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July 9, 2013

Glitch may limit penalties for smokers in new health care law

WASHINGTON (AP) — Some smokers trying to get coverage next year under President Barack Obama's health care law may get a break from tobacco-use penalties that could have made their premiums unaffordable.

The Obama administration — in yet another health care overhaul delay — has quietly notified insurers that a computer system glitch will limit penalties that the law says the companies may charge smokers. A fix will take at least a year to put in place.

Older smokers are more likely to benefit from the glitch, experts say. But depending on how insurers respond to it, it's also possible that younger smokers could wind up facing higher penalties than they otherwise would have.

Some see an emerging pattern of last-minute switches and delays as the administration scrambles to prepare the Oct. 1 launch of new health insurance markets. People who don't have coverage on the job will be able to shop for private insurance, with tax credits to help pay premiums. Small businesses will have their own insurance markets.

Last week, the White House unexpectedly announced a one-year postponement of a major provision in the law that requires larger employers to offer coverage or face fines. Officials cited the complexity of the requirement as well as a desire to address complaints from employers.

"This was an administration that was telling us everything was under control," health care industry consultant Robert Laszewski said. "Everything was going to be fine. Suddenly this kind of stuff is cropping up every few days."

A June 28 Health and Human Services Department document couched the smokers' glitch in technical language:

"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," the industry guidance said.

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