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L.A Care Health Plan is filling a void in California for unbanked consumers who need to maintain mandated health insurance coverage but have no credit or debit account.
Almost everyone is now required to have health insurance, but for people who have limited or no access to a bank account, it can be hard to pay monthly premiums.
L.A Care Health Plan is filling a void in California for unbanked consumers who need to maintain mandated health insurance coverage but have no credit or debit account by becoming the first ACA health plan to offer cash payment option.
L.A. Care Health Plan is partnering with PayNearMe so that its L.A. Care Covered (LACC) plan members can take advantage of subsidies on the Covered California health insurance exchange and pay with cash at 683 convenient locations throughout Los Angeles County. Twenty-eight percent of Americans have little or no relationship with a bank, leaving them with limited options when paying for health insurance because most insurance carriers require payment through credit cards, check or ACH transfer.
Jaramillo“Approximately 40% of our LACC members mail in their payments-and a significant portion of them are using money orders,” says Laura Jaramillo, director of commercial and group plan operations, L.A. Care Health Plan. “We realized there is a segment of our membership that doesn’t have traditional bank accounts. These folks are considered ‘unbanked,’ which means they don’t have a credit card or checking account. Making a premium payment each month is more time-consuming for them as they have to make their payment by mailing a money order, cashier’s check or by using a pre-paid credit card.”
These payment options all have purchase or activation fees associated with them, thus adding cost to what may already be perceived by LACC enrollees as “unaffordable” health insurance, and complicating a marketplace consumer experience that may already seem overwhelming, according to Jaramillo.
“We wanted to make the payment process simple, convenient and secure for all members, whether they have a bank account or not, at no additional cost to the member,” she says.
The use of technology, non-exchange of personal information and the large and well-known network 7-Eleven stores through PayNearMe allows the plan to accomplish all these goals, according to Jaramillo. L.A. Care Covered plan members simply print or send their unique PayNearMe payment code to their smartphone, walk into a 7-Eleven, ACE Cash Express, Family Dollar or other participating store, and hand the code and cash to the cashier as if they are making a regular purchase.
There are nearly 700 participating locations in Los Angeles County, almost 2,000 sites in California and more than 17,000 stores across the country.
“We hope to simplify the payment process for not only our members who are unbanked, but for all our members who find it easy and convenient to stop at their local 7-Eleven to pay their monthly premium payment,” Jaramillo says. “The fact that they can do this from almost 700 locations, many of which are open 7 days per week, 24 hours a day, with a simple barcode has to make it easier for members to activate and maintain their health policy throughout the year. To that end, we also hope to increase our effectuation [activation] and retention rates in 2015.”
In 2013, the Department of Health and Human Services ruled that health plans must accept alternative forms of payment-such as paper checks, cashier's checks, money orders and pre-paid credit cards -which are common among low-income households.
“It didn’t require plans to accept cash payment because HHS did not want to discourage health plans from participating in the marketplaces, and a number of commercial plans had urged HHS to allow them set their own payment options,” Jaramillo says. “Nonetheless, as a non-profit, public health plan, our Board of Governors felt that providing a cash payment option for members who may not have other options, without incurring additional fees aligns with our Mission and organizational objectives.”
Jaramillo hopes that more health insurers will embrace this form of payment.
“We have already received a lot of positive feedback from consumer advocates and public officials about the addition of this payment option and we expect that they will encourage other Qualified Health Plans [QHP] to do the same,” she says. “The healthcare industry is very competitive, especially in California, and usually once a key player does something unique or different the others follow. The need is certainly there, and it is well documented. Now we are paving the way for other QHPs to follow.”