If you’re like many Americans, you’re waiting for your tax refund to arrive before taking care of health-care expenses.
completely new research by the J.P. Morgan Chase Institute found that will health-care spending spikes by 60 percent from the week after individuals receive their tax refunds. as well as those higher payouts last for about 75 days following the receipt of the refund, the think tank found.
Families who have less cash available were more likely to raise their health-care spending after their refund. Account holders with less than $536 in their checking accounts increased health spending by a whopping 220 percent post-refund. Those with more than $3,500 in their checking accounts increased their health outlay by 11 percent.
The payments were measured through immediate payment methods including debit cards or electronic payments. Credit card use for health expenses did not change, the research found.
“People are in effect waiting just for This particular tax refund to come, then seeking care,” said Diana Farrell, president as well as CEO of the J.P. Morgan Chase Institute.
The refunds prompted individuals to either visit dentists’ or doctors’ offices, or to pay outstanding hospital bills, according to the research.
“We know the dynamics of health-care problems is actually they don’t age well,” Farrell said. “If you’re waiting to seek care, you’re not getting care when you need the idea.”
The research is actually evidence of the financial volatility Americans live with day to day, according to Farrell, with their income as well as spending going up as well as down all the time.
The data did not include individuals who hold health savings accounts or flexible spending accounts, which are tax advantaged ways to save for these costs in advance.
Individuals can take steps to prepare for these expenses in advance, according to Steve Auerbach, CEO of Alegeus, a consumer directed health-care technology company.
First, Auerbach recommends taking advantage of health savings accounts if they are offered by your employer. You must have a qualified high-deductible health plan in order to have a health savings account.
The advantages of HSAs is actually that will they are triple-tax free: The money is actually invested pretax, as well as there are no taxes on the interest or when the money is actually taken out for eligible medical expenses. Because you are not required to take the money out as well as you can take the idea with you if you leave your employer, the idea is actually also considered a potential retirement savings vehicle.