If an insurer tries to charge more, "the submission of the (insurer) will be rejected by the system," it added.
Starting in 2014, the law requires insurance companies to accept all applicants regardless of pre-existing medical problems. But it also allows them to charge smokers up to 50 percent higher premiums — a way for insurers to ward off bad risks.
For an older smoker, the cost of the full penalty could be prohibitive.
Premiums for a standard "silver" insurance plan would be about $9,000 a year for a 64-year-old non-smoker, according to the online Kaiser Health Reform Subsidy Calculator. That's before any tax credits, available on a sliding scale based on income.
For a smoker of the same age, the full 50 percent penalty would add more than $4,500 to the cost of the policy, bringing it to nearly $13,600. And tax credits can't be used to offset the penalty.
The underlying reason for the glitch is another provision in the health care law that says insurers can't charge older customers more than three times what they charge the youngest adults in the pool. The government's computer system has been unable to accommodate the two. So younger smokers and older smokers must be charged the same penalty, or the system will kick it out.
That's not what insurers had expected. Before the glitch popped up, experts said the companies would probably charge lower penalties for younger smokers, and higher penalties for older ones.
"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," said Larry Levitt, an insurance market expert with the nonpartisan Kaiser Family Foundation. "A 60-year-old is another story."
The administration is suggesting that insurers limit the penalties across all age groups. The HHS guidance document used the example of a 20 percent penalty.