Personal Finance

Underbanked May Face More Difficulties Getting Health Insurance

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The Affordable Care Act passed in 2010 mandates that all Americans be covered by some sort of insurance plan. Unfortunately, though, numerous consumers might not be able to do so because of the ways in which many insurance companies require monthly premium payments be made.

Today, many insurers require that people who receive healthcare coverage through them pay for it either by check or through automatic withdrawals from a checking account, but that could leave millions of Americans with significant difficulties, according to a new study from Jackson Hewitt Tax Service. About 27 percent of all uninsured Americans under the age of 65 who would be entitled to some sort of federal tax credit to help them cover insurance costs simply do not have any bank accounts in their names.

These unbanked consumers could face considerable difficulties as a consequence, because the ACA mandates that all Americans have insurance or face fines if they don’t, the report said. In all, some 8 million people might be affected unless lawmakers or regulators introduce measures that allow consumers to pay by means other than checking accounts. Of that group, many would likely be minorities, as African Americans and Latinos are about 40 percent more likely than Caucasian Americans in their same income bracket to be unbanked. Further, millions of people who receive federal benefits on prepaid debit cards, including military veterans, would likewise be affected by these issues.

Interestingly, 11 of the 12 states with the largest unbanked consumer populations will have their exchanges run by the federal government, the report said. That may put federal lawmakers in a better position to address this issue specifically, though the window in which they may be able to do so effectively is likely closing. Enrollment in federally-run health insurance exchange marketplaces is slated to open Oct. 1.

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Unbanked consumers tend not to have these types of accounts specifically because of the potentially high cost involved with maintaining them. Since the financial reforms of a few years ago, many large banks have been introducing more fees for having checking and savings accounts, which can make it difficult for those on limited incomes to afford.

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