San Francisco Chronicle

Fitness Friendly Firms May Get Credits

By Greg Lucas, San Francisco Chronicle
March 11, 2007

SAN FRANCISCO — Businesses would receive a tax credit equal to 10 percent of what they spend each year to improve the fitness of their employees — everything from building on-site workout rooms to subsidizing health club memberships — under a bill pending in the state Assembly in Sacramento.

The measure also would allow employers to claim the same credit for half the cost of hiring a person or company to provide nutritional advice, yoga instruction or substance-abuse prevention.

"We're trying to help people get into healthy, active lifestyles to prevent them from needing the hospital in the first place," said the bill's author, Assemblyman Lloyd Levine, D-Van Nuys. "An hour's worth of exercise would reduce the health costs to the employer, the employee and the state."

The measure is one of dozens introduced by lawmakers in the aftermath of Gov. Arnold Schwarzenegger's goal voiced in January of extending health insurance coverage to the state's 6.5 million uninsured residents and bringing down treatment costs through disease prevention.

Levine is personally familiar with disease prevention: He is an asthmatic and marathon runner.

No estimate exists of what Levine's proposed tax credit could cost the state in lost revenue.

The higher the amount of lost revenue, the more likely the scope of the bill will be reduced because state tax collections this year are already $1 billion below projections.

Levine's bill, AB1439, says "qualified fitness expenditures" by an employer include installing an employee gym, swimming pool, weight room, running track and indoor or outdoor courts or sports fields.

The cost of equipping an amateur athletic team can also be counted toward the credit if the team engages in "vigorous athletic activity," which the bill defines as "exertion that makes a person sweat and breathe hard."

Contracting with another organization to operate an employee fitness facility also could be counted. So would be subsidizing health club memberships for workers.

The bill has yet to have any legislative hearings.

It must pass through both the Assembly and the Senate before reaching the governor's desk. Schwarzenegger has taken no position on the bill but is supportive of its goal.

"More than half of all diseases are preventable, so to contain spiraling healthcare costs over the long run you need to focus on disease prevention and wellness," said Sabrina Lockhart, a Schwarzenegger spokeswoman.

With or without Levine's bill becoming law, employers are increasing their focus on prevention, offering an array of fitness-promoting activities and programs.

A June 2005 nationwide survey of 365 companies by the Deloitte Center of Health Solutions found that 62 percent of companies had implemented wellness programs and 33 percent said they were considering doing so.

Of companies with wellness programs, 64 percent said rising healthcare costs were a major factor in their decision.