The Affordable Care Act’s mandate that all large employers provide health care for their employees has an unintended target: the 26,000 fire departments across the U.S. that are either entirely or mostly composed of volunteers.
The health overhaul requires employers with more than 50 workers to provide health insurance, though that provision was delayed until 2015. The Internal Revenue Service considers volunteer firefighters to be employees for tax purposes because they often receive some benefit for their service, such as a small stipend. Fire lobbying groups have pressed the agency to issue a rule clarifying how the health law relates to volunteers, but the National Volunteer Fire Council has yet to receive word and its government relations director says he doesn’t know when the IRS will weigh in.
“These are volunteers with fulltime employment and health care elsewhere,” said David Finger. “This is really just an unintended consequence.” Finger added that the IRS hasn't said how it would treat departments that refuse to offer insurance to volunteers who already have coverage from their employer. "We aren’t sure how it would work if the volunteer gets insurance through their work," he said.
In the meantime, recently filed bills in both the House and the Senate seek to remove volunteer firefighters and emergency personnel from the tally of full-time workers calculated by employers as they prepare for compliance with the 2015 mandate. Under the Affordable Care Act, a full-time employee is anyone who works at least 30 hours a week.
Both bills have wide bipartisan support but neither has yet received a committee vote. The Senate bill is sponsored by Democratic Sen. Mark Warner of Virginia, while the House bill is sponsored by GOP Rep. Lou Barletta of Pennsylvania, where 97 percent of fire departments are all or mostly made up of volunteers. “Forcing volunteer fire companies to comply with the (employer mandate) will not extend health insurance to the uninsured—rather it will close firehouses and place communities at risk,” Barletta wrote in a letter to the IRS.
Nationally, volunteers account for nearly 70 percent of the 1,129,250 total firefighters in the U.S., according to the Volunteer Fire Council. About 26,000 of the 30,000 total departments are either all or mostly volunteer-based. Some fire departments are part of a municipal or county government, but many are private nonprofits. Nonprofits could be hit especially hard, but even larger governmental organizations would feel the strain, Finger said. If nothing changes, fire departments would likely limit hours for volunteers, cut positions, eliminate whatever benefits volunteers do receive or take other actions to avoid outright closure, Finger said, but his group is advising departments to hold off doing anything drastic at this point.
“I don’t think you can rule out closures at this point, but I think far more likely is that people will take steps to protect themselves either by eliminating benefits, reducing volunteers or hours, or they basically ignore this,” he said. “Then they’re just vulnerable if the IRS decided they wanted to enforce it.”
But some departments are preparing for the worst. Burlington, Washington, has nine full-time employees and 30 volunteers on its fire staff. City Administrator Bryan Harrison told a local TV station that full medical benefits for volunteers would cost the city $750,000, when the department’s entire budget is $1.6 million.
“I’m not sure where we’d get that money,” he said.