A smart move on tax day: Sign up for health insurance using your state's tax forms

Many of her clients don't believe it when Maryland-based tax preparer Diana Avellaneda tells them they might qualify for low-cost health coverage. Or they think she's trying to sell them something. But in reality, she's helping her customers take advantage of an underused feature of her state's tax forms: A way to get financial assistance for health insurance.

Avellaneda says she just wants people to avoid the financial risk of a medical emergency: "I have health insurance right now, and I feel very, very peaceful. So I want my community to know that."

The process is simple: By checking a box, taxpayers trigger what's called a qualifying event that enables them to sign up for insurance outside the traditional open enrollment period and access subsidies that can bring the cost of that insurance down, if their income is low enough. It also allows Maryland's comptroller to share a person's income information with the state's insurance exchange, created by the Affordable Care Act.

Then people receive a letter giving an estimate of the kind of financial assistance they qualify for, be that subsidies on an exchange-based plan, Medicaid or, for their child, CHIP. A health care navigator may also call taxpayers offering them enrollment assistance.

Avellaneda says most of her clients who apply end up qualifying for subsidized insurance – many are surprised because they had assumed financial assistance is only available to those with extremely low incomes. In fact, Avellaneda thought this as well until she did her own taxes a couple years ago.

"I was one of the persons that thought that I couldn't qualify because of my income," said Avellaneda, with a chuckle.

An outreach model that's spreading

A growing number of states – including Colorado, New Mexico and Massachusetts – are using tax forms to point people toward the lower-cost coverage available through state insurance marketplaces; by next year, it will be at least ten, including Illinois, Maine, California and New Jersey.

"We all file taxes, right? We all know we're filling out a bazillion forms. So what's one more?" said Antoinette Kraus, executive director of the Pennsylvania Health Access Network, who advocated for Pennsylvania to create a program that's based on Maryland's, which it did last year.

Often, efforts to enroll people in health insurance are scattershot because the datasets of uninsured people are incomplete; for example outreach workers might be trying to reach out to people who have submitted unfinished Medicaid applications to try and sign them up for coverage. But everyone has to pay taxes, and that existing infrastructure helps states connect the dots and find people who are open to signing up for insurance but haven't yet.

"It's hard to imagine more targeted outreach than this. I think that's one reason it's become popular," said Rachel Schwab, who researches the impact of state and federal policy on private insurance quality and access at Georgetown University.

Health insurance changes

The rise of these initiatives, known as easy enrollment, is happening at a time of incredible churn for health insurance. The end of COVID-19 era policies are forcing people to reenroll in Medicaid or find new insurance if they make too much money. At the same time, marketplace subsidies that were created in response to the pandemic have been extended through the end of 2025, via the Inflation Reduction Act.

So having a simple way to connect people to health care coverage and make the most of these federal dollars is a good idea, says Coleman Drake, a health policy researcher at the University of Pittsburgh. But he cautions, these initiatives won't get everyone covered.

Data bears this out: Only about 10,000 Marylanders have gotten insurance this way since 2020, less than 3% of that state's uninsured population. The number in Pennsylvania is estimated to be small too. Still, it's a step in the right direction.

"Uninsurance in general, is extremely costly to society," said Drake. "Whatever we can do here to make signing up for health insurance easy, I think, is an advantage."

There is lower-cost insurance available for consumers, and, in some states, getting this coverage is now simpler than many realize.

This story comes from a partnership with WESA, NPR and KHN. The web version was edited by Carmel Wroth of NPR, and the broadcast version was edited by Will Stone of NPR and Taunya English of KHN.

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