Filing Taxes Early, Getting Healthcare Late: Insights from 1.2 Million Households

JPMorgan Chase &Co Institute, April 2018

13 Pages Posted: 28 Jun 2018

See all articles by Diana Farrell

Diana Farrell

JP Morgan Chase & Co. - JP Morgan Chase Institute

Fiona Greig

JP Morgan Chase & Co. - JP Morgan Chase Institute

Amar Hamoudi

JP Morgan Chase & Co.

Date Written: April 10, 2018

Abstract

For a large majority of American households, tax season brings one of the most significant positive cash flow events of the year in the form of tax refunds. Leveraging data on 1.2 million accounts receiving tax refunds in 2016, we investigate variation in the timing of tax filing across socioeconomic and demographic groups, and variation in the impact of the tax refund on out-of-pocket healthcare spending. To our knowledge, this is the first analysis in 30 years to look at how the timing and size of tax refunds varies across a broad income distribution. We find that among tax filers who were owed refunds, lower-income and younger people filed earlier in the season. Even within an income or age group, those who were owed larger refunds tended to file earlier. Healthcare spending out of accounts held by earlier filers, younger people, women, and lower-income people increased by the largest proportion in response to the tax refund. Deferred care represented a larger fraction of deferred healthcare spending out of accounts held by earlier filers, women, and lower-income people. Cash flow dynamics affected the timing of out-of-pocket healthcare payments even among higher-income groups.Regardless of income, those who filed earlier in the season put a larger fraction of their refund toward deferred healthcare spending.

Keywords: healthcare spending, tax refunds, demographic heterogeneity

JEL Classification: H00, I12, D12

Suggested Citation

Farrell, Diana and Greig, Fiona and Hamoudi, Amar, Filing Taxes Early, Getting Healthcare Late: Insights from 1.2 Million Households (April 10, 2018). JPMorgan Chase &Co Institute, April 2018. Available at SSRN: https://ssrn.com/abstract=3162422

Diana Farrell

JP Morgan Chase & Co. - JP Morgan Chase Institute ( email )

New York, NY
United States

Fiona Greig (Contact Author)

JP Morgan Chase & Co. - JP Morgan Chase Institute ( email )

New York, NY
United States

Amar Hamoudi

JP Morgan Chase & Co. ( email )

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