doesn't exceed 138% of the poverty level, which is the upper income threshold for adult Medicaid eligibility under the ACA. The ACA's Medicaid expansion is optional, but 40 states and DC have expanded Medicaid, extending eligibility to adults with household income up to 138% of the poverty level. In most states, there is no premium for Medicaid. Some states have expanded Medicaid with a waiver that allows for small premiums for some enrollees, but these premiums do not include tobacco surcharges.

Which states prohibit or limit tobacco surcharges?

For private individual/family health insurance coverage, both through the exchange and outside the exchange, it is up to individual states to decide whether they will let insurers charge smokers more.

As of 2025, a dozen states and the District of Columbia had restricted or eliminated the tobacco surcharge.³ The most recent state to join that list is Virginia, albeit under legislation (SB1011 and HB1375) that only prohibits tobacco surcharges for 2024 and 2025. Virginia would have to enact additional legislation to extend this past the end of 2025.

Three states have set a maximum tobacco surcharge of less than 50%:

Arkansas: 20%
Colorado: 15%
Kentucky: 40%

Eight states and DC have banned tobacco surcharges in their entire individual market:

California
District of Columbia
Maine (surcharge reduced to 25% in 2023, and banned altogether starting in 2024)⁴
Massachusetts
New Jersey
New Mexico (new as of 2023; only for the individual market, but not small group)⁵
New York
Rhode Island
Vermont

In Washington, all carriers opted to stop using tobacco surcharges as of the 2026 plan year.⁶ This happened because state regulators told carriers that their plans would not be eligible for Cascade Care Savings (state-funded subsidies) if they continued to use tobacco surcharges.⁷ So while tobacco surcharges are not prohibited in Washington, regulators made it unattractive for carriers to use them.

Virginia banned tobacco surcharges in 2024 and 2025, but is allowing them again as of 2026. Here's how that happened: Lawmakers passed legislation in 2022 that would have banned tobacco surcharges as of 2023, but Gov. Youngkin vetoed the measures out of concerns that it would raise premiums for non-smokers and eliminate a potential incentive (the surcharge) that could encourage people to stop smoking. Youngkin had changed his perspective on the issue by 2023, however, and signed new legislation into law, prohibiting tobacco surcharges in 2024 and 2025⁸

Those bills have a sunset clause at the end of 2025, allowing tobacco surcharges to be in use again in 2026 in Virginia. Additional legislation was passed by lawmakers in 2025 that would have removed the sunset provision (and thus made the ban on tobacco surcharges permanent), but it was vetoed by Gov. Youngkin.⁹ As a result, at least some Virginia insurers included tobacco surcharges in their rates for 2026.¹⁰

The American Cancer Society and the American Lung Association, which are opposed to tobacco surcharges on health insurance, are working to persuade other states to ban it. The ACS explains: "We're anti-smoking, not anti-smoker."

How many Marketplace enrollees pay a tobacco surcharge?

As of the 2024 plan year, 221,310 HealthCare.gov enrollees were paying a tobacco surcharge, out of about 16 million enrollees.¹¹ That does not include people in states that run their own Marketplaces. But all of the states that have banned tobacco surcharges are also states that run their own Marketplaces, so tobacco surcharges across the state-run Marketplaces are less common than they are in states that use HealthCare.gov.

Even in states where tobacco surcharges are allowed, some insurers choose not to add the cost to enrollees' premiums, or choose to use a premium surcharge of less than 50%. So depending on the state and the plan that a person chooses, they may not have to pay a tobacco surcharge even if they're in a state that allows it.

Workers covered by employer-sponsored health insurance can generally avoid tobacco penalties by joining smoking cessation programs.¹²

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

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