No Bank Account? No Problem - Premiums May Now Be Paid In Cash

In the past, the only way to pay for your health insurance premiums were through your employer, direct deposit, or sending a check to the insurance company. But now, the largest publicly run health plan in the nation, L.A. Care Covered, is allowing customers who do not have traditional bank accounts to pay their health insurance premiums with cash.

Individual Mandate

As a refresher, prior to Obamacare, not every American had access to health insurance. With the Affordable Care Act, now all people are required to carry health insurance. And through the Health Insurance Marketplaces, they have a place to go to purchase it, without having to go through an employer.

Premium Problems

Consumer advocates have long pushed for easier ways for the working poor to pay their insurance premiums. One in four Americans who were previously uninsured and eligible for federal insurance subsidies don’t have a bank account, relying instead on prepaid debit cards, money orders, and cash to pay their bills, according to a study by Jackson Hewitt Tax Service. Some low- and moderate-income households shun bank accounts because checking account and overdraft fees can wreak havoc on their precarious finances. So, paying a premium through bank draft or check simply wasn’t working for a large portion of Americans.

Cash Option

Last month, L.A. Care Covered, announced an insurance plan that rolled out the neighborhood cash payment system. It is offered to consumers who are eligible for government subsidies through the state’s health coverage exchange, Covered California. Members can pay their premiums at 1,953 stores in California, including all 7-Elevens, by scanning a barcode linked to their account. The payments post within 24 hours and the service is free to customers.

Laura Jaramillo of L.A. Care Covered stated, “We are very excited. We feel this new method of payment is going to make it extremely easy and convenient for people to pay their premiums”. She adds that the insurance company hopes a few thousand of the plans 17,000 covered California members will use the new payment option. It’s unclear how many members lack bank accounts, but about 40 percent mail in a money order, personal check, or cashier’s check, rather than paying with a credit card online. An additional number also pay with a prepaid debit card online.

Before the Affordable Care Act Marketplaces took effect last year, Obamacare administration officials ordered health plans to accommodate people who don’t have bank accounts by accepting checks, cashier’s checks, money orders and, however, not cash. This was decided because they thought it would be too complicated. Managers at Covered California also discussed requiring health plans to accept cash payments, but ultimately decided against it. With the implementation of the new payment option, people will no longer have to wait in line to make their payments. The health plan will be charged a fee equivalent to a payment for credit card transactions, therefore saving the participant from paying the fee.

Conclusion

With the ACA individual mandate, health insurance has now become easily accessible and affordable. Although there are no other known health plans for low-income residents to make their premium payments in cash, L.A. Care Covered is apparently paving the way. Now, participants who don’t have bank accounts will have the option to pay their premiums with ease and convenience at participating locations.