Tax preparers could play a crucial role in determining whether the final month of the open enrollment period delivers a surge in signups through the state and federal exchanges
That's in part because three out of four uninsured individuals who qualify for subsidized healthcare coverage
—either through Medicaid or private health plans—file a federal tax return, according to a new study released by the Urban Institute and the Robert Wood Johnson Foundation (PDF)
. More than 90% do so among those who are younger than 35—the most sought-after demographic for insurers because of their relative health.
In addition, many low-income individuals who are eligible for insurance subsidies rely on tax preparers to help with their returns. That includes nearly two thirds of those who qualify for the earned income tax credit.
“This is by the far the most productive potential setting to find the eligible uninsured,” said Stan Dorn, a senior fellow at the Urban Institute and co-author of the study. “It's just an extraordinary opportunity.”
The connection also makes sense because the Patient Protection and Affordable Care Act
is inextricably entwined with the federal tax code. Income tax data is used to determine whether individuals qualify for Medicaid
or federal subsidies. And most people who fail to acquire coverage by the end of March will be subject to a tax penalty of either $95 or 1% of their income, whichever is greater.
“The Affordable Care Act's probably generated the most changes in the tax code in the last 20 years,” said Mark Ciaramitaro, vice president for health services at H&R Block.
That reality isn't lost on H&R Block and other national tax preparation services. Every H&R Block tax customer receives an assessment of whether they're likely to qualify for subsidized healthcare coverage, according to Ciaramitaro. If the customer is determined to likely be eligible for Medicaid, they're directed to the applicable state agency for assistance. For all others, H&R Block is partnering with GoHealth
—an online enrollment company—to provide individuals with information about potential coverage.
“We're trying to really be a trusted, nonbiased source of information that allows people to make informed decisions,” Ciaramitaro said.
H&R Block won't disclose how many people the company has helped sign up for coverage so far. It also won't reveal the details of its financial relationship with GoHealth.
Jackson Hewitt is also promising to provide customers
with reliable information about subsidized coverage. The company points out that for many low-income individuals, particularly those that qualify for the earned income tax credit, the largest single check they'll receive all year is their federal tax refund.
The state and federal exchanges have seemingly been less active in seeking to take advantage of this potential outreach opportunity, according to Dorn.
The District of Columbia's exchange is working closely with tax preparers to sign people up for coverage. The exchange has outreach workers at 11 different tax preparation sites, six days a week, according to Linda Wharton Boyd, director of external affairs for DC Health Link. “People seem to be very happy because some of them didn't know about the tax penalty,” Boyd said.
But Dorn argues that the state and federal exchanges should be doing more to take advantage of the potential customers who will be showing up at tax preparation services across the country in the coming weeks. “I think it really behooves federal and state policy makers, as well as consumer groups, to work pretty intensively with the tax preparer community.”
Employers will be prohibited from making workers wait more than 90 days before becoming eligible for healthcare coverage, under a final rule issued by federal agencies Thursday (PDF)
. The mandate was part of the federal healthcare reform law. The rule also places a 1,200-hour cap on the length of time a person can be required to work before becoming eligible for healthcare coverage.
Half of California's
roughly 7 million uninsured have been without coverage for at least five years, according to a survey of low-income residents released by the Kaiser Family Foundation (PDF)
on Wednesday. In addition, more than 20% of respondents reported that they have never had coverage in their lifetime. Since California's exchange opened for business, more than 1.6 million residents have signed up for coverage either through Medicaid or private plans, although it's uncertain how many of them previously lacked coverage. The survey was conducted between July and September of last year.Follow Paul Demko on Twitter: @MHpdemko