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Proposed PHIT Act Legislation Aims to Allow Pre-Tax Dollars for Fitness

Jan. 10, 2017
The PHIT Act calls for pre-tax medical accounts to be used for health and wellness activities, not just hospital visits.

Employees could have a new incentive to participate in company-sponsored health and wellness programs.

A tax bill making its way through Congress is aiming to shape the way the American public utilizes health savings accounts to focus on prevention, not just treatment.

The Personal Health Investment Today (PHIT) Act, first introduced to the house in March 2015 and more recently to the Senate in November 2015, is a bi-partisan supported proposal that would allow medical account tax deductions to be applied to some specified costs associated with staying active.

“If you’re one of the active people, you’ll say ‘I’ll head to the gym,’ you have to pay to get that activity in,” said Bill Sellsvice president for government relations, Sports and Fitness Industry Association.. “It’s going to come with a cost. Being active today has a price tag attached where it did not have a price tag attached in previous generations.”

Currently, pre-tax medical accounts provided by employers allow a worker to take part of their earnings and place it into a special account for out-of-pocket expenses such as hospital visits and bills.

The PHIT legislation would make it possible for the average American to utilize that account for health prevention activities such as sports league fees, gym memberships and equipment.

Activities eligible for pre-tax reimbursement under the PHIT Act include: youth and adult sports league fees; health club membership dues; exercise classes and personal trainers; sports & fitness equipment used for participation in physical activities; youth camps; pay-to-play school sports fees; organized running event registration fees martial arts, gymnastics and other physical activities.

The limit for qualified sports and fitness expenses for any taxable year would total $1,000 for an individual or $2,000 in the case of a joint return or a head of household, according to the bill.

“What we’ve found is we have a decline in participation – cost is a major barrier,” Sells said. “We said ‘what can we do to help families and young people just entering the workforce that don’t have a lot of money with the costs?’”

Changing societal norms have made it harder for Americans to remain active. Before, casual play was common and many activities had little to no cost associated with them. In addition, American society has prioritized convenience, especially when it comes to errands such as shopping.

For example, in the past, a person would go to the mall and walk to numerous stores for one product, actively seeking the best price. Now, that same person could save hours by shopping online, Sells said.

While the bi-partisan measure has drawn little opposition, the progress of getting it through Congress is still ongoing.

 “All the key people that we need to support this are behind us. We are the only HSA expansion bill with both Democrats and Republicans on it,” Sells said. “Now it’s just a matter of getting the word out, getting the public engaged, letting Congress know that they want this and finding the right vehicle in Congress to attach the PHIT bill to so its gets passed as part of a broader healthcare package.”

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