LOS ANGELES -- The largest publicly run health plan in the nation, L.A. Care, will allow customers who do not have traditional bank accounts to pay their health insurance premiums with cash at 7-Eleven convenience stores, reported Kaiser Health News.
Starting this week, customers of L.A. Care Covered, one of the health plans for sale on Covered California, the state's insurance marketplace, can pay monthly premiums in cash at more than 680 locations, including 7-Eleven and Family Dollar stores. At the register, customers scan a bar code sent to their smartphone and hand over their cash.
The payment posts to L.A. Care within 24 hours, and the service is free to customers.
"It's as quick as buying a Slurpee," Danny Shader, the founder and CEO of PayNearMe, the for-profit company that established the electronic cash transaction network, told the news agency.
L.A. Care, like most health insurers around the country, pays fees to Visa, MasterCard and banks to process debit and credit card transactions. Laura Jaramillo, director of commercial and group plan operations at L.A. Care, said the health plan negotiated a similar surcharge to PayNearMe for cash payments.
"It should not increase our administrative costs," Jaramillo told Kaiser. L.A. Care estimates that up to 25% of its marketplace customers mail in money orders each month. Now, members who don't have a bank account can pay in cash, said Jaramillo, "instead of sending us money orders."
L.A. Care is the first health plan to use the PayNearMe network, said the report.
In December, 7-Eleven joined PayNearMe in a partnership with the U.S. Department of Health & Human Services (HHS) to help reach financially underserved and other cash-preferring consumers and encourage them to sign up for health insurance coverage under the Affordable Care Act (ACA) or "Obamacare."
One in four Americans who were previously uninsured and eligible for federal insurance subsidies don't have a bank account, relying instead on prepaid debit cards, money orders and cash to pay bills, according to a study by Jackson Hewitt Tax Service.
After advocates for low-income consumers raised concerns to the Department of Health and Human Services over how so-called unbanked households would pay their monthly insurance premiums, the Obama administration ordered health plans to accept payment methods that didn't require a credit card or checking account.
Some low- and moderate-income households shun bank accounts because checking account and overdraft fees can wreak havoc on their precarious finances. These same households, however, rely heavily on cellphones--68% of unbanked households have mobile phones.
PayNearMe, Sunnyvale, Calif., is an electronic cash transaction network that enables consumers to pay rent and utility bills, repay loans, buy tickets, make online purchases and do much more with cash. Consumers can make payments on their own schedule and in their own neighborhood in less than a minute at one of more than 17,000 locations, including 7-Eleven and Family Dollar stores across the United States.
Dallas-based 7-Eleven Inc. operates, franchises or licenses nearly 10,500 7-Eleven convenience stores in North America. Globally, there are more than 55,400 7-Eleven c-stores in 16 countries. During 2013, 7-Eleven c-stores generated total worldwide sales close to $84.5 billion.
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