1 in 4 Americans Use Tax Returns for Medical Bills

The Internal Revenue Service (IRS) reports over 105 million Americans received a tax refund in 2023, equaling 334.861 billion. A new survey reveals many United States residents choose to use tax return money on medical bills.

The survey from Tebra found that more than a quarter of respondents used their tax returns for medical bills dealing with dental care, vision care, mental health services, and more. Also, Americans are using tax return money for elective procedures like lip filler.

Of the 1,100 survey respondents, 82% say tax refunds alleviate healthcare-related financial stress.

Even for Americans with health insurance, healthcare costs are high. A recent KFF study found that 47% of insured and 85% of uninsured Americans claim healthcare costs to be very or somewhat difficult to afford.

“The fact that individuals are using their tax returns to cover medical expenses suggests that healthcare costs in the US are high for many people,” says Hannah Workman, a project manager working on behalf of Tebra to Healthnews. “Even with insurance coverage, out-of-pocket expenses can be substantial, leading individuals to rely on other forms of income, like tax refunds, to pay these bills.”

Dental care is at the top as far as needs, with 44% of those planning to use tax refunds for medical bills relating to dental care. Following are vision care (25%), mental health services (21%), prescription medications (19%), and emergency medical expenses (17%).

Mental health services ranked ahead of all but dental and vision care. In 2021, the National Institutes of Health estimated that 57.8 million Americans have a mental illness. Workman notes it is not surprising to see mental health services high on the list due to the increased amount of attention on mental wellness since the COVID-19 pandemic.

“Even ranking among the top three healthcare needs suggests a positive shift in attitudes toward mental health with more individuals acknowledging its importance and seeking treatment," says Workman. "Its ranking also highlights the ongoing need for increased awareness and support for mental health services to ensure that individuals receive the care they need.”

Tebra’s survey did find some discrepancies among age generations using tax refunds for medical bills. Gen X respondents (34%) are the most likely to use tax refunds to pay off medical bills, while Gen Z respondents (18%) are the least likely to use tax refunds for medical bills.

As of March 8, the IRS has reported 43,020,000 tax refunds for the 2024 filing season. Workman says Tebra’s investigation provides insight into the “widespread financial strain” caused by healthcare expenses and how tax refunds assist in handling the burden.

Recognizing the significant role tax refunds play in managing healthcare costs highlights the importance of addressing healthcare affordability and accessibility issues. Implementing more flexible payment plans and better healthcare price transparency can help reduce the reliance on tax refunds and alleviate financial pressure on individuals and families.

Workman

Tax refunds for cosmetic procedures

Tebra’s survey also reports one in 10 respondents plan to use their tax returns on elective surgeries. The top three planned procedures include cosmetic dentistry (26%), facial fillers (25%), and LASIK eye surgery (22%).

Facial fillers like lip fillers have gained popularity via social media platforms. The #lipfiller hashtag has garnered over 6.7 billion views on TikTok. Workman says social media platforms play a big part in contributing to the trend in the growing popularity of beauty procedures.

“Social media likely plays a significant role in this trend. Platforms like Instagram, TikTok, and YouTube are filled with influencers and celebrities showcasing their cosmetic enhancements, creating a culture where such procedures are normalized and even celebrated,” Workman says. “The constant exposure to idealized images of beauty may contribute to individuals feeling pressure to invest in cosmetic treatments.”

The survey shows a dichotomy of priorities for Americans. For some, it's getting ahead of debt, for others, it's a desire to spend their extra cash on themselves. The average refunds for the 2024 year are approximately $1,700, according to the Internal Revenue Service, meaning it's just enough to get ahead or just enough to splurge.

Health vs. beauty standards are at the cornerstone of what Americans value, and it's up to each individual person to decide where they decide to cash out.


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