Imagine this scenario: It’s the mid-year blues of the fitness industry season and your facility is busy. Retention is rising and your sign-up rates show growth in your gym management software. It sounds like a dream, but this situation may not remain a fantasy. Not if the PHIT (Personal Health Investment Today) Act becomes a law in the United States.
There’s quite a lot of information floating around regarding the PHIT Act. Here are the basics to understand what the PHIT Act is and what it could mean for your fitness facility.
The PHIT Act in Summary
The PHIT Act proposes that Americans will be allowed to use their Pre-Tax Medical Accounts to help pay for certain physical activities. With a Health Savings Account or Flexible Spending Account—Americans could place up to $500-$1000 of pre-tax money to cover fitness classes, memberships, and personal training sessions. The expenses can then be written off as a tax deduction.
What Are Pre-Tax Medical Accounts?
Pre-Tax Medical Accounts are generally offered through an employer-provided healthcare account, or the Affordable Care Act. With either, people can place aside part of their earnings that will pay for out-of-pocket medical, dental, and vision care expenses not covered by a health benefits plan. If the PHIT Act becomes law, physical activities like yoga or cycling classes would be categorized as an out-of-pocket medical expense.
What the PHIT Act Means for Gym Owners
Easier public access to yoga lessons, personal training sessions, and gym classes means more chances for facility owners to increase revenue. If every member of your facility brought a considerable sum that was specifically meant for exercise activities, they would be more likely to keep on spending after that sum is gone. Why? The psychology of out of pocket spending. The sum your members start with is cut from their paycheck so because it doesn’t feel like the member is paying directly, the member may choose to continue spending at your facility.
As it stands now for the PHIT Act, youth memberships, youth sports leagues, and health club memberships are all included in the bill. The PHIT Act does have some restrictions though. The bill states that golf, sailing, and horseback riding “shall not be treated as a physical exercise or activity” to be covered. For those golf and sailing enthusiasts all hope is not lost—all bills under review to become law have the potential for alterations until passage.
What Gym Owners Can Do to Prepare for the PHIT Act
Think of the estimated expense as the chance to plan memberships and package deals in advance. It’s important to get that competitive edge before the PHIT Act is passed just as it’s always important to have a promotion plan ready before the surge of holiday memberships begin. Complete your strategy and have your business-ready to act. Then, all that’s left to do is spread the word. Share promotions on social media, post some signage around your business and local community or immediately send email campaigns to leads you have collected. While the responses pour in, your competitors will still be scrambling at the drawing board.
Why the PHIT Act Matters
Physical inactivity is a growing problem in the United States. The Mayo Clinic reports that less than 3 percent of Americans meet the basic qualifications for a “healthy lifestyle”. Even so, fitness classes remain popular. According to the 2018 IHRSA Global Report, the health club industry generated at least $87.2 billion in revenue in 2017.
The PHIT Act is meant to deter the problem of idleness, promote a healthier lifestyle, and encourage productivity. In a nutshell, think of it as a tax break for fitness memberships. Cost effective access to exercise classes could make staying active more desirable to your clients—and potential clients!
The History and Current Status of the PHIT Act
The PHIT Act was in Congress on March 1st, 2017. On July 12th, 2018, the House Committee of Ways and Means passed the bill in a vote of 28-7. It then was moved to the House of Representatives for further consideration. On July 25th, 2018, the PHIT Act was passed by a 277-142 vote. The bill is now on its way to the Senate.
What the PHIT Act Could Cover
- Health Club Memberships
- Personal Training Services
- Exercises Competition Fees
- Yoga and other group fitness classes
- Youth Sports Leagues
What Could the PHIT Act Not Cover
- Golf
- Hunting
- Sailing
- Horseback Riding
- Exercise Equipment
What Happens Each Time the PHIT Act Is Presented
The PHIT Act is susceptible to alterations each time it is presented and reviewed on the floor. For example, the PHIT Act previously had exercise videos, exercise equipment, golfing, sailing and hunting under the list of covered exercise expenses. These all have subsequently been removed from the bill.
How to Impact the PHIT Act
IHRSA (International Health, Racquet and Sportsclub Association) created a page where people can contact local senators with an automated, or personalized message about the PHIT Act. You can also reach out to your senators on your own with a telephone call or email through the official senate.gov website.
How to Find Out More About the PHIT Act
We recommend the official congress.gov website where the PHIT Act is listed. There you can opt to receive alerts on the latest news regarding the status of legislative proposals.
Do you have any thoughts about the PHIT Act regarding your facility? Let us know in the comments below and feel free to vote on our social poll on how you think the PHIT Act could affect your facility.