The ACA’s rocky rollout may have lost a critical opportunity to enroll consumers when they have cash in their pockets. Beginning in November, many families begin to redirect their spending towards holiday purchases. Cash-strapped families simply wont be able to find extra money to pay new insurance premiums during the holiday period. Thus, the glitches with healthcare.gov have prevented many of these families from buying coverage during October in the pre-Holiday season, when these families could best afford to do so.
For the Administration to meet its enrollment goal of enrolling 7 million Americans, it must allow families to sign up when they have the cash to pay premiums. After the Holidays, the first time most families have available cash is when they receive their tax refund during the tax filing season. The refund amounts are considerable: for the 2011 tax year, the average federal refund for families with incomes between $15,000 and $50,000 exceeded $2,800.* Indeed, the federal tax refund represents the largest single paycheck that most American families receive during the year. And these are precisely the families that the ACA is intended to benefit (i.e., those between 100% and 400% of the federal poverty level).
The IRS’s announcement on Tuesday delaying the tax season adds an important (and perhaps overlooked) new wrinkle. Citing the effect of the government shutdown, the IRS said that it would delay the beginning of the tax filing season for perhaps 10 days to two weeks. Consequently, American families will not be able to get their refunds as early as they otherwise would which means that the liquidity injection from tax refunds will happen much later than the Administration thought when it initially set March 31st as the end of the ACAs initial open enrollment period.
Extending the open enrollment period through April 15, 2014 now may make sense. The federal government itself is the major supplier of liquidity to families during this period: the IRS issued roughly $36 billion in federal refunds between March 29, 2013 and April 19, 2013. And with 41.6 million Americans filing their returns during the last three weeks of the tax season,** the federal government may find no better opportunity to sell them insurance. Fortunately, HHS retained the discretion under its existing rules*** to declare a special enrollment period and allow these families to enroll between April 1-15, 2014. And under HHSs own rules, families who sign up either on March 31 or April 15 will have exactly the same effective date of coverage: May 1, 2014.****
Why do we care? As tax preparers, we regularly serve families who pay more than 7.5% of their income for health care each year — or who are unable to afford health insurance all together.***** For this reason, Jackson Hewitt has committed to providing free ACA assistance to families that we serve. While doing a familys taxes, we already collect 90% of the information that the family needs in order to apply for ACA programs. We have pledged to help customers with the remaining information needed — and to do all of the governmental paperwork to help families enroll, regardless of where the live or for which ACA program that they may qualify. And again, well do this all for free for our customers. As evidenced by this investment, we very much want these families to see a real benefit from the ACA. Particularly given the interest that Senator Shaheen (D-NH) and others have expressed in this issue, we wanted to provide the information above as the Administration and Congress consider this issue. For friends in the media, all statements above are on the record. Additionally, we will post a copy of this note at http://www.jacksonhewitt.com/Resource-Center/Affordable-Care-Act/. Please feel free to contact me at email@example.com or 615-761-6929 if I can be helpful in any way.
* Internal Revenue Service, Statistics of Income Division, July 2013, Table 3.3, available online at http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Income-Tax-Returns-Publication-1304-%28Complete-Report%29#_tbla, accessed October 21, 2013.
** IRS Tax Season Filing Statistics, 2013, available at http://www.irs.gov/uac/2013-and-Prior-Year-Filing-Season-Statistics, accessed October 21, 2013.
*** See 45 CFR 155.420(d)(9) (allowing individuals to enroll during a special enroll period if they demonstrate to the exchange that they meet other exceptional circumstances).
**** 45 CFR 155.410(c)(1)(ii).
***** For reference, the ACA changes the excess medical deduction for persons under age 65 from 7.5% to 10% of adjusted gross income beginning with the 2013 tax year. For more information, see http://www.irs.gov/Individuals/2013-changes-to-itemized-deduction-for-medical-expenses. (Were tax folks so the details matter!)
Senior Vice President for Health Policy
Jackson Hewitt Tax Service Inc.
Cell: (615) 761-6929