Physical Activity Tax Incentive (PHIT) Included in Congressional Report on Suggested Tax Reforms
Tax reform is a top priority in Congress and on May 6th, the (Congressional) Joint Committee on Taxation released a comprehensive report with suggestions on how to proceed. The report which will be used to guide the Congressional effort on tax reform included “expanding the types of medical expenses that can be paid from Health Savings Accounts.” H.R. 956 “The Personal Health Investment Today Act” (PHIT) would expand the IRS definition of a medical expense to include physical activity as a form of preventive medicine.
PHIT was first introduced in 2007 and has been re-introduced in every Congress since. The bill has always enjoyed strong bi-partisan support from Members of Congress across the political spectrum. PHIT is an innovative concept that fits with two major Congressional concerns: rising health care costs and the budget deficit. The rise in sedentary lifestyles is a major contributor to higher obesity rates and an increased incidence of expensive, preventable chronic illnesses. PHIT will help reverse the sedentary/obesity trend by providing an economic incentive to invest in physical activity.
If enacted physical activity expenses could be reimbursed using money in pre-tax medical accounts. Financial incentives have been used effectively to encourage home ownership, retirement savings and higher education. PHIT would do the same for investment in improved health via physical activity.
American culture has changed over the past 25 years as technology has made life more convenient and provided additional social interaction options. Casual play among our young people has declined partly due to ability for remote socialization but also because of parental concern for the safety of their children and a more competitive sports environment. All this has led to an increase in organized sports which comes with a price tag that can discourage participation. PHIT would help offset this youth activity cost by allowing reimbursement with pre-tax dollars.
PHIT coverage would not be limited to youth sports as gym membership dues, fitness program costs, adult sports registration fees, required equipment and other expenses would all be eligible for reimbursement. While inclusion of PHIT in the Joint Committee on Taxation report is a positive development, Congress has a long way to go before finalizing a tax reform package and the more elected officials hear from the people back home asking for PHIT, the better the chances of success.