By Prachi Bhardwaj
April 5, 2019

American are using their tax refunds more and more for one expense they can’t afford to hold off on: Health care.

According to new research from financial think tank JPMorgan Chase Institute, people spend an average of 20% more on health care in the months after getting their refund and a staggering 60% more in the first week alone.

Most of it, the reports show, went towards “deferred care” or in-person payments at a doctor’s office — which means that people were delaying going to the doctor until they had their tax refunds in their bank accounts.

“What we saw was an immediate impulse response to the receipt of the tax refund. The day that the tax refund is received is on average the highest cash balance day of the year for the average family [and] the highest out-of-pocket expenditures on health care occur on that day,” said Amar Hamoudi, JPMorgan Senior Consumer Research Lead. “It testifies to the importance that cash flow is playing in health care expenditures.”

The JPMorgan reports analyzed JPMorgan and Chase bank accounts from 2015, 2016, and 2017, and showed that Americans put their high cash balance towards other things too, like credit card bills, cars, and travel.

Early filers tended to be lower income or younger Americans who seek out that cash flow bump as soon as its available. But the urgency wasn’t exclusive to these demographics: regardless of income or how much tax refund money was coming in, people who got their refund early were putting more of it towards their health.

The common denominator between Americans choosing to get their refund early, then, is more than just monetary — it’s necessity. One in four Americans skipped a medical treatment due to costs, according to a new West Health and Gallup study that looks at the relationship between personal finances and health care.

Of course, it’s important to note that changes in tax regulations mean that the refunds will be slightly different this year. As of March 15 of the 2019 tax season, the Internal Revenue Service (IRS) reported that it had refunded a total of $177 billion to taxpayers, at an average rate of $2,960 per refund — that’s about $60 different from the average refund at the same time in any recent year.

 

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