Last reviewed June 2026

How does tobacco use affect small-group premiums?

Short answer: Where allowed, insurers can charge tobacco users up to 50% more (a 1.5:1 ratio). Many states prohibit it, and where it’s permitted, a cessation program lets members avoid the surcharge.

Tobacco is one of the four factors the ACA lets insurers use to set premiums, with a maximum 1.5:1 surcharge. In practice its impact varies: several states ban it entirely, others allow the full surcharge, and the plan must offer a cessation program that removes it. For an employer, the surcharge (where it applies) raises the affected employee’s premium but not the rest of the group’s.

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