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Another Kink in Health Care Law: How Will the ‘Unbanked’ Buy Insurance?

About 51 million U.S. adults don’t have traditional bank accounts (May 20)

When movie stars become “unbankable,” they’re no longer a slam dunk at the box office. When investments become “unbankable,” they’re relegated to the junk pile. For ordinary Americans deemed “unbankable” — those who don’t have a traditional checking or savings account — it can be hard simply to pay bills.

According to a report from the Kaiser Family Foundation, that is about to become a big problem for those who also lack health coverage — and for the health insurance companies trying to sell them coverage. After all, how do you sell a product to a customer who has no way to pay you?

One in five households in the U.S., or about 51 million adults, have only a tenuous relationship with a traditional bank, relying instead on check-cashing stores and money lenders, according to the Federal Deposit Insurance Corporation.

The Patient Protection and Affordable Care Act (PPACA), which requires most Americans to have health insurance starting in January, presents a particular problem for those households, the Kaiser report says, since most health plans accept a credit card for the first month’s premium payment and then require customers to pay monthly with a check or an electronic funds transfer from a checking account.

Those options won’t work for the so-called “unbankables” looking to purchase health coverage with federal subsidies through online insurance marketplaces, said Dan Schuyler, a director at Leavitt Partners, a firm that is advising private insurers and states on how to comply with the law. “You don’t want to take these millions of unbankable people through the entire enrollment process and then at the end of the line say, ‘Okay, the only way you can pay for your share of the premium is with a bank account number,’” he said.

Neither the PPACA nor any other federal health laws require health insurers to accept all forms of payment, including credit cards or the cash-loaded, pre-paid debit cards that people without bank accounts often rely on. Federal officials are wary of doing anything to discourage insurance companies from selling plans on the exchanges, say current and former state health officers who have pressed the U.S. Department of Health and Human Services for a ruling.

Federal health officials issued a letter in April stating that all health plans selling coverage in the federally run insurance marketplaces in 28 states will have to accept payments in ways that do not discriminate against their customers, but did not prescribe what those payments should be.

Source: Kaiser Health News; May 20, 2013.

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