Americans May Be Using Their Tax Refunds for Healthcare Costs
Have American healthcare costs gotten so high that doctor’s appointments are considered a luxury purchase? New research from JPMorgan Chase suggests just that. According to the Deferred Care study, out-of-pocket healthcare spending increases 60% the week after consumers receive their tax refunds.
To further prove that Americans are spending their tax refunds on healthcare, the study showed an 83% increase in debit card spending. However, there was no change in credit card spending for healthcare before and after tax refunds. “This suggests that liquidity from the tax refund drove the change in healthcare spending,” the report stated. Consumers are using this money to pay for doctor’s visits, dentists appointments and paying off outstanding hospital bills.
This may be a case of unbalanced expectations vs. reality. At the end of last year, only 3% of Americans planned to pay off medical debt with their tax refunds. A much higher 20% said they would put money away in a rainy day fund, and 18% said they would pay off their credit card debts. Chase’s study reveals that despite lavish plans for tax refunds, many Americans are forced to use that money for basic necessities.
There is one other factor to consider. Many Americans switch to a new healthcare plan during the open enrollment period (November 1 to December 15). Those policies may not go into effect until the new year. Tax refunds start going out in mid-February, so the spike in healthcare spending could be from taxpayers taking advantage of their new, lower co-pays. In response to that, the pre-refund daily average stays fairly consistent in January. Thus the jump is most likely from refund itself, not coincidental timing.
If you plan to use your tax refund to pay for medical expenses, your doctor may fewer appointments available due to the influx in patients.