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Are health club memberships or on-site fitness centers an ERISA benefit?
More and more employers are contributing dollars toward the cost of health club memberships for employees. Some are even building their own on-site fitness centers. If your organization is considering either approach, you might wonder: Are health club memberships or on-site fitness centers subject to the Employee Retirement Income Security Act (ERISA)?
Under the definition
In general, neither paying for employees’ health club memberships nor providing an on-site fitness center for employees will constitute an ERISA plan. For an employer-provided benefit program to be subject to ERISA rules, it must (among other things) provide one or more of the benefits listed in the act’s definition, such as medical, sickness or disability benefits.
Although health clubs and on-site fitness centers promote general good health, they’re normally offered without regard to sickness or disability and don’t diagnose or treat specific medical conditions. Thus, they typically don’t provide medical care, benefits in the event of sickness or any other ERISA benefit. Absent such a benefit, a policy or program of paying for health club memberships or providing an on-site fitness center wouldn’t establish an ERISA plan.
In relatively rare situations, such as a disease-management program, an employer may offer a health club membership or access to an on-site fitness center to employees as part of an arrangement that includes diagnostic, therapeutic, or preventive care or “coaching” for specific health conditions or risks.
This type of health club arrangement may be considered to provide a medical benefit, potentially making it subject to ERISA and applicable group health plan rules either on its own or as an element of a larger plan, depending on how the arrangement is structured. Determining how ERISA applies to this type of program is complex and fact-specific, and should be undertaken with the assistance of legal counsel.
Please note that an employer’s payment or reimbursement of health club dues — or provision of an on-site fitness center — will raise tax issues. Contact us for help navigating the tax rules, as well as for more information on the advantages and challenges of funding health club memberships or on-site fitness centers.