Countdown to Coverage: Uninsured and Unbanked

By Laura Rosen and Lauren Stebbins

The October 1, 2013 opening day for Affordable Care Act Marketplaces is quickly approaching. While the new Health Insurance Marketplace is being established to reduce the numbers of uninsured, another effort is underway to ensure that unbanked individuals don’t face unnecessary barriers in getting health insurance.   Currently, insurance companies often require individuals to pay their monthly premiums via automatic withdrawal from a checking account. But if this current practice were required by insurers in the new Marketplace, it would potentially cut off access to ACA health benefits for millions of unbanked Americans. It would have been a particularly troubling issue in Texas, which has the second highest percentage – 12.8 percent – of unbanked households in the nation. An additional 27.2 percent of households (the fifth highest in the nation) are “underbanked,” meaning they may have a bank account but still use alternative financial services like check cashers and payday loans.

Until recently, the options for how the unbanked would participate in the Marketplace  were unclear.   However, on August 28 the Department of Health and Human Services issued a final rule requiring insurers to accept various forms of payment, including paper checks, cashier’s checks, money orders, EFT and general-purpose prepaid debit cards, so that families without checking accounts won’t lose the opportunity to purchase the insurance required by law.

Under the Affordable Care Act (ACA), over 2.5 million Texas residents are expected to qualify for tax subsidies that can be used to purchase insurance through the Marketplace.  However, 29 percent of uninsured households in Texas have no checking or savings accounts and are effectively “unbanked,” according to a report by the tax firm Jackson Hewitt.

These new ACA rules have resulted in insurers accepting a broader variety of payment options, and in the process shed new light on a primary cost of being unbanked – the exclusion of unbanked families from certain products and services.  Having a bank account is an essential on-ramp to other financial products that help families reach financial stability such as an emergency savings account.

Fortunately, programs in some Texas communities are helping the unbanked open bank accounts, including local Bank On campaigns and tax-time savings opportunities offered through some Volunteer Income Tax Assistance (VITA) programs.  Local Bank On campaigns, typically coordinated by local governments with “backbone” nonprofits, are public/private partnerships that reduce common barriers for individuals to get a bank account.  Four Texas communities – Dallas, Houston, Central Texas and the Brazos Valley – have Bank On campaigns.   Some VITA programs, including those participating in the OpportunityTexas Tax-Time Savings Project, also help families open savings accounts, encouraging families to save a portion of their tax refund into their newly opened account.

While all these programs are a great step to expanding access to the financial mainstream for these families, we can do more.  The potential enrollment of unbanked families into health plans presents an opportunity for insurers and groups promoting health insurance enrollment to also promote bank account enrollment through collaborative efforts with local Bank On and tax-time savings campaigns.

In addition, opportunity exists for VITA and other programs providing financial stability services to help families enroll in health plans through the new Marketplace – one local example of this is Foundation Communities’ Insure Central Texas program. Click here to learn more about Foundation Communities’ efforts!

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