Taxes are due April 17, and according to a new report, many Americans will put their refunds to pay down healthcare costs.
Out-of-pocket healthcare spending jumps 60% during the first week after tax refund payments are sent out, according to a report from JP Morgan Chase Institute. Out-of-pocket spending remains 20% higher on average during the next 76 days as more Americans file their taxes.
The report looked at 1.2 million American households in different income and demographic groups that received tax refunds in 2016, and found the 60% increase is linked primarily to people that had been putting off payments until they received their refund. Researchers found it to be a common approach among younger people, women and people with lower income.
However, scheduling healthcare payments around tax refunds every spring could jeopardize Americans’ financial health, Diana Farrell, president and CEO of JPMorgan Chase Institute, wrote in CNN Money. “It also poses problems for Americans' physical health, because those who rely on this cash infusion to afford health care are likely to delay care,” she warns.
One possible solution? Periodic refund payments that would disperse returns throughout the year to prevent consumers from postponing dental visits, hospital visits and in-person doctor appointments until spring. Although analysts acknowledged this isn't a surefire solution, additional flexibility could prevent consumers from putting off necessary care.
Meanwhile, patients’ out-of-pocket spending continues to grow as they take on more responsibility for the cost of their medical care. Average out-of-pocket costs rose 11% from $1,630 in the fourth quarter of 2016 to $1,813 in the fourth quarter of 2017, according to a recent TransUnion Healthcare analysis. At the same time, more Americans fear paying for their medical bills than becoming seriously ill.
JPMorgan is part of new healthcare venture announced with Amazon and Berkshire Hathaway. Earlier this month, JPMorgan CEO Jamie Dimon addressed some of the healthcare industry's biggest pain points in a letter to shareholders but said it could be years before the three companies make any progress on solving the issues.