Proposed PHIT Act Promotes Healthy Lifestyles, Could Lead to Lower Insurance Premiums
On March 1, 2017, the Personal Health Investment Today (PHIT) Act was introduced to the House Ways and Means committee. This bill would allow pre-tax contributions to a qualified medical savings account, such as an FSA or HSA, for the purpose of covering expenses related to physical activity such as gym memberships, sports equipment, and fees for youth and adult sports leagues.
Currently, pre-tax contributions to FSA or HSA accounts can only be used for qualified medical and dependent care expenses (e.g. daycare costs, prescriptions, doctor co-pays). Under the PHIT Act, an individual could also take a tax deduction to a qualified account up to $1,000 ($2,000 for a joint return or a head of household) for qualified sports and fitness expenses (e.g. triathlon bikes, hockey skates, running shoes) per year.
Proposed Bill Could Mean Many Benefits for Employers
Aside from the current tax savings advantages available for employers who offer qualified medical savings accounts, the PHIT Act could reap even more benefits for business owners. First, this bill promotes healthy lifestyles that proactively combat the obesity epidemic in the U.S. By offering a qualified medical savings account that includes proposed tax incentives for activity-related expenses, employers could see a healthier and more engaged, productive workforce.
Secondly, having healthier employees means that employers could ultimately help drive down their insurance premium costs, an expense that has continually been on the rise. In fact, The World Health Organization reported that an investment of $1 in physical activity can lead to $3.20 in medical costs savings in the U.S.
Employers who offer pre-tax medical savings accounts may experience more employee participation if the PHIT Act were to pass. With the potential for medical as well as wellness costs to be covered (up to $2,000 depending on tax filing status), more participants may be incentivized to take advantage of this benefit.
Although Congress still has to vote on the PHIT Act, this is one of a few pieces of health care legislation that has strong bipartisan support. Regardless of the bill’s fate, businesses can consider offering an HSA or FSA account now and reap the many advantages already available. In the meantime, we will continue to monitor developments with this bill as they become available.