WASHINGTON, D.C. — Volunteer fire departments and emergency medical responder companies will not be required to provide health insurance for their members or face a penalty under the Affordable Care Act, the US Department of Treasury announced on January 10.
The health care overhaul, often referred to as “Obamacare,” requires that employers with more than 50 employees who work more than 30 hours per week on average offer them health insurance or pay a penalty in lieu of those responsibilities. Such payments are called “the employer shared responsibility provisions” of the act.
The US Department of the Treasury announced through its blog on January 10 that volunteer firefighters and emergency personnel would not need to be covered by their employers.
“An important question arises about how the hours of volunteer firefighters and other volunteer emergency responders should be taken into account in determining whether they are full-time employees and for counting toward the 50-employee threshold,” Mark J. Mazur, assistant secretary for tax policy, posted January 10 for the Treasury Department. “Treasury is acting to ensure that emergency volunteer service is accorded appropriate treatment under the Affordable Care Act.”
Firefighters and officials across the country had reportedly expressed concern about the financial impact of having the volunteers fall under the new regulations.
Treasury and the IRS issued proposed regulations on the employer shared responsibility provisions (Section 4980H of the Tax Code) in December 2012 and invited public comments. Numerous comments were received from individuals and local fire and emergency medical service departments that rely on volunteers, Mr Mazur continued in last week’s post.
“The comments generally suggested that the employer responsibility rules should not count volunteer hours of nominally compensated volunteer firefighters and emergency medical personnel in determining full-time employees (or full-time equivalents). In addition, Treasury heard from numerous members of Congress who expressed these same concerns on behalf of the volunteer emergency responders in their states and districts,” the post continued.
Treasury and the Internal Revenue Service (IRS) carefully reviewed the comments and spoke with representatives of volunteer firefighters and volunteer emergency personnel to gain a better understanding of their specific situations, according to Mr Mazur. The groups reportedly also consulted with representatives of the International Association of Fire Chiefs (IAFC).
The IRS also heard from at least five members of Congress with constituents in Connecticut. In a letter to IRS Commissioner John Koskinen dated January 9, Congressmen John B. Larson, Rosa L. DeLauro, Elizabeth Esty, Joe Courtney, and Jim Himes expressed their “growing concern for the volunteer first responder community in Connecticut and states across the country.”
The volunteer first responder community, the group said, had raised concerns that in 2015, “some departments that rely on volunteers may be unnecessarily required to comply with the employer shared responsibility requirement. … We believe that the IRS must take action to address this issue and clarify that volunteer first responders that receive nominal compensation are not counted as employees toward the employer responsibility requirement.
“As you know, volunteer first responders are critical to the safety and security of communities in Connecticut and across America,” the group continued. “Close to 9 out of 10 fire departments in the U.S. are staffed by volunteers whose donated services represent over $100 billion.
“These are individuals who sacrifice their time and put themselves in harm’s way in service to their neighbors. As such, many departments offer nominal benefits to volunteers as an incentive and gesture of appreciation,” the letter continued.
There are no paid firefighters in Newtown. All five of the town’s companies are volunteer-driven. Active firefighters and officers receive stipends based on the number of calls, meetings and/or training drills they attend, as set by each company.
Likewise, Newtown Volunteer Ambulance Corps (NVAC) is a group of emergency medical technicians who provide emergency medical service and ambulance transport when needed. (To provide advanced life support when needed, the corps contracts for a paramedic to be stationed at the NVAC garage to respond to calls.)
“There has been a recognition by both the IRS and the Department of Labor of the unique and important role that volunteer first responders play and the need to ensure that nominal compensation does not call into question their volunteer status,” the congressmen wrote. “Many departments are concerned that despite the volunteer status of their first responders, they will be considered ‘employees’ and thus required to comply with the employer shared responsibility requirement.”
Most volunteer first responders, they said, work full- or part-time in other occupations. There is no expectation that their volunteer departments would provide health coverage.
The congressmen fully support the law, they said, but their concern was that the issue would have “significant impacts” on volunteer departments across the country.
Treasury Department Response
On January 10, Representative Larson received a reply from the Treasury Department. A letter from Alastair M. Fitzpayne, assistant secretary for legislative affairs for the department, said that Treasury and IRS had “carefully reviewed” the comments and feedback concerning IRS Code 4980H, a statutory provision applicable to “bona fide volunteers for different purposes under Code section 457(e)(11) (relating to deferred compensation plans of state and local governments and tax-exempt organizations) and rules governing the treatment of volunteers for purposes of the wage and hour laws,” Mr Fitzpayne wrote.
“As a result of that review and further analysis concerning the appropriate treatment of volunteer firefighters and volunteer emergency personnel under section 4980H, the forthcoming final regulations generally will not require volunteer hours of bona fide volunteers firefighters and volunteer emergency personnel at government entities or tax-exempt organizations to be counted when determining an employer’s full-time employees or full-time equivalent employees.”
Treasury and the IRS also reviewed various rules that apply to such volunteer personnel under other laws. These include the statutory provisions that apply to bona fide volunteers under Section 457(e)(11) of the Tax Code (relating to deferred compensation plans of state and local governments and tax-exempt organizations) and rules governing the treatment of volunteers for purposes of the federal wage and hour laws. 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).
The final regulations are expected to be issued shortly, according to Mr Fitzpayne. While those specifics are not yet available, Mr Fitzpayne did point out that under transition relief announced in July 2013, no employer shared responsibility payments will be assessed for 2014.
“Such payments will be assessed only for 2015 and subsequent years,” he wrote.
Congresswoman Esty said she was pleased that the Obama Administration listened to concerns she had heard and shared from volunteer firefighters in her district.
“The clarifications just published by the IRS will help the Affordable Care Act work better for our fire departments and, ultimately, make sure that the departments have the capacity to recruit and retain volunteer firefighters, which is critical to keeping our communities safe,” she said in a January 13 press release.
“Today’s decision is welcome news for the thousands of departments and volunteers working to keep our communities safe,” said Congressman Larson, also by way of the same press release. “When the volunteer first responder community, including one of our local fire chiefs, brought this issue to my attention, I knew an explanation was needed to ensure our departments have the resources they need. This decision could not have come at a better time as the demand for volunteer first responders steadily increases in Connecticut and across the nation.
“I applaud Commissioner Koskinen, the Department of Treasury and the IRS for their timely response and look forward to continuing my efforts for our brave volunteer first responders,” Mr Larson added