Let’s Make a Healthy Lifestyle Affordable and Accessible
The PHIT Act is a great idea whose time has come. According to the Centers for Disease Control and Prevention (CDC), only about 1 in 5 American adults get enough physical activity. Perhaps more alarming, children and adolescents are becoming accustomed to inactivity at increasingly alarming rates. According to current statistics, only 20 percent of our youth are participating in 60 or more minutes of physical activity at least 5 days per week.
Although there is currently plenty of healthy discourse about the validity of the dangers of obesity, most health advocates still agree inactivity correlates with higher risk for developing various chronic conditions—including cancer, cardiovascular diseases, diabetes, obesity, depression and anxiety. As such, there have been various lobbying campaigns to encourage people toward healthier, more active lifestyles (e.g., Let’s Move, Exercise is Medicine, Exercise as a Vital Sign, etc.). However, it has also been recognized that sometimes (especially among at-risk populations), the cost of engaging in physical activities and/or good nutrition can be a barrier to adopting healthy habits. For instance, many low-income families are not able to support their children in the pursuit of recreational or competitive sport. One potential solution comes in the PHIT Act, a piece of current legislation that has been proposed. The PHIT Act as the potential to make engaging in physical activities more accessible.
Physical Activity: A Luxury or a Basic Human Need that Maintains Health?
Health experts often argue that modern healthcare systems are predominantly focused on the treatment of disease (and not enough on prevention). Some dub our current U.S. healthcare model as “sick care.” As such, several agencies have tried to position regular physical activity as a health intervention (see the previously shared lobbying campaign examples above). Unfortunately, although the World Health Organization determined that investment in physical activity could significantly reduce your medical expenses (purporting that $1 invested in exercise and keeping fit could reduce your health expenditure by $3.20), these programs and initiatives have failed to really take off.
Fortunately, although general exercise prescription programs are still fledgling, the knowledge that physical activity constitutes an important part of disease prevention is well-established and has been embraced at the federal and state level. There is a consensus that regular physical activity is not just fun, but also a necessary ingredient of well-being. At the governmental level, attempts have been made to encourage a healthier lifestyle through appropriate legislation for years (e.g. providing financial incentives for engaging in healthy behaviors through the Affordable Care Act). Arguably, if incentives and policies are well-designed, they can effectively increase the ability of everyone to participate in physical fitness activities of their choosing. (Critics of the Affordable Care Act say the current system coerces people into activities that they might not necessarily be interested in.) The PHIT Act was crafted to improve upon what is currently available and foster consumer choice.
PHIT Act History
The first version of the PHIT Act was presented to Congress in May 2006 by former Rep. Jerry Weller, a Republican from Illinois. Since then, newer versions of the act have been re-introduced in several subsequent sessions. In 2017, the PHIT Act (PHIT – H.R.1267 and S.482) received strong bi-partisan support in the House of Representatives, as well as the Senate, with both Democrats and Republicans acting as co-sponsors. This suggests that the PHIT Act taps into areas that are of mutual interest to both political parties. And why not? However, although the PHIT Act has little opposition, unfortunately, it has not been passed yet. It appears that (even) more political and public support is needed to get this worthy legislation across the finish line.
Nut & Bolts of the PHIT Act: Using Pre-Tax Dollars for Physical Activity
The PHIT Act proposes paying for various physical activity expenses from pre-tax medical accounts, such as your Flexible Spending Account (FSA) and/or your Health Savings Account (HSA). Currently, these types of accounts generally enable you to allocate part of your salary (on a pre-tax basis) to pay for out-of-pocket medical expenses (including vision and dental care) that are not covered by your existing health plan. The tax-free money you are allowed to set aside can then be used to reimburse yourself for medical expenses not covered by your insurance. Under current law, in certain cases, employers can also contribute to these health funds on your behalf.
Presently, tax-free savings accounts are used for a defined set of medical expenses only (e.g., vision care, hospital visits, prescription drugs, etc.). The PHIT Act suggests that physical activities should be considered as a qualified medical expense, too. The argument is clear and scientifically valid: those that are physically active are less likely to require treatment for chronic conditions connected to a lack of physical activity (for instance, in 2018, we have discovered we can reverse age-related heart damage through exercise).
According to the PHIT Act, you could use tax-free FSAs and HSAs funds for things such as:
- health club memberships
- sports and fitness equipment
- personal trainer fees and fitness/exercise classes
- entry fees for athletic competitions, such as organized running events
- fees for adult and youth sports leagues and camps
- pay-to-play school sports fees
- company-sponsored health and wellness programs
- martial arts, gymnastics and other recreational or competitive sports activities
The PHIT Act is meant only for products, services and programs that can be used exclusively for physical fitness, recreational activity or competitive sport. You cannot claim PHIT Act funds for equipment and apparel that might also be used in other areas of life (e.g., buying a sun visor or a golf shirt might not qualify). You can, however, purchase sport-specific equipment like golf clubs and/or golf balls (as the PHIT Act is currently drafted). There are other consumer protections as well. For instance, it is currently written so that exclusionary clubs (e.g., clubs owned solely by its members) are not eligible for reimbursements on membership dues. Thus, dues for a private country club (even if it exists to promote sport) may not meet the criteria for a tax deduction.
There are other limitations as well, such as how much you can spend per tax year. As things currently stand, if passed, you can spend up to $2,000 (as a family or jointly filling couple) or up to $1,000 as an individual, with a $250 cap for each item or transaction.
PHIT Act Considerations
Although most agree that the PHIT Act is a step in the right direction, there has been some skepticism surrounding its practical value. No one can be certain how effective the bill will actually be when/if passed. Critics point out that the PHIT Act might provide reimbursements for sports equipment that does not necessarily promote much physical activity (fishing equipment is often cited as an example). Also, it may do little to influence behavior change and instead simply be a nice tax break for those that are already active.
Another consideration about the utility of the PHIT Act is that not many low-income families use pre-tax health savings accounts. The worry is that many people still won’t be able to benefit from this initiative and it will not reach the most at-risk individuals. Some analysts point out that those that have FSAs and HSAs generally have reasonable levels of discretionary income and can already afford fitness activities. In other words, the people the PHIT Act would benefit are not necessarily at-risk due to the financial burdens of staying active, and as such financial incentives may not be the best-suited behavioral change intervention.
Lastly, in some cases to be entitled to health reimbursements an individual (or family) needs to itemize their tax deductions, which a large proportion of tax filers do not do.
Pass the PHIT Act
Despite some legitimate ethical concerns, in my opinion, the PHIT Act is a step in the right direction. It has political momentum and bipartisan support, something in short supply these days. It is not an entitlement per se, but a way for most people to use their own money to participate in their own preventive care through physical activity. I hope you will join me in supporting the PHIT Act by contacting your appropriate congressional representative and letting them know you would like to see this important initiative passed.
Sources & further reading:
O’Donnell, M. (2007). Making health promotion tax deductible: Congressman Weller’s Personal Health Investment Today (PHIT) Act. American Journal of Health Promotion, 21(4), iv.
Wallace, N. (2016). Behavioral economics and obesity: An analysis of fitness-based tax incentives. Policy Perspectives, 23: 76-93.
World Health Organization. (2003). Health and Development Through Physical Activity and Sport. Geneva: WHO Document Production Services.
