How the ’Fiscal Cliff’ Bill will Affect the Volunteer Emergency Services

January 4, 2013

With enactment of the American Taxpayer Relief Act (H.R. 8), Congress and the President avoided the “fiscal cliff” by extending numerous provisions in existing law and averting spending cuts and tax increases that had been scheduled to take effect automatically on January 1. The volunteer fire and emergency services will be affected directly and indirectly by numerous provisions in H.R. 8.

The bill extends “add-on” payments through Medicare for ground ambulance transport through January 1, 2014, including bonus payments for transports originating in super-rural areas where the cost of providing service is highest. Add-on payments for air ambulance transports were also extended through June 30, 2013. All of the add-on payments, which are intended to cover the difference between the cost of providing service and the reimbursement that providers receive through Medicare, had been scheduled to expire at the end of 2012.

H.R. 8 delays the automatic spending cuts, which were agreed to in August 2011 as part of a deal to raise the federal debt ceiling, from taking effect until March 1, 2013. If Congress cannot come to an agreement and the cuts go forward as envisioned under current law, non-defense and defense discretionary programs would be cut by $550 billion each over the next 10 years. Essentially, passage of H.R. 8 buys the new Congress two months to determine how to replace the automatic cuts with some other type of deficit reduction. For FY 2013, the cuts would likely mean a 8.2 percent reduction for non-entitlement federal programs and agencies, potentially including the Assistance to Firefighters Grant and Staffing for Adequate Fire and Emergency Response grant programs as well as the U.S. Fire Administration.

While H.R. 8 dealt with a number of tax provisions that were expiring it did not address important issues related to the taxation of volunteer benefits. The Volunteer Responder Incentive Protection Reauthorization Act (VRIPRA), which exempts property tax benefits and up to $600 per year of other benefits that volunteer firefighters and EMTs receive as a reward for their service, was not included in H.R. 8. The original Volunteer Responder Incentive Protection Act was enacted in 2007 but expired at the end of 2010, when Congress failed to extend it. Congress is expected to take up major tax legislation early this year and the NVFC will be working to ensure that important volunteer tax bills like VRIPRA and the Volunteer Emergency Services Recruitment and Retention Act (VESRRA), which simplifies the treatment of length of service award programs under the tax code, are included.