On July 8, 2004, the House Small Business Subcommittee on Tax, Finance, and Exports held a hearing to examine a bill designed to help businesses aid their employees in maintaining healthy lifestyles. This proposed legislation, entitled the Workforce Health Improvement Program Act (H.R. 1818, S. 1491), extends nontaxable fringe benefit coverage to qualifying off-site fitness or athletic club services provided by an employer.

The bill would allow employers to deduct the cost of providing health or fitness club benefits to employees. This bill also ensures that employees would not be penalized for the deduction since the value of an athletic facility membership would be excluded from an employee's gross income.

Under the current law, employers can deduct the costs of providing on-site exercise facilities and fitness programs to employees. However, most companies are unable to afford on-site fitness facilities. A few may offer to pay for health club memberships at off-site facilities but that cost is considered to be a taxable income for the employee. According to Rep. Pat Toomey, R-Pa., chairman of the subcommittee and chief sponsor of the legislation, this bill is an attempt to 'level the playing field' for small and large businesses by encouraging employers of all sizes to offer health and athletic facility benefits to their workers.

Edwin Foulke, a former chair of the U.S. Occupational Safety and Health Review Commission, testified before the committee that "many of the costs associated with an unhealthy and overweight working America are absorbed by employers. Those extra pounds have serious ramifications relating to health care costs, productivity, absenteeism, workplace injuries, morale, and potential employee discrimination."

Supporting Foulke's testimony, the Department of Health and Human Services found that the societal costs resulting from obesity are as high as $300 billion and costs U.S. companies an estimated $12.7 billion annually. Additionally, health care for obese workers costs 36% more than for "normal" weight workers, and medication costs almost 80% more.

The Workforce Health Improvement Program Act could be voted on by the end of the summer but, more likely, it will not pass as a stand-alone bill. Instead, will probably be approved if it is included as an amendment to some other tax or appropriations package.

The Human Equation will update you as soon as new information is available.