This Proposed Law Could Make Fitness Gear More Affordable
The Personal Health Investment Today (PHIT) Act, a bill introduced to Congress this month, seeks to expand the tax-related definition of "medical expense" to include qualifying preventative fitness and wellness expenses. Proponents of the bill believe that by lifting some of the financial burden associated with fitness gear, gym memberships, and other means of living an active and healthy lifestyle, total spending on healthcare in America could go down.
The proposed legislation would allow up to $1,000 ($2,000 for joint filers) of pre-tax funds, via a health savings account (HSA) or similar types of flexible spending accounts, to be used for things like sports gear and even personal trainers -- though not items that might be used outside of fitness, such as running shoes or golf shirts. Depending on your tax bracket, that could mean around a 30% tax savings on qualifying fitness expenses.
Image source: Getty Images.
"We need a culture change"
Despite the plethora of information available on health and preventive care, Americans are increasingly undergoing very costly treatments for preventable conditions like obesity and high blood pressure, according to the Sports & Fitness Industry Association (SFIA), the group that's helped to craft the bill. According to PHITAmerica.org, a quarter of Americans are totally inactive, and two-thirds are not active to healthy standards. "We need a culture change, and that happens by helping people to have the resources to make the right choices," SFIA vice president Bill Sells said in an interview, "and to help children to get that access as they grow up."
Other proponents of the bill include the American Heart Association and American College of Sports Medicine, and even professional athletes like former major-league baseball All-Star Steve Garvey, who lobbies on behalf of the bill. In a phone interview with The Motley Fool Garvey said: "I'm 68 and I grew up in the '50s, and the evolution over the years of what to eat and a greater awareness of how specific habits and practices can affect health for the better has grown...But at the same time, with more disposable income and a faster-paced society, even with a better understanding of fitness and health, people are far more sedentary. Even in sports, it's very organized and you don't just find your friends and go play in a field, you have travel teams for little kids with set practices and more costs. It's much more of a challenge now to really have daily exercise."
Will it pass?
There are some questions the bill will undoubtedly face as it makes its way through Congress, such as how to control the gray area of what constitutes a qualifying expense. For example, a Fitbit-style wearable tracker would likely be covered, but more broad-use smartwatches wouldn't be, since fitness isn't their primary function; for many products, that line could easily be blurred. Then there's the question of whether this act is broad enough to help those who may not have access to these kinds of flexible spending accounts.
Still, SIFA vice president Sells believes the bill seeks a relatively modest change. "This act would only add six words to the IRS definition of a medical expense," says Sells, "physical activity as form of prevention." Also, the current administration seems to support HSAs and the role they could play in planned changes to healthcare legislation.
Image source: Getty Images.
The bill has been around for some time, and was actually introduced before, though it has never made it far enough to be brought to a vote. The bill's backers believe that it's gaining traction now, and are encouraged by its level of bipartisan support, something that seems rare in Washington lately: More than 100 members of Congress across political parties have supported it, and 12 are official co-sponsors. One of its biggest champions is Rep. Jason Smith (R-MO), who introduced the current bill to the House of Representatives on March 1, and who hopes to use his own story to further the bill's prospects.
In an interview with The Motley Fool, Rep. Smith said that he's a smaller person now than when he got to Washington, and that after losing 70 pounds in the last few years, he is no longer on prescription medications for high blood pressure and cholesterol. Congressman Smith now gets together with various colleagues in Washington for morning workouts that he says have gotten the nickname "bipartisan biceps." He believes that the bill's focus on lowering the cost of healthcare and allowing consumers to take charge of their own healthcare is the kind of legislation that has a good chance of getting passed at a time when Congress, controlled by his party, is making changes to current healthcare legislation.
"You're looking at the largest driver of government expense is healthcare, and it's projected that healthcare costs could roughly increase $1 trillion in the next 5 years," Smith said. "I think it's extremely important that we promote preventative care, that we promote wellness, and that's what this bill does,which will only lower the cost of healthcare in the future. And I'm the prime example of how it does that."
As expected, the bill also has support from athletic companies like Nike (NYSE: NKE), Under Armour (NYSE: UAA) (NYSE: UA), Adidas (NASDAQOTH: ADDYY), and others. It's easy to see why these kinds of companies would support such a bill: not only to increase incentives for people to buy more of the gear they make, but also to help grow the overall culture of fitness in the U.S., which presumably would help the fitness and sports industry as a whole. These companies have long been members of the SFIA, supporting its goals for more physical education funding to this PHIT Act, and each is sending athletes and/or representatives of its own when the SFIA lobbies Congress about the bill on March 22, the designated National Health Through Fitness Day.
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Seth McNew owns shares of Nike and Under Armour (A and C Shares). The Motley Fool owns shares of and recommends Fitbit, Nike, and Under Armour (A and C Shares). The Motley Fool has a disclosure policy.