Tuesday, June 18, 2013

How "Obama Care's" Is Trying To Make It Easier For Poor Americans To Pay For Their Health Insurance

Officials overseeing the implementation of the Affordable Care Act have proposed rules to require that insurance companies accept a variety of payment methods, including cashier’s checks, money orders, and re-loadable pre-paid debit cards. That’s expected to help millions of low-income Americans — many of whom don’t have access to credit cards and checking accounts — who will receive federal tax credits to purchase insurance through Obamacare’s statewide marketplaces.

The health law extends premium subsidies to American households making up to 400 percent of the Federal Poverty Level (FPL), or about $94,200 for a family of four.

But many of the people gaining insurance through Obamacare’s marketplaces will be relatively poor, since higher-paying jobs tend to come with employer-sponsored health coverage. That could wind up being a problem when they try to pay their monthly premium under the law, because a large number of lower-income people don’t have checking accounts or do business with banks, despite the increasingly electronic nature of money transfers.

CNNMoney reports that 10 million U.S. households don’t have bank accounts at all, and according to one study cited by Kaiser Health News, one in four Americans who will qualify for premium subsidies through the health law don’t have checking accounts or a credit card.

These Americans have to rely on the sort of alternative payment methods that federal officials are now encouraging. Critics may point out that some of these methods — particularly debit card transaction — carry transaction fees, and could lead insurers to pass the cost of those charges onto low-income Americans.

But as Kaiser Health News notes, another Obamacare consumer protection will shield consumers from potential price gouging by insurers: the so-called “80/20 rule” that requires individual and small group health plans to spend at least 80 percent of the premiums they charge Americans on actual health care, rather than administrative overhead or profit. Card transaction fees are considered to be administrative, meaning that insurers would have to include those costs as part of their 20 percent overhead limit.

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