If you’re one of the millions of Americans who doesn’t have a bank account and doesn’t have health insurance, you no longer have to worry about being shut out of your state health exchange when you want to shop for insurance.
A change by the federal government means you’ll be able to use your prepaid debit card to pay your premiums.
Under the change, finalized Aug. 28, the U.S. Department of Health and Human Services (HHS) makes it easier for those without bank accounts to pay their health insurance bills by requiring insurers to accept such payment methods as money orders, cashier’s checks and prepaid debit cards.
Before the change, a study by experts from Jackson Hewitt Tax Service Inc. and Vanderbilt University had found 8.5 million people who would benefit from the Affordable Care Act would have trouble paying their premiums because insurers typically require the funds be automatically deducted from checking accounts, posing a major problem for those without accounts.
Under HHS’s new rule (scroll down to section 156.1240), you’ll be able to use your prepaid debit card, cashier’s check, money order, check or electronic funds transfer to pay your premiums.
The exchanges opened for enrollment Tuesday and the new policies go into effect Jan. 1, 2013.
“We’re very excited about the federal government banning discrimination against unbanked consumers. It’s a very positive step forward,” says Brian Haile, senior vice president for health policy at Jackson Hewitt.
With the new law, anyone who earns up to 400 percent of the federal poverty level will be eligible for tax credits to offset premium costs if they purchase their insurance through state health exchanges. But if you don’t have insurance, you’ll pay have to pay a penalty.
Haile says insurers have balked at accepting credit and debit cards because of the transaction costs. It’s a particularly sensitive subject because of the medical loss ratio, or MLR, which requires insurance companies that sell individual policies to spend at least 80 percent of the premiums they collect on medical care. The remainder can go toward administrative costs and profits. If they exceed the 80 percent limit, they must issue a rebate to their clients.
Haile says if transaction costs are the key issue barring the use of credit and debit cards, HHS should exclude them from the MLR calculation.
It’s one of those cases, Haile says, where the “nickels and dimes” of transaction costs shouldn’t outweigh the millions of dollars the feds will be spending getting consumers signed up on the exchanges.
Earlier post: No checking account, no health insurance?