L.A. Woman Uninsured After Paying With Credit

Sept. 22, 2011 — -- Health insurer Anthem Blue Cross, based in California, announced this year it no longer allows monthly automatic online bill payments, attracting complaints from long-time customers. And consumer finance watchers warn this may be one of the first of many cases of merchants reigning in credit card use.

Anthem Blue Cross initially announced it was charging $15 convenience fee on credit card payments in the spring, much to the dismay of policyholders accustomed to auto-paying with credit cards.

A spokesman said at the end of May the company first notified customers by mail of the surcharge but waived that fee indefinitely within a week. He said customers were informed they could no longer make auto-payments via credit, and calls were made to policyholders who were still paying premiums by recurring credit card each month reminding them of the restriction.

He said the outbound calls reminded policyholders of the other payment options, including automatic checking deduction, online bill payment, payments by mail, and one-time payments, with no fee until further notice, through customer service. Anthem now offers for free an automated telephone payment option to make a one-time credit card payment, according to the spokesman.

Ed Mierzwinski, consumer program director of the Public Interest Research Group, or PIRG, said Anthem did a "terrible" job informing customers of the change though credit card companies are "part of the problem."

"The fees they impose on companies that collect credit cards is very high," he said, saying a credit card company can charge 3 percent.

Though Mierzwinski said no consumer group would advocate for a merchant to surcharge customers for using a credit card. The Federal Reserve capped debit card fees for merchants at 21 cents for each transaction, after initially proposing a cap of 7 to 12 cents in December.

Lynda Gledhill, spokeswoman for the California attorney general's office, could not comment about Anthem but said California law prohibits private companies from requiring a credit card payment surcharge from customers, though they can offer discounts if paying with cash.

Beverly Harzog, credit card expert at Credit.com, said consumers should be aware if merchants limit or no longer accept credit card payments to try to decrease the transaction fees.

"When I see something like this, it's not long before I see similar situations," she said. "Accepting credit card payments is a little more expensive. Given how the economy has been, my guess is other companies may try to trim expenses."

Andrea Kreuzhage, a documentary filmmaker in Los Angeles, is an example of a customer caught out of the loop.

An Anthem customer since 1995, Kreuzhage, 48, said she has never missed a payment to her insurer, which is why she was shocked and "frightened" when she received a letter last week that she was no longer covered.

"This occurred either because Blue Cross did not receive your premium within 31 days of the premium due date, or because we did not receive sufficient funds to cover your premium," Kreuzhage said the letter stated.

Kreuzhage said she felt as though the company almost did not want her business because they did not inform her of a missed payment.

"Why didn't they alert me that my premium was not paid?" she said. "It's as though they decide one day they don't want me anymore. The burden is on me that they kindly take our money."

She said it took about six weeks for the company to notify her she was no longer covered, meanwhile receiving at least three pieces of company marketing through mail and email, that began "Dear Member..."

The filmmaker said she felt as though there was no where to turn for her story except for Los Angeles Times columnist David Lazarus, who began writing about her health insurance company months ago.

She said when she learned she did not have coverage for the past two months, she was relieved when the company said they could reinstate her if she paid for the two months via her checking account.

She said she faxed her checking information but did not receive a confirmation after she sent it. A company representative told her Anthem could refuse a payment and not inform her.

"I'm healthy, I have money to pay for insurance, and I'm never late," she said. "Everything is perfect, so why this situation? What if I did have claims during that two months? What would have happened to me?"

Kreuzhage said she has never filed an insurance claim, though she also has fire and earthquake insurance. She said it is "unconceivable conceptually to not have health insurance," to her because it is a public service in many places in Europe.

"I strongly believe this is a collective, communal way to protect ourselves and our neighbors," she said. "To me, this is in my DNA."