U.S. Rep. Frank LoBiondo says the new federal health care law may force volunteer fire companies to disband because they can't afford to buy health insurance for their firefighters, a potential requirement of the act.
The congressman said that loss would force the municipalities to create costly paid fire departments in those towns, which one southern New Jersey mayor called "a budget buster."
LoBiondo, R-2nd, calls the situation one of the "unintended consequences" expected to come out of the Patient Protection and Affordable Care Act, commonly called Obamacare.
LoBiondo and other members of the Congressional Fire Services Caucus have contacted acting IRS Commissioner Danny Werfel urging him to make sure volunteer firefighters don't come under Obamacare. They sent Werfel a letter Dec. 6 but have yet to get a response. The act could impact other first responders including EMT's but the bulk of them are firefighters, he said.
Jason Galanes, a spokesman for Lobiondo, said the IRS still is setting the guidelines for volunteer workers with a Jan. 1 deadline looming for the required health insurance the law calls for, though some deadlines have been put off until Jan. 1, 2015. The way the law is now written, the IRS would have to take "corrective action" to make sure the volunteers don't fall under the act.
"The IRS has to set guidelines based on what's in the law. They have to interpret the law. At this point, we're just waiting for the IRS to say something," Galanes said.
Fire chiefs and mayors in southern New Jersey are just starting to hear about the issue.
"The cost of benefits would be astronomical," said Lower Township Mayor Mike Beck, who has three fire companies in his township and notes the health insurance for municipal employees is $20,000 per year.
"It could be a real budget game-changer. It just couldn't be done. It's something we'd love to do. We have lot of respect for volunteer firefighters, but it's not something we have the resources to do," Beck said.
As expensive as health insurance policies could be for the volunteer firefighters in the Town Bank, Erma and Villas sections, it would cost more for Lower Township to create a paid department if they all disband. Ocean City, which has a paid fire department, spends $6.6 million per year just on salary and wages for them. This does not include buildings, fire apparatus, pensions and other costs. And Ocean City has fewer residents than Lower Township.
An increase of more than $6 million on the township's $26 million budget would create havoc. It also would exceed the state-mandated caps on spending and tax levies, although health insurance could be exempted from those ceilings.
"We'd have to give (Chief Financial Officer) Lauren Read CPR. It would be 'before and after,' as far as your tax bill goes," Beck said.
Ocean City Chief Financial Officer Frank Donato said the family benefit package for paid firefighters in Ocean City is $27,800. Even at that price, he said it would be less costly than creating a paid department.
"The cheaper way to go would be to keep the volunteers and give them health benefits," Donato said.
Michael Clark, president of the Cape May County Firemen's Association, said few in the Fire Service are aware of the issue. He plans to bring it up at the association's next meeting.
Clark, a volunteer in Cape May Court House, said insuring the company's 48 volunteers would cost about $1 million per year.
"It would be a killer. That would kill communities in New Jersey. You'd have to have shared services," Clark said.
Towns typically give some money to the volunteer companies, helping them buy equipment and new fire trucks, or in some cases paying for insurance on the apparatus or workmen's compensation for line-of-duty injuries. One worry is this money would all get funneled to health insurance, leaving a gap that can't be made up by pancake breakfasts, bingo games and coin drops.
Towns that are in fire districts have annual budgets approved by the voters and are in a better position to raise money if insurance must be purchased. This would ultimately be funded through higher property taxes.
"There's no good outcome," said Michael Donohue, a volunteer in Stone Harbor and a municipal solicitor for both Avalon and Stone Harbor.
Donohue said he has been following the issue "for some time" and a week ago read that the IRS still has not made a decision. He said it may apply only to companies of more than 50 members, but this would result in companies being understaffed to avoid the costs. There also is a question of whether firefighters could classify as part-time workers and not fall under the act, but hours vary widely depending on fire calls.
There seems to be more confusion than facts. Donohue said for a long time nobody seemed to know exactly what was in the new federal law.
Galanes said Lobiondo and several other congressmen may seek "legislative options" depending on the IRS rules that come out. They have offered the IRS a way out, saying there is precedent under the Fair Labor Standards Act to recognize firefighters as volunteers and not employees
"If the IRS defines volunteer firefighters as employees, then volunteer companies will be forced to provide health insurance, which none of them can do. You'd have to disband the company because you can't meet Obamacare's requirement. Hopefully the IRS will do the right thing and define everybody as volunteers," Donohue said.
Some towns give pensions to volunteer firefighters and a nominal stipend for serving. Lobiondo said the Fair Labor Standards Act allows this practice without the firefighters losing their status as volunteers. He is asking the IRS to extend this to Obamacare.
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