In the coming year, seniors using Medicare benefits looking for a game of pickleball, laps in the pool or just a walk on the treadmill in Life Time will have fewer hours to do so.
Currently, seniors enrolled in Medicare health plans face no time limitations and can visit any Life Time club at any time without paying individually. But starting in January, the Chanhassen-based fitness chain will restrict Medicare members to visits between 9:30 am and 3 pm on weekdays and after 2 pm on Saturdays. There will be no restrictions on Sundays.
Health club industry experts said that while somewhat unusual, Life Time’s decision reflects the growing challenge health clubs face in trying to accommodate discounted memberships while preserving their bottom line.
Life Time said the changes came after negotiations with Medicare fitness program administrators over the fee the programs will pay the company on behalf of Medicare members. The fee paid by Medicare providers is significantly discounted from the standard subscription, which can be as high as $299 per month.
“Ultimately, rather than not renewing agreements and not providing Medicare enrollees with more membership options, we wanted to create a solution that could continue to serve a large and rapidly growing Medicare population and do so with a price advantage. ongoing and meaningful,” a Life Time statement said.
Blue Cross and Blue Shield of Minnesota, HealthPartners, Medica and UCare said about 18,000 seniors, mostly from Minnesota, work at Life Time as part of their Medicare coverage.
Access to fitness centers is not a standard Medicare benefit, which provides health insurance for seniors and certain special populations. But a growing percentage of seniors choose to receive coverage through Medicare Advantage plans from private insurers, which routinely include access to gyms as an extra benefit. The fitness benefit is also part of some Medicare supplemental policies, which private insurers sell to supplement the original Medicare benefits.
To administer fitness benefits, health insurers contract with third-party companies such as SilverSneakers, Silver&Fit and Renew Active/One Pass, which is part of the Minnetonka-based UnitedHealth Group.
People with Medicare subscriptions can purchase an upgrade for just $80 a month for unlimited access during all opening hours, Life Time said.
For more than 30 years, Bob Margolis, 77, of Arden Hills, has visited the Life Time club in Fridley, formerly the Northwest Athletic Club. He stopped paying debts directly to Life Time a few years ago because he gained access through his Medicare health plan.
With the new limits in place next year, Margolis said he will postpone weekday practices until later in the morning. But he thinks the changes will upset others even more, because he estimates that seniors make up at least half of the people who frequent the Fridley club most mornings.
“I think it’s pretty clear that they’re just trying to get more money from the insurance companies,” Margolis said. “Or, if they can’t get that from insurers, they’ll try to get people to cough up $80 a month.”
The move frustrated Diane Lysen, 72, of Edina, who visits the Life Time club in Eden Prairie. Since its Saturday morning fitness class won’t be open to seniors next year, Lysen has already asked if the club could reschedule sessions to fit the new limitations. She questioned why the company is making the change.
“We’re not overusing the equipment,” said Lysen, who works as an insurance agent.
Other types of health clubs place limits on the frequency of visits or the number of classes for Medicare members. For example, at some specialty gyms like Pure Barre, F45 Training and StretchLab, membership through Medicare partner programs includes a certain number of classes or sessions per month with the option to pay more.
But Joshua Haberman, chief executive of Bloomington-based insurance brokerage Haberman & Alexander, said Life Time’s decision struck him as atypical. The health clubs that the YMCA of the North operates, for example, do not limit Medicare members’ hours.
“I’ve never heard of anyone restricting hours,” he said. “Either you’re in or you’re out.”
Shawnee Christenson, an insurance agent in New Hope, said she’s received complaints about the change, something she’s heard about in other states but never before in Minnesota.
John Atwood, founder and managing partner of Boston-based Atwood Consulting, which advises gyms and other sports facilities, said many health clubs struggle with how to offer discounts on memberships. It can be difficult for fitness facilities, including non-profit organizations like the YMCA, to offer subsidized memberships to Medicare fitness programs like SilverSneakers.
“The amount of revenue coming from SilverSneakers is so small that it’s hard to justify the program’s existence,” he said.
For a club with membership fees ranging from $9 to $30 a month, prices can be comparable. However, this isn’t about health clubs like Life Time, Atwood said.
In recent years, Life Time has invested millions of dollars to open more resort-type clubs with numerous amenities such as saltwater pools, cabanas and spas. As Life Time clubs have increased their amenities, the company has increased its membership fees, with the lowest tier at $99 per month.
Life Time CEO Bahram Akradi told analysts in July that the adjusted pricing allows the company to “manage the experience.”
Akradi added that rates could continue to rise.
In April, May and June of this year, Life Time posted a profit of $17 million, compared with a net loss of $2.3 million during the same period last year. This is largely due to an increase of about 10% in revenue per center member and a 25% increase in membership fees and application fees to over $387,000.
Meanwhile, Medicare Advantage health plans for seniors has been a lucrative line of business for insurers.
Life Time recognized the importance of seniors in its clubs. Last year, it launched ARORA programming for seniors. It offers subscriptions with discounts of around 10% for people aged 65 and over.
Atwood said the policy “could legitimately be a way for Life Time to keep this show going”.
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