In January of 2018, SmartAsset shared results of research they conducted, the findings of which indicated that the average tax refund varies quite a bit depending on the state of residence.
For instance, they found that Texas residents typically receive the highest return at roughly $3,133 and Maine residents generally receive the lowest at $2,302, with all of the other state’s average refund amounts falling somewhere in between.
While a tax refund is simply monies that individuals and families overpaid to the government in the prior year, some consider their annual refunds as more of a bonus. They think of it as an extra lump sum payment that isn’t budgeted toward day-to-day living expenses like mortgage payments and utilities, which means that they can use it any way they’d like. So, what do people tend to buy with it?
If you’re like some people, you may think that this additional, unbudgeted amount would be spent on new furniture, used as a down payment on a car, or put toward a vacation they’d been wanting to take for some time. However, one study found otherwise, and its results are good news for those who work within the healthcare system.
Tax refunds and healthcare spending
JP Morgan Chase did a recent analysis on tax refund spending patterns and one of their top findings was that “consumers immediately increased their total out-of-pocket healthcare spending by 60 percent in the week after receiving a tax refund.” Furthermore, this amount continued to stay elevated for the next couple of months, with consumers spending approximately 20 percent more on healthcare needs that aren’t typically covered by insurance during this timeframe.
When it comes to payment methods, this study found that debit card spending showed the highest spike, with an increase of 83 percent. Electronic payments went up as well (56 percent) and, because credit card spending remained relatively the same, JP Morgan indicated that it was likely the receipt of the tax refund monies that was responsible for this higher level of spending on health-related expenses.
This study also found that, while patients visited their healthcare providers more often after receiving this beginning-of-the-year payment, likely because they finally had the extra cash to do so, others used the monies to help clear up their outstanding medical debt. So, instead of using it to cover new services, they chose to use the refund to pay up what they already owed.
Putting knowledge into action
Based on this new information, there are a few things you can do to maximize chiropractic office profits during tax season. For instance, knowing that people tend to increase their healthcare spending after receiving their annual tax refunds makes the first few months of the year a great time to ramp up your marketing efforts.
According to the Internal Revenue Service (IRS), nine out of 10 refunds are issued within 21 days of filing. Since filing isn’t open until the end of January and ends around April 15 (usually), this means that most refunds will be received by taxpayers somewhere between the middle-to-end of February through the spring. That makes this a great time of year to remind people that you’re there to help them increase their overall wellness all year long. Plant the seed that this is a great time to look after their health.
It may also help to offer discounts on supplements, products, and ancillary services for patients who pay via cash, debit card, or electronic payment during this time frame since these are the methods they’re inclined to use most. Give them an extra “bang for their buck” by promoting reduced rates for the types of payments, encouraging them even more to use their refund monies to tend to their family’s healthcare needs.
Another way to maximize office profits based on these newly revealed spending trends is to take this time as an opportunity to remind your current patients of any monies that are still owed to your office. If their account has been delinquent for some time or is a relatively high amount, you may even decide to offer a payment plan if they pay it by a certain date, like by the end of April when most people would’ve received their lump sum payment anyway.
In order to maximize tax refund spending at your practice, it’s helpful to have the appropriate tools in place that will allow you to modify your retail and ancillary service costs as well as identify delinquent accounts in an efficient manner. Relying on paper ledgers or insufficient software systems may hinder your ability to capitalize on tax refund season due to their lack of accessible, sortable data. A complete EHR solution can give your practice the intelligence and flexibility needed to proactively serve your patients’ needs while maintaining a healthy revenue stream.
The fact that people are choosing to use their tax refunds to address their healthcare needs is good news for patients and doctors alike. Not only does it help maximize office collections and profits, it means that people are taking their health and wellness seriously, making tax season a time to celebrate versus a time to dread.