Americans shopping for health insurance under the Affordable Care Act next year might hit an unexpected obstacle: the lack of a bank account.
Millions of Americans are expected to qualify for tax subsidies under the health overhaul, which they can use to purchase coverage on new marketplaces. One quarter of those people are effectively "unbanked" and without a checking account, according to a new report from tax firm Jackson Hewitt.
With few regulations around what types of payment health insurers must accept - whether they will could require direct debit from a bank account or also allow credit cards - these Americans may run into trouble paying their monthly premiums.
"The reason this is such an issue is that insurers are increasingly saying that they will not accept debit or credit cards as an acceptable form of payment" study author Brian Haile says. "If insurers refuse to accept premium payments made by debit cards, you're going to exclude many uninsured Americans."
The Jackson Hewitt report, first reported by Kaiser Health News, focused on uninsured Americans between 100 and 400 percent of the poverty line, who are eligible to receive tax subsidies under the Affordable Care Act.
It found that, in this demographic, the ranks of the unbanked tend to be highest among states that also have high uninsured rates. In Florida, where 24 percent of the non-elderly lack insurance coverage, Jackson Hewitt estimates that 34 percent of those likely eligible for premium subsidies do not have a regular bank account.
The unbanked rate tends to be higher among minority groups. Thirty-three percent of African Americans in the demographic Jackson Hewitt studied did not have a checking account, compared with 23 percent of whites. Among Hispanics, that number stood at 32 percent.
A letter from the Department of Health and Human Services sent to health insurers on April 5, addressed the this issue. It said that insurance carriers must be "able to accept payment in ways that are non-discriminatory."
Aetna, one of the country's largest health plans, already accepts debit and credit card payments. It will continue to do so on the new health insurance exchanges.
"We accept credit and debit cards for Individual policies today and will have the same payment options for Individual exchange products," spokesman Matt Wiggin wrote in an e-mail.
Still, not all health insurers read that language as requiring them to accept every form of payment that a subscriber might come up with. One possible deterrent to accepting credit cards could be the administrative fee that comes along with a credit card transaction, which could slightly increase premium costs.
"I've not seen any specific guidance that says you have to be able to accept these types of payments," Ray Smithberger, Cigna's general manager of individual and family plans, says. "I have seen the wording around non-discrimination, but if you take that to an extreme, that means people could send cash payments in the mail. That would be a little messy."
Cigna plans to sell in five state health exchanges next year and has run focus groups that explore how subscribers may want to pay their monthly premiums. The health plan has experimented with debit cards, credit cards and even Western Union money orders. It has not yet made any determination on which sort of payments it will ultimately accept.
"We'll need to make some decisions," Smithberger says. "If we do go with money orders, and being able to accept alternative payments, there is some technology that we need to build."
It's difficult to know what type of payments most health insurance plans plan to accept on the new exchanges. America's Health Insurance Plans, which represents insurance carriers, has not collected data on the issue, according to a spokesman.
"They haven't said you have to take debit cards or a certain form of payment," says Judy Solomon, vice president for health policy at the Center for Budget Policy and Priorities. "They've said you can't be discriminatory. And it's hard to know how much of a problem this could be in terms of what insurers were planning to do."