The Affordable Care Act & the Unbanked: Part 2

This is the second blog in a two part blog series on the Unbanked and the Uninsured.

In our first blog of this series we discussed the unique challenges facing unbanked households when they try to pay for health insurance.

An estimated 36% of currently uninsured households in our state have no checking or savings accounts and are effectively “unbanked.” The problem is that the vast majority of insurance companies require individuals to pay their monthly premiums via automatic withdrawal from a checking account. This means if you don’t have a checking account, you can’t get insurance.

In an effort to address this challenge, the Department of Health and Human Services released proposed rules that would require insurers to accept a menu of payment options, including paper checks, cashier’s checks, money orders, and prepaid debit cards.

In response to these proposed rules, IABG submitted a letter in partnership with 78 other organizations engaged with CFED’s Assets & Opportunity Network. The letter includes recommendations on how the Department and other state and federal agencies can ensure that a pathway to safe banking opportunities is a part of ACA implementation. The recommendations include:

• Deductions from Paychecks: Automatic withdrawals from payroll help facilitate on-time payment. Similar to retirement savings or social security deductions, payroll deductions for insurance purchased on the exchange will ensure regular on-time payments.
• Ability to Pay in Advance: If open enrollment in states across the country were aligned with tax time, consumers could pay for their premiums via their tax return. The Department of the Treasury should explore mechanisms for streamlining payments through resources consumers receive at tax time. Many Volunteer Income Tax Assistance (VITA) sites work with the unbanked population and can facilitate community outreach for this payment option.
• Use of Navigators: Navigators should be required to provide payment information to each consumer who is purchasing health insurance via the Marketplace. Navigators can be key ambassadors of this information. We recommend creating FAQs on payment options for this formerly uninsured population.
• Website Development: Each state will have either its own website or they will be referring people to the federal website to access the Marketplace. Payment information should be provided on the website and should be sent to consumers via email or traditional mail upon purchasing their insurance. Given that immigrants make up a significant percentage of the unbanked community, this information should be accessible in a variety of languages.

Pathway to Safe Banking

While we support efforts to ensure that the unbanked have access to health insurance through the marketplaces, we also strongly believe that DHS should use this as an opportunity to provide pathways to safe affordable banking. Being banked will facilitate on time payments which will ensure continuity of coverage and access to health care. While the alternative payments proposed by the Department are important to improve access to health care, they are costly and not a long term solution.  IABG will continue to work with healthcare advocates to implement changes that will create a pathway to banking.