Two of the nation’s top three tax-preparation services are turning out to be allies of the Obama administration in the battle to get people signed up for health insurance coverage under the Affordable Care Act. It’s a no-brainer: For uninsured customers who are coming into tax-prep offices to get their taxes done, it takes only a few extra minutes to fill out the forms for health insurance.
The surprise? The federal government has had nothing to do with this sign-up drive. Jackson Hewitt and H&R Block (HRB) are doing it on their own as a customer service. “My sense has been that they [government officials] just have a lot on their plate and I’m not sure they’ve fully appreciated the opportunity that tax preparers represent,” says Stan Dorn, a senior fellow at the Urban Institute think tank in Washington.
“We haven’t really consulted with HHS [the Department of Health & Human Services],” says Mark Ciaramitaro, H&R Block’s vice president of health services. “We came to this conclusion ourselves based on our clients’ stated needs.” H&R Block calls its service Helpth, for help with health.
The tax preparers aren’t taking sides in whether the Affordable Care Act is a good law or a bad one, nor are they pushing their clients to sign up for coverage. “Our role in this is pretty simple,” says Brian Haile, senior vice president for health policy at Jackson Hewitt. “If you don’t like Obamacare, we understand, but it’s part of the tax code. There are tax consequences for those choices and we want to make sure you understand what those consequences are. As long as people make an informed choice, we’re doing our job.”
Haile is a key figure in the private-sector initiative. He helped developed the concept while serving as the director of Tennessee’s insurance exchange planning initiative. Republican Governor Bill Haslam decided not to have a state exchange, but that’s another story. Haile held discussions with H&R Block, Jackson Hewitt, and Liberty Tax, which turned him down. Last September he went to work for Jackson Hewitt. (Liberty Tax and the Department of Health and Human Services didn’t immediately respond to requests for comment.)
During an interview Wednesday, Haile said there are a lot of people who would like to get covered but are put off by the paperwork. He learned from experience in an earlier job in D.C. that people are more likely to enroll in Medicaid if the application is combined with the one for food stamps, since putting food on the table is a more urgent priority. Coupling the insurance application with the paperwork for a tax refund works the same way. Plus, Haile said, tax-prep offices are politically neutral and there’s no welfare stigma.
Haile said many tax clients are under the false impression that the tax penalty for non-coverage in tax year 2014 is only $95. For most families, however, it’s either $95 or 1 percent of their family income above the filing threshold, whichever is greater. So a family with an income of $40,000 and a filing threshold of $10,000 would have to pay $300.
For tax-prep clients who decide to give Obamacare a whirl, things move quickly since most of the necessary information has been entered. Haile said his goal is to have the insurance application process take five to six minutes. Right now it’s averaging 6.1 minutes.
Both Jackson Hewitt’s Haile and H&R Block’s Ciaramitaro say the rate of sign-ups has been building steadily. Wednesday was Jackson Hewitt’s biggest day yet, Haile said, although neither firm will reveal numbers for competitive reasons. Ciaramitaro said he doubts H&R Block’s numbers will be big enough to make a “material” contribution to the 6 million people the Congressional Budget Office expects to sign up by March 31, the end of the first year of open enrollment. “That’s not the number we care about. It’s whether we can help one of our clients,” Ciaramitaro said.
Stan Dorn and two Urban Institute colleagues released a study Tuesday on the potential impact. Three-quarters of people who qualify for assistance under the Affordable Care Act file federal income tax returns, the study found, making them an ideal target audience. And most low-income taxpayers use tax-prep firms.
In an interview, Dorn said that Jackson Hewitt has gone the furthest in walking people through the process. “If at any point in the process you rely on the client to take the initiative,” he said, “they’re not going to follow through.”
