Taxes and firefighters are two words that aren't often said in the same breath. However, fire chiefs last year shifted their focus from NFPA codes to tax codes when concerns were raised that the Internal Revenue Service (IRS) might consider nominally compensated volunteer firefighters as employees of their fire departments for the purposes of enforcing the Patient Protection and Affordable Care Act (PPACA).
On February 10, the IRS issued their final rule to implement the Employer Shared Responsibility Provision (ESRP) of the PPACA. Fortunately for the fire service, this final rule contained a provision to exempt volunteer and combination fire departments from the requirement to offer health insurance to their nominally compensated volunteer personnel.
Specifically, the IRS ruled:
In response to these concerns, the final regulations provide that hours of service do not include hours worked as a "bona fide volunteer" … Bona fide volunteers include any volunteer who is an employee of a government entity or an organization described in section 501(c) that is exempt from taxation under section 501(a) whose only compensation from that entity or organization is in the form of (i) reimbursement for (or reasonable allowance for) reasonable expenses incurred in the performance of services by volunteers, or (ii) reasonable benefits (including length of service awards), and nominal fees, customarily paid by similar entities in connection with the performance of services by volunteers.
In creating the exemption, the IRS broadly applied the definition of bona fide volunteer to include any nominally compensated volunteer for a government entity or a nonprofit organization.
This definition is particularly helpful to the fire service since it also exempts nominally compensated volunteers in such programs as CERT, FIRECORPS, fire police or ladies' auxiliary organizations.
Unfortunately, in creating this definition of bona fide volunteer, the IRS didn't clearly define what would constitute reasonable benefits and nominal fees. The IAFC will continue engaging the IRS and encouraging the IRS to create a clear definition for these terms.
While this one issue involving the intersection of the PPACA and the fire service may be settled, there continue to be several other ways the PPACA will have significant impacts on the fire service and its operations. From EMS to labor negotiations, the PPACA will continue to be a major consideration for the fire service.
Regardless of this latest determination by the IRS, fire chiefs are strongly encouraged to work with either their agency's or jurisdiction's benefits administrator or legal counsel to ensure their fire departments are in full compliance with the PPACA.