Money Matters: A troubling connecting between taxes and health

April 12, 2019 11:00

Sponsored by NEFE

Monday, April 15 is the federal income tax filing deadline, as well as the deadline for many states.

So far, the IRS reports that it has received slightly fewer tax refunds than this time last year, which could be, in part, due to tax law changes affecting this year’s filing process.

The IRS also reports that the number of tax refunds, total amount and average refund (IRS reports did not include median refund data) are all down slightly.

Lower refunds could mean consequences for filers beyond their bank accounts: it could affect their health.

That’s because research shows that spending on health care jumps significantly after people receive refunds, up to 60% more in the first week after receiving a refund.

The research indicates that people put off going to the doctor until they receive their tax refunds, suggesting people have trouble paying their deductibles or are facing large out-of-pocket costs for receiving treatment.

They may not have the cash available to afford medical expenses until the tax refund arrives.

Early filers are most likely to spend their refunds on health-related expenses, which suggests that people rely on and expect refunds, plan to use the money for health expenses and file early to avoid further delaying treatment.

So how will the federal tax changes affect refunds and, in turn, health?

Talk to local medical practices. Do they anticipate an increase in appointments or procedures over the next few weeks? Have they already been busier since the tax filing season opened? Have they noticed changes from past years?

What can people do who need treatment but face high costs? Are there alternatives to help people be able to get treatment without waiting to have the cash boost of a refund?

Ask a financial planning professional about whether Health Savings Accounts or other programs can help people save for and access treatment.

Talk to your state policymakers about the trend and how state tax and health policies affect access to medical treatment.
 
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