The most important day on the open enrollment calendar is probably one of the least known. It’s nowhere featured on healthcare.gov, and precious few HHS officials are likely aware of its significance. But we thought that we’d share the date with you, along with an explanation of why it is so critical.
The date may be surprising: it’s January 31, 2014. And it’s not because this happens to be the 149th anniversary of the Congressional passage of the 13th Amendment, or even because it’s the birthday shared by Jackie Robinson and Justin Timberlake. Rather, January 31, 2014 is auspicious because on this date the IRS will begin processing tax returns* and distributing over $320 billion (billion with a B!) in federal tax refunds (with state refunds putting billions more in consumer pockets).** That’s a big deal for most American families since the federal refunds alone average about $3,000 – and the IRS pay refunds to about four out of every five taxpayers.***
So why exactly is the January 31, 2014 date so significant to the ACA? For starters, it represents the largest injection of cash flow during the year for most consumers, in large part ending the financial hangover from the holiday period. This new-found liquidity presents the opportunity to sell qualified health plans to persons when they actually have the money to make the purchase.**** Put simply, these refunds ensure that the insurance marketplaces are no longer competing with Christmas spending.
The fact that this date is not foremost on the mind of anyone at HHS may not even matter. Jackson Hewitt has already started helping customers figure out the ACA. With just a few extra minutes after the tax interview, our “ACA Accelerator” can tell customers what ACA programs they likely qualify for and fill out the paperwork for them! In fact, we provided ACA assistance to our first customers when we opened our doors this morning to start returns for early filers. We’re off to a great start!
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* Internal Revenue Service, “2014 Tax Season to Open Jan. 31; e-file and Free File Can Speed Refunds,” December 18, 2013, available at http://www.irs.gov/uac/Newsroom/2014-Tax-Season-to-Open-Jan.-31;-efile-and-Free-File-Can-Speed-Refunds, accessed January 2, 2014.
** 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 November 13, 2013.
*** Internal Revenue Service, “2012 End-of-year Filing Season Statistics,” available online at http://www.irs.gov/uac/2012-Filing-Season-Statistics, accessed January 2, 2014.
**** Indeed, the fraction of Americans getting refunds is even higher among taxpayers with adjusted gross incomes between $15,000 and $50,000, which is a part of the population that is substantially (two or three times!) more likely to be uninsured. See second note above and U.S. Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2012, Washington, DC: September 2013, available at http://www.census.gov/prod/2013pubs/p60-245.pdf, accessed January 2, 2014 (reporting that in 2012 “…21.4 percent of people in households with income ranging from $25,000 to $49,999 were uninsured; 15.0 percent of people in households with income ranging from $50,000 to $74,999 were uninsured; and 7.9 percent of people in households with income of $75,000 or more were uninsured.”).
Senior Vice President for Health Policy
Jackson Hewitt Tax Service Inc.
Cell: (615) 761-6929