Obamacare aims to help low-income families buy health insurance. Given that 10 million U.S. households don’t have bank accounts, that’s posed a tricky question for the government: How does it get people to buy even affordable coverage if they have no way to pay for it? After all, you can’t exactly walk over to the insurance store with a wad of cash each month for your premium—even if insurers are going retail.
The White House’s solution: prepaid debit cards. Insurance companies that sell policies through the state exchanges opening in October will be required to accept prepaid plastic, along with checks, money orders, and bank wire transfers, according to new federal rules released yesterday.
Consumer advocates sometimes criticize prepaid debit cards when companies use them to pay workers because they can carry high fees and confusing rules. But since the cards are already widely used, making insurers accept them as payment makes sense for people who don’t have checking accounts. The new rules won’t require insurers to accept automatic monthly transfers from prepaid debit cards, as the Wall Street Journal reports, so anyone using the method will have to remember to make a new payment each month or risk a coverage lapse.
People who earn below a certain threshold—about $94,000 for a family of four—can get federal subsidies to buy health plans through the insurance exchanges under the Affordable Care Act. As many as 27 percent of those eligible for subsidies might not have bank accounts, according to researchers at Vanderbilt University.
Accepting debit cards can be more costly for the insurance companies than other forms of payment—but that’s just part of the price of doing business in the exchanges. The insurance industry is getting millions of new customers, a law that requires people to buy its product or pay a fine, and federal help for those who can’t afford it on their own. Making it easier for them to pay for their policies seems like a small concession.