Q: Will the Affordable Care Act force fire departments to provide health insurance to their volunteers?
A: No. A memo issued by the Department of Treasury makes clear volunteer firefighters will not be counted as full-time employees under the Affordable Care Act.
Will the requirements of the Affordable Care Act force volunteer fire departments to provide health insurance to their volunteers? If so, will the vast majority of volunteer fire departments be forced to end their services?
Our email inbox has been inundated with similar queries about the impact of the Affordable Care Act on volunteer fire departments. The furor has been fueled, in part, by a Dec. 9 story in England’s Daily Mail, which carried the headline, ” ‘A public safety disaster': Obamacare could force THOUSANDS of volunteer fire departments to close,” as well as one from Fox News Insider, which ran Dec. 10 under the headline, “ObamaCare May Force Thousands of Volunteer Fire Departments to Close.”
The operative words in those two headlines are could and may.
Under the Affordable Care Act, businesses with more than 50 full-time workers (defined as those working an average of at least 30 hours per week) are required to provide health insurance to all of their employees or face a tax penalty of $2,000 per employee (minus the first 30 employees). That so-called employer mandate was postponed, and will now go into effect in 2015.
But on Jan. 10, Mark Mazur, assistant secretary for tax policy at the Department of Treasury, cleared up any ambiguity on the issue with a memo that explained that the forthcoming IRS rules on the employer responsibility for the Affordable Care Act would not require counting volunteer firefighters as full-time employees.
Mazur, Jan. 10: As a result of that review and analysis, the forthcoming final regulations relating to employer shared responsibility generally will not require volunteer hours of bona fide volunteer firefighters and volunteer emergency medical personnel at governmental or tax-exempt organizations to be counted when determining full-time employees (or full-time equivalents).
These final regulations, which we expect to issue shortly, are intended to provide timely guidance for the volunteer emergency responder community. We think this guidance strikes the appropriate balance in the treatment provided to traditional full-time emergency responder employees, bona fide volunteers, and to our Nation’s first responder units, many of which rely heavily on volunteers.
Prior to that memo, the IRS had been mum on the issue of how the law relates to volunteers, which got some volunteer fire company officials wondering whether that might mean they’d have to provide insurance to volunteers, or face a penalty.
The concern was not entirely unfounded. A longstanding IRS policy deems volunteer firefighters to be “employees” for tax purposes. That’s because some volunteer firefighters receive a small stipend for things like travel or other expenses.
IRS memo, Issues for Firefighters: Generally, tax laws apply to firefighters in the same manner as for other types of workers. It does not matter whether firefighters are termed “volunteers”, are considered employees, or are identified by any other name, if the work they do is subject to the will and control of the payer, under the common-law rules, they are employees for Federal tax purposes.
Whether or not volunteer firefighters would be exempt from the employer mandate under the Affordable Care Act was not addressed in the proposed rules released by the Treasury Department last year.
That prompted Heather Schafer, executive director of the National Volunteer Fire Council, to direct a letter to the acting IRS commissioner urging him to “clearly exempt volunteers from being considered ‘employees’ of the organizations they serve under the Employer Shared Responsibility Provisions of the law.”
Schafer, Sept. 9: Depending on how/whether the final implementing regulations address the status of volunteer emergency responders, thousands of agencies could end up being penalized for not providing health insurance to their personnel.
This would be a public safety disaster. Volunteer fire and EMS agencies do not have the resources to provide their members with health insurance. Communities that rely on volunteer emergency responders are commonly rural, with small tax bases and higher-than-average rates of poverty. Most volunteer agencies raise money by serving meals at the fire station, selling raffle tickets or holding community events just to make ends meet. The cost of complying with the Employer Shared Responsibility Provision of the PPACA could exceed the operating budgets of many volunteer agencies, which mainly consist of paying insurance, fuel, electricity, training and equipment.
Volunteers do not have an expectation that they will receive health insurance benefits through the departments that they serve. Many volunteers, like approximately 60 percent of all Americans, receive employer-sponsored health insurance through their full-time jobs. Although there are some cases where volunteers have access to health insurance through their department currently, it is generally because the agency provides coverage to full- or part-time paid personnel and the volunteers are eligible to purchase their own insurance as part of the group plan. The NVFC is not aware of any instances of department paying for health insurance coverage for volunteer members at the present time.
Schafer warned that if the IRS did not spell out a clear exemption for volunteer firefighters, many fire companies “may simply take a ‘better safe than sorry’ approach and curtail their activities in an unnecessarily broad manner to avoid incurring penalties under the PPACA.”
It was also unclear how departments would calculate hours worked to determine whether volunteers meet the 30-hour threshold to be considered full-time employees. Would it include training and maintaining the firehouse or time spent on fundraising? Those questions have now been addressed by the Treasury memo.
Even if the IRS had ruled that volunteer firefighters are employees for the purposes of the ACA’s employer mandate, legislation proposed by a bipartisan group of legislators was poised to reverse that.
On Dec. 10, Rep. Lou Barletta, a Republican from Pennsylvania, introduced H.R. 3685, the Protecting Volunteer Firefighters and Emergency Responders Act. The bill has 64 cosponsors from both parties. Over in the Senate, Democrat Mark Warner from Virginia proposed a similar bill, S. 1798, which also has bipartisan cosponsors. Both bills would ensure that emergency services volunteers are not counted as full-time employees under the employer mandate portion of the Affordable Care Act.
David Finger, director of government relations for the National Volunteer Fire Council, told us in a phone interview that he had not spoken to a single legislator who believed it was the intent of the Affordable Care Act to include volunteer fire companies in the employer mandate. And he was confident the IRS would agree — which it now has.
Of the more than 30,000 fire departments in the U.S., just over 20,000 are all volunteer, and another 5,445 are mostly volunteer, according to council estimates. All told, the council estimates, there were more than 783,000 volunteer firefighters in the U.S. in 2012.
Update, Jan. 13, 2014: On Jan. 10, Mark Mazur, assistant secretary for tax policy at the Department of Treasury, issued a memo that definitively explained that the forthcoming IRS rules on the employer responsibility for the Affordable Care Act would not require counting volunteer firefighters as full-time employees. The original version of this story was published before that memo was released, and it has now been updated to reflect that new piece of crucial information.
— Robert Farley
Mazur, Mark. “Treasury Ensures Fair Treatment for Volunteer Firefighters and Emergency Responders Under the Affordable Care Act.” U.S. Department of Treasury blog, “Treasury Notes.” 10 Jan 2014.
Martosko, David. “‘A public safety disaster': Obamacare could force THOUSANDS of volunteer fire departments to close.” The Daily Mail. 9 Dec 2013.
Fox News Insider. “ObamaCare May Force Thousands of Volunteer Fire Departments to Close.” 10 Dec 2013.
U.S. Government Printing Office. The Patient Protection and Affordable Care Act. Passed, 23 Mar 2010.
Internal Revenue Service. Notice: Determining Full-Time Employees for Purposes of Shared Responsibility for Employers Regarding Health Coverage. Undated, accessed 18 Dec 2013.
Internal Revenue Service. Notice: Issues for Firefighters. Undated, accessed 18 Dec 2013.
Internal Revenue Service. Notice of proposed rulemaking and notice of public hearing: Shared Responsibility for Employers Regarding Health Coverage. 3 Jan 2013.
Schafer, Heather. Letter to the Acting Commissioner of the Internal Revenue Service. 9 Sep 2013.
GovTrack.us. H.R. 3685: Protecting Volunteer Firefighters and Emergency Responders Act. Introduced, 10 Dec 2013.
GovTrack.us. S. 1798: Protecting Volunteer Firefighters and Emergency Responders Act. Introduced, 10 Dec 2013.
National Volunteer Fire Council. Volunteer Fire Service Fact Sheet. Undated, accessed 18 Dec 2013.