Health Clubs Lobby for Tax Breaks on Dues
By Elizabeth Agnvall
Special to The Washington Post
Tuesday, May 25, 2004; Page HE01
If your company paid your health club dues, would that get you off the couch and into a step class?
A national survey released this spring by the International Health, Racquet and Sportsclub Association (IHRSA), a gym trade group, put essentially that question to 1,000 people. More than 80 percent of respondents said they would hit the gym regularly if their employer subsidized the dues. Of course what people say and what they do often differs, but several members of Congress think the idea is worth a shot.
They've proposed a bill that would allow employers to write off the cost of any gym membership fees the companies pay on behalf of their employees. The Workforce Health Improvement Program (WHIP) bill, which is now before the Senate Finance Committee, would also allow employees to accept the benefit without having to declare its value as income.
Last week a group of 150 health club operators muscled their way onto Capitol Hill to lobby for the bill, first introduced last April by Sen. John Cornyn (R-Texas) and Rep. Pat Toomey (R-Pa.).
Promoters cast the bill as a response to the nation's growing girth -- which has been linked to the rising incidence of such costly health problems as diabetes, heart disease and cancer. Two-thirds of U.S. adults are either overweight or obese, according to the U.S. Centers for Disease Control and Prevention. Obesity costs employers an estimated $12.7 billion a year in direct health expenses and such indirect costs as decreased productivity, according to the Society of Human Resource Management (SHRM), a professional group.
"With obesity being the number one epidemic that we're facing, this is one of the few bills out there that isn't studying the problem, it's addressing the problem," said Kevin Buckley, deputy director of government relations for IHRSA.
Buckley said the legislation would ultimately save companies money. "Businesses are now more concerned about their health care costs than their taxes, because they are seeing double-digit increases [in health care costs] each year."
In addition, backers say, the measure would correct a tax inequity by giving small employers the same financial stake in their employees' fitness that larger companies now have.
"Disease prevention and promotion of a healthy lifestyle are perhaps the most common-sense and cost-effective way to deal with health care," said Cornyn. "This would allow some parity in the treatment of an employer who provided an on-site exercise facility with those who don't, and establish that tax break if they decided to outsource to an outside fitness center."
Because the bill would drain tax dollars, Hill observers say its passage is hardly assured.
"There is a revenue impact on the federal budget, so it's highly unlikely that there will be a direct vote," said Mary Huttlinger, manager for tax and benefits policy for SHRM. Its best hope might be if it is attached to a larger piece of legislation, she said.
Moved to Work Out
Thirteen percent of all U.S. employers have an on-site fitness center or subsidize health club membership fees, according to a 2003 survey by Mercer Human Resources Consulting. Among employers with 500 or more workers, the proportion is 34 percent.
There's good reason for that difference. Under current law, companies can deduct the cost of on-site but not off-site fitness centers -- a provision that bill sponsors say favors large companies. Companies don't get a tax write-off if they subsidize employees' health club dues, and employees are required to declare any dues discounts from their employers as income.
But would the bill really prompt companies to help out with fitness club fees? That depends on the company.
Burness Communications, a small Bethesda public relations firm, now encourages its 26 employees to exercise during work hours, but doesn't reimburse for gym dues, said Vanessa Bigelow, the company's director of operations. A tax break would most likely cause the company to pay for at least part of club dues, she said.
"The health of the community and of our employees is very important to us," Bigelow said. "We don't subsidize it at this time, but if there was a tax break we probably would look into doing so."
Lafarge North America, a Herndon-based building materials manufacturer with 650 employees in the Washington area, reimburses employees for half of their monthly gym fees up to $500 per year, said spokeswoman Peggy Disney. She said the company policy was established more than 15 years ago based on the idea that physical fitness improves employee quality of life and is good for productivity. But she's not sure whether a tax break would lead Lafarge to pick up a bigger chunk of employees' fees.
"It would be difficult for us to speculate on how the pending tax bill would affect our program until the bill was passed and we were able to evaluate it," Disney wrote in an e-mail.
One group to whom the idea gives a healthy glow is fitness club owners, some of whom say passage of such a bill would make it easier for them to persuade companies to do more to promote fitness.
"We talk to a lot of companies about membership, but it's hard to explain why it's not tax-deductible," said Mitch Wald, president and CEO of Sport & Health, which has 29 health clubs in the Washington area.
Huttlinger said anything that encourages employees to lose weight will help both company and employees' bottom lines, so to speak.
"Not only does this provide a nice benefit, it also helps develop a healthy workforce, decreases health care costs, improves morale and reduces absentee rates," she said.
Even without the tax benefit, more companies are starting wellness programs or subsidizing health club fees, according to SHRM. Although most company benefits have remained the same over the last year, weight-loss programs, smoking cessation programs and subsidized fitness club memberships have increased -- all benefits aimed at helping cut employers health care costs.
Rachael Loper, marketing director of Greenfield/Belser, a D.C.-based graphic design and advertising firm with 45 employees, said she'd like to see the bill pass -- the sooner the better. Inspired in part by "Super Size Me" (Morgan Spurlock's documentary film about his descent into serious illness after eating at McDonald's every day for a month), Loper just switched gyms -- opting to pay more for a club that she says offered more exercise classes. Greenfield/Belser doesn't directly reimburse workers for health club fees, although the company's health insurance plan does pay 40 percent of their dues at certain gyms.
"I'm trying to give myself a reason to go every day," Loper said. She added that she thought that if more companies helped pay for employees to work out, it would get people into gyms.
"I think it's a good message for the government to be sending," she said.•
Elizabeth Agnvall last wrote for the Health section about men's cardiovascular health.
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