2011 Fire Fighters Issues Book.pmd - IAFF

INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS
HAROLD A. SCHAITBERGER THOMAS H. MILLER
General President General Secretary-Treasurer
March, 2011
Dear Member of Congress:
On behalf of the nearly 300,000 men and women of the International Association
of Fire Fighters, I am pleased to provide you with a copy of our 2011 Legislative
Issues Book. Our nation’s first responders are facing significant challenges at
the federal, state and local level, and are directly affected by decisions that will be
made by the 112th Congress. This briefing book is intended to provide you with
a better understanding of the perspective of the nation’s professional fire fighters
and emergency medical personnel.
From March 13 - 17, approximately one-thousand IAFF members from across
the country will come to Washington, DC to attend the IAFF’s annual Legislative
Conference and meet with their elected representatives. I hope you will have the
opportunity to meet with your fire fighter constituents to discuss the issues
outlined on these pages, as well as the challenges they are confronting at the state
and local level.
I thank you in advance for your consideration of our views. The IAFF
Department of Governmental Affairs stands ready to assist you and your staff
throughout the year. Please do not hesitate to call on us. We look forward to a
cooperative and productive legislative session.
Sincerely,
A
Harold A. Schaitberger
General President
1750 New York Avenue, N.W., Washington, DC 20006-5395

IAFF LEGISLATIVE ISSUES BOOK
112th Congress - First Session
TABLE OF CONTENTS
ISSUE PAGE
Public Sector Pensions
Fact Sheet 4
Key Points 5
Analysis of the Transparency Act 6
Criticisms of the Transparency Act 7
Mandatory Social Security Coverage
Fact Sheet 8
Key Points 9
SAFER and FIRE Grants
Fact Sheet 10
Key Points 11
Federal Fire Fighter Presumptive Disability
Fact Sheet 12
Key Points 13
Health Care Tax Exemption
Fact Sheet 14
Key Points 15
3

IAFF LEGISLATIVE FACT SHEET
PUBLIC SECTOR PENSIONS
The IAFF opposes efforts to force states to dismantle fire fighter pension plans or enable states to avoid their
responsibilities to their employees and retirees by declaring bankruptcy.
BACKGROUND
In recent months, there has been a great deal of discussion about the solvency of public employee pension
plans. Some elected officials have called for dismantling defined benefit pension plans, and replacing them
with 401(k)-style defined contribution plans. Others have suggested allowing states to declare bankruptcy to
avoid their financial obligations to their employees and retirees.
While the current economic downturn has placed many states in dire fiscal straits, public employee pensions
are not the cause. Misleading media reports have created a false impression that public employees have been
promised overly generous benefits paid for by tax dollars.
A realistic assessment of state and local pension systems shows a very different picture. Most pension plans
are in sound financial shape, even after the stock market collapse of 2008-2009. While there are some instances
in which plans are dangerously underfunded, these states have been moving aggressively to change their systems
and return to solid financial footing.
Moreover, the vast majority of funding in pension plans does not come from taxpayers. More than 70% of
funds in pensions have been contributed by workers or earned by making prudent investments. Contrary to the
claims about pensions bankrupting states, only about 3% of state budgets are devoted to pension contributions.
The primary cause of pension plan underfunding has been the failure of states to make their required annual
contributions. When the stock market was rising and plans were showing a surplus, states simply opted to forgo
contributing their share. Rather than acknowledge that their failures caused the shortfalls, some government
officials are now using fire fighters as scapegoats and are proposing slashing the benefits that fire fighters
earned over their years of service to the community.
Dismantling pensions in favor of 401(k)-style defined contribution plans would be catastrophic for the retirement
security of fire fighters and other public employees, and would not save state governments money. States
would still contribute to employees’ retirement, but the benefits received by employees would be significantly
less. Wall Street firms, which are behind much of the misinformation campaign, are the only ones who stand to
benefit from such a change.
CONGRESSIONAL ACTION
Representative Devin Nunes (R-CA) and Senator Richard Burr (R-NC) introduced the Public Pension
Transparency Act. H.R. 567 and S. 347 would require states to calculate their long-term obligations using
unrealistically low rates of return on investments, and create a false picture of the plans funded status.
4
Representative Jason Chaffetz (R-UT) introduced H. Res 23, a resolution expressing the sense of Congress that
defined benefit plans should be replaced with defined contribution plans.

KEY POINTS
PUBLIC SECTOR PENSIONS
• Contrary to media reports, most public sector pension systems are on sound financial footing. While the downturn
in the stock market has posed challenges, most plans will be able to recoup their losses without making changes in
benefits or contributions. Those plans that need to make changes are already doing so.
• Underfunding of plans is due largely to the failure of state and local governments to make their required annual
contributions during good times. It is wrong to punish beneficiaries of pension plans for the failure of their
employer to live up to their obligations.
• Many states are facing severe budget shortfalls, but this has nothing to do with their pension system. Only 3% of
state expenditures are related to employee pensions.
• Defined benefit pension plans are a fair and cost-effective system of providing retirement security to workers.
More than 70% of pension funds come from employee contributions and earnings on prudent investments, with
tax dollars accounting for only about a quarter of the funds.
• Efforts to convert defined benefit (DB) plans to defined contribution (DC) plans are shortsighted. DB plans are
superior to DC plans in several important ways:
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DB plans have much greater return on investments than DC plans.
DB plans have lower administrative costs than DC plans.
DB plans include disability and survivor benefits, which provide retirement security for the families of
fire fighters who are injured or killed in the line of duty.
DB plans weather the ups and downs of the stock market better than DC plans, and do not penalize
workers who reach retirement age during a market downturn.
• Fire fighters would be especially hard hit if public sector DB plans were dismantled. Fire fighters have negotiated
unique pension systems that account for their early retirement ages and high rates of disability. Moreover, most
fire fighters are not covered by Social Security, and many are covered by mandatory retirement age requirements.
DB plans provide for retirement security in ways DC plans cannot.
• Fire fighter pensions are not overly generous, as some have claimed. The average pension received by a fire
fighter is less than $35,000. The anecdotes about huge pension benefits are anomalies that need to be addressed
in the context of that specific pension plan, and do not warrant changes in federal law.
• The shift in recent years from DB to DC plans in the private sector has undermined the retirement security of
millions of Americans. The gap between the amount of savings American workers need for retirement and the
amount they are currently projected to have is an astonishing $6.6 trillion. Impoverished retirees will harm our
economy and increase dependence on government assistance.
• Congressional proposals to require “transparency” are unnecessary since state laws already require disclosure.
The real intent behind such proposals is to exaggerate shortfalls and force states to dismantle their DB plans.
• Allowing states to declare bankruptcy to avoid paying retirees the pensions they have earned would be unfair to
workers, and could wreak havoc with state and municipal finances.
5

IAFF Analysis:
Public Employee Pension Transparency Act
Public pensions continue to be attacked from all sides. In addition to attempts to weaken
or dismantle public pensions at the state and local levels, some in Congress now want
the federal government to undermine public pensions. Representatives Devin Nunes
(R-CA), Paul Ryan (R-WI) and Darrell Issa (R-CA), and Senator Richard Burr introduced
the Public Employee Pension Transparency Act (PEPTA). H.R. 567 and S. 347 would
force states and local governments to change the way public pension fund liabilities are
calculated and reported. Specifically, PEPTA would require new federally-mandated
reporting requirements on states and local governments, require certain information to
be made public on a website, and prohibit the federal government from providing any
financial assistance or bailouts to public pension funds in the future. Failure to comply
with the bill’s new requirements would result in states or local government losing their
ability to issue tax-exempt bonds.
Although the bill’s intent seems harmless, the Transparency Act would effectively
undermine public confidence in defined benefit pension plans. For the first time ever,
the federal government would force states and local governments to list pension fund
liabilities based on “risk free” rates, which would be equivalent to the interest earned on
Federal Treasury bonds, currently at 4%. In contrast, traditional actuarial accounting
standards use an expected rate of return based on a 25-year yield of past performance,
which is around 8%. By forcing public pension funds to use the lower Treasury bond
rate, the overall pension liability will appear drastically larger, prompting calls for
unnecessary reforms or worse, disbanding pensions altogether in favor of 401(k)-style
defined contributions plans.
The truth is that there is no public pension crisis. Only about 3% of state budgets are
devoted to pensions, and most pension plans are in sound financial shape, even after the
stock market collapse of 2008-2009. Since March 2009, pension fund asset values have
been growing with current assets valued at approximately $2.9 trillion. Overall, the
Government Accountability Office found that public pensions are financially secure
and positioned to meet their long-term pension obligations. While there are a few
instances in which plans are dangerously underfunded, these states have been moving
aggressively to change their systems and return to solid financial footing.
The Public Employee Pension Transparency Act also represents a fundamental lack of
understanding regarding the strong accounting rules and strict legal constraints already
in place that require open and transparent governmental financial reporting and processes.
This legislation conflicts with existing governmental accounting standards, increases
state and local government costs, and undermines investor confidence in the municipal
bond market.
6

WHAT’S WRONG WITH THE PUBLIC EMPLOYEE
PENSION TRANSPARENCY ACT?
It’s Based on Erroneous Information—Sponsors of the PEPTA claim that public pension plans are
dangerously underfunded, and are likely to go bankrupt. This simply isn’t true. The overwhelming
majority of public pensions are adequately funded. The few that are not are taking steps to correct their
imbalance.
It Requires Use of Faulty Assumptions—Pension plans already use prudent long-range assumptions
to determine their funded status. The PEPTA requires plans to assume that their rate of return will be
far lower than financial experts conservatively predict, and will create a grossly distorted picture of the
plan’s funded status.
It Violates States’ Rights—The 2010 campaign saw a renewed emphasis on the Constitution and
respect for states’ rights. The PEPTA violates these principles by forcing new, burdensome reporting
requirements on states and local governments, and adding onerous new tax penalties that undermine
their ability to issue bonds at competitive interest rates.
It Punishes Those Who Aren’t At Fault—The cause of the underfunded status of the few pension
plans that are running deficits is the failure of employers to make their annual required payment. The
decision to skip payments when the plans were doing well left plans unable to weather the inevitable
downturn. The PEPTA would lead to reduced benefits for workers and retirees, even though these
people paid their share into the system. It’s wrong to punish employees for the failure of government
agencies.
It’s Not Needed—Public sector pension plans already disclose their funded status and assumptions.
State laws and the Government Accounting Standards Board (GASB) require full transparency. A
federal law would add a burdensome layer of reporting, and not improve disclosure or transparency.
It’s Not Needed to Protect Taxpayers—Sponsors of the PEPTA claim the legislation is necessary to
protect taxpayers against the need to bailout pension plans that go bankrupt. But no public pension
plan has sought a federal bailout, and there is no reason to believe that will change.
It Discriminates Against Public Pensions—Many financial institutions make decisions based on
assumptions of long-range return on investments. None of them are required to use a risk-free rate of
return. In fact, some are required by federal law to assume a much higher rate of return. The PEPTA
singles out public pensions.
It Will Force States to Convert to a Defined Contribution System—Group defined benefit pension
plans are much better for both the employee and the employer than individual defined contribution
retirement accounts. DB plans produce a greater rate of return at a much lower cost. Forcing States to
convert to a DC plan will benefit Wall Street, but will harm retirees and government agencies.
7

IAFF LEGISLATIVE FACT SHEET
MANDATORY SOCIAL SECURITY COVERAGE
The IAFF opposes mandatory Social Security coverage for non-covered public sector employees.
BACKGROUND
When the Social Security system was created in 1935, government employees were expressly excluded. Even when state
and local governments were given the option to join the system in the 1950s, many fire departments were still legally
barred from electing Social Security coverage until 1994. Because of this long exclusion from the Social Security system,
local governments created pension systems for fire fighters to address their retirement needs without Social Security. An
estimated 70 percent of all fire fighters are covered by pension plans that are independent of Social Security. These
comprehensive plans are tailored to meet the unique needs of fire fighters by taking into consideration the early retirement
ages and high rates of disability retirement that are characteristic of public safety occupations.
Throughout the1980s and 90s, Congress considered various proposals to bring all public sector workers into the Social
Security system, but decided each time to maintain the current practice of allowing public employees the option to join
Social Security or retain their separate pension systems.
Recently, the issue has been resurrected as a way to generate additional revenue for the Social Security Trust Fund. In
2010, two separate national commissions on reducing the deficit included identical proposals in their recommendations to
bring all newly hired public employees into Social Security beginning in the year 2020.
While the need for additional revenue is the primary reason for bringing all public employees into Social Security, proponents
make two additional arguments. First, they contend that most non-covered public employees qualify for Social Security
benefits, either from a second job or a spouse. They argue that workers who receive Social Security benefits should be
required to pay into the system throughout their career.
A second, more recent, argument contends that public pension plans are unstable, and Social Security coverage would
provide public employees with retirement income if their pension plan went bankrupt.
Opponents of mandatory coverage believe that forcing all public employees into Social Security—even if it is only new
hires—would undermine existing pension systems that provide superior benefits and reflect the unique circumstances of
public safety work. They argue further that the overwhelming majority of public pensions are on sound financial footing,
and rumors about plans going bankrupt are not supported by the facts.
Opponents also note that any influx of funding to the Social Security Trust Fund would have a negligible and temporary
impact on the Fund’s long-term solvency. Moreover, Congress already fully addressed concerns about people receiving
benefits without paying in their fair share. The Social Security benefits of people who also receive a pension from non-
Social Security covered employment are significantly reduced.
CONGRESSIONAL ACTION
Senators Mark Warner (D-VA) and Saxby Chambliss (R-GA) are preparing to introduce legislation that will implement the
recommendations of the Deficit Commission. Among those recommendations is a proposal to bring all newly hired public
employees into Social Security. Specific details of the Warner legislation are still being developed at this time.
8

KEY POINTS
MANDATORY SOCIAL SECURITY COVERAGE
• More than 70% of the nation’s fire fighters are not enrolled in the Social Security system.
Instead, they participate in specialized fire fighter pension plans that have been designed to
reflect the unique circumstances of their profession, including early retirement ages and high
rates of disability. Requiring Social Security coverage of all state and local government employees
would undermine these tailored pension plans.
• The revenue generated by mandatory coverage of state and local government workers would be
marginal and temporary. The wholesale disruption of the retirement plans of our nation’s first
responders is too heavy a price to pay for such a small contribution to the solvency of the Social
Security system.
• Forcing fire fighters into the Social Security system would amount to an unfair 6.2% tax increase
on these middle-income workers. At a time when many fire fighters have been forced to accept
pay cuts and wage freezes, such a large tax hike would have a significant detrimental impact on
family budgets.
• Paying the employer’s share of the Social Security tax would place a financial strain on many
cash-strapped municipalities. This would lead to cutbacks in municipal services, including fire
protection.
• Claims that Social Security coverage is necessary because public pension funds are going bankrupt
are simply unfounded. The vast majority of fire fighter pension systems are on sound financial
footing, and the few that are not are currently being revamped. There is no real danger of fire
fighters losing their pension benefits.
• Social Security benefits earned by non-covered public employees from a second job or through
their spouse are significantly reduced. Claims that public employees are receiving Social Security
benefits to which they are not entitled are false.
• The creation of these specialized public sector pension plans came in direct response to Congress
prohibiting public employees from participating in Social Security. As recently as 1994, fire
fighters in many states were not allowed to join the system. It is unfair to force public agencies
to now curtail or abolish these well-funded, financially stable plans just to generate a small
amount revenue to the Social Security Trust Fund.
9

IAFF LEGISLATIVE FACT SHEET
BACKGROUND
SAFER AND FIRE GRANTS
The IAFF supports level funding for SAFER and FIRE grants and extending the SAFER waivers.
The SAFER and FIRE grant programs were created by Congress to help address the significant staffing, equipment,
training and health and safety needs of fire departments. Under SAFER, fire departments apply for federal grants to help
pay the costs associated with hiring new personnel to maintain safe staffing levels, the importance of which has been welldocumented
by independent studies and incorporated into OSHA regulations. Under FIRE, departments apply for grants
to purchase protective equipment and provide needed training. Together, the programs have improved the effectiveness of
fire department operations and protected the health and safety of local fire fighters.
For Fiscal Years 2009 and 2010, in response to the recession, Congress enacted waivers to SAFER allowing communities
to use the grant to retain or rehire fire fighters. They also waived a number of budgetary requirements, including requirements
to maintain the fire department’s budget, funding caps and local matching requirements. As a direct result of the waivers,
1236 good-paying fire fighter jobs were created or saved with FY09 grants, and an estimated 2500 additional jobs will be
created or saved with FY10 grants.
The SAFER waivers were intended to be a temporary measure to help fire departments weather the recession, and expired
in FY10. However, as the recession lingers locally and staffing reductions continue, it is imperative that they be extended.
The weak economy is causing communities to reduce fire department staffing and cut back on training and equipment,
posing significant threats to public safety and local preparedness. Robust funding of SAFER and FIRE will help communities
secure the resources needed to protect the public. Additionally, extending the SAFER waivers will ensure that those
departments which need SAFER funds most will be able to utilize SAFER to maintain or restore safe staffing levels.
CURRENT LEGISLATION
Because the last Congress did not complete work on Fiscal Year 2011 appropriations, the current Congress is considering
both FY11 and FY12 appropriations. For FY11, the U.S. House of Representatives addressed funding for SAFER and
FIRE in H.R. 1, legislation to provide continuing funding for the federal government. For FY12, funding for SAFER and
FIRE will be addressed through the FY12 Department of Homeland Security Appropriations Act.
CONGRESSIONAL ACTION
FY11 Appropriations
On February 11, 2011, H.R. 1 was introduced in the U.S. House of Representatives. As introduced, the bill contained $300
million for FIRE and eliminated the SAFER grant program. Additionally, the bill did not extend the SAFER waivers.
On February 16, 2011, the House approved an amendment offered by Representative Bill Pascrell (D-NJ) to restore
funding for the SAFER and FIRE grant programs to $420 million and $390 million, respectively, by a vote of 318-113.
On February 17, 2011, the House approved an amendment offered by Representative David Price (D-NC) to restore the
SAFER waivers for FY11 by a vote of 267-159.
On February 19, 2011, the House approved H.R. 1, including the Pascrell and Price amendments, by a vote of 235 – 189.
FY12 Appropriations
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On February 14, 2011, the Administration released its budget proposal for FY12. The proposal includes $420 million for
SAFER and $250 million for FIRE.

KEY POINTS
SAFER AND FIRE GRANTS
• The SAFER and FIRE grant programs provide funding directly to local fire departments to ensure such
departments have sufficient personnel, equipment and training to operate safely and effectively.
• The role of the fire service has transformed from providing local response to an integrated national
system that responds to a wide range of local emergencies and national disasters. When the country is
under attack or when there is a natural disaster, local fire fighters respond. The federal government has
a responsibility to help local fire departments protect the public safety.
• The nation’s fire service has long faced significant staffing, equipment and training shortages. According
to a 2007 Needs Assessment conducted by the National Fire Protection Association and the U.S. Fire
Administration, personnel, equipment and training shortages encumber fire departments of all sizes
and interfere with departments’ ability to respond to common emergencies.
• Providing sufficient funding for SAFER and FIRE is more crucial than ever. As the economic downturn
persists, local fire departments are forced to cut services and staffing, as well as postpone purchasing
critically-needed equipment, apparatus and training.
• Staffing shortfalls have worsened as a result of the dire economic conditions facing local communities.
An IAFF survey of 3012 locals indicates that approximately 5650 fire fighter jobs have been lost due to
layoff or attrition, and approximately 5200 additional layoffs have been proposed.
• Even accounting for jobs created or saved through Fiscal Year 2009 and Fiscal Year 2010 SAFER
grants, over 7100 fire fighter positions remain lost or threatened.
• Fire departments’ significant need is illustrated by the number of applications submitted for SAFER
and FIRE grants. In Fiscal Year 2009, nearly 20,000 fire departments applied for more than $3.1 billion
in FIRE grants, and over 2100 departments applied for more than $1.2 billion in SAFER grants.
• For Fiscal Years 2009 and 2010, Congress enacted waivers to the SAFER grant program allowing
communities to use the grant to retain or rehire fire fighters in order to avoid staffing reductions. They
also waived a number of budgetary requirements, including requirements to maintain the fire department’s
budget, funding caps, and local matching requirements – requirements which most departments were
unable to meet due to the economy.
• If the SAFER waivers are not extended, fire departments will be unable to use SAFER funds to rehire
laid-off workers, fill positions lost to attrition, or prevent potential layoffs. Additionally, departments
would be required to fulfill burdensome budgetary requirements, which in the current economy, very
few departments would be able to meet.
• If Congress fails to maintain funding for the SAFER and FIRE grant programs and extend the SAFER
waivers, jobs would go unfilled and fire fighter safety as well as the public safety would be put at
significant risk.
11

IAFF LEGISLATIVE FACT SHEET
FEDERAL FIRE FIGHTER PRESUMPTIVE
DISABILITY
The IAFF supports the Federal Firefighters Fairness Act and encourages Members of Congress to cosponsor the
legislation.
BACKGROUND
Fire fighters are exposed on a daily basis to stress, smoke, extreme temperatures and various toxic substances. As a
result, fire fighters are far more likely to contract heart disease, lung disease and cancer than other workers. And as
fire fighters increasingly assume the role of the nation’s leading providers of emergency medical services, they are
also exposed to infectious diseases. Heart disease, lung disease, cancer and infectious disease are now among the
leading causes of death and disability for fire fighters, and numerous studies have found that these illnesses are
occupational hazards of fire fighting.
In recognition of this link, forty-two states have enacted “presumptive disability” laws, which presume that
cardiovascular diseases, certain cancers and certain infectious diseases contracted by fire fighters are job-related for
purposes of workers’ compensation and disability retirement unless proven otherwise. No such law covers fire
fighters employed by the federal government.
Under the Federal Employee Compensation Act (FECA), federal fire fighters must be able to pinpoint the precise
incident or exposure that caused a disease in order for it to be considered job-related. This burden of proof is
extraordinarily difficult for fire fighters to meet because they respond to a wide variety of emergency calls, constantly
working in different environments under different conditions. As a result, very few cases of occupational disease
contracted by fire fighters have been deemed to be service-connected.
CURRENT LEGISLATION
House:
Senate:
Summary:
The Federal Firefighters Fairness Act (to be introduced in the near future)
Sponsor: Representative Lois Capps (D-CA)
The Federal Firefighters Fairness Act (to be introduced in the near future)
Sponsor: Senator Tom Carper (D-DE)
The Federal Firefighters Fairness Act would create a rebuttable presumption that cardiovascular
disease, certain cancers and certain infectious diseases contracted by federal fire fighters are jobrelated
for purposes of workers’ compensation and disability retirement.
CONGRESSIONAL ACTION
Representative Capps and Senator Carper plan on reintroducing the Federal Firefighters Fairness Act in the U.S.
House of Representatives and the U.S. Senate in the near future.
12

KEY POINTS
FEDERAL FIRE FIGHTER PRESUMPTIVE
DISABILITY
• Our nation’s federal fire fighters have some of the most hazardous and sensitive jobs in the country. While
protecting our national interests on military installations, VA hospitals and other federal facilities, they are routinely
exposed to stress, smoke, extreme temperatures, toxic substances and infectious diseases, putting them at an
increased risk to develop cancer, heart disease, infectious diseases, and lung and respiratory diseases. Numerous
studies provide evidence of the link between fire fighting and these and other health problems.
• Fire fighters who are forced to separate from service due to a disability sustained in the line of duty receive
enhanced retirement benefits over those who are injured off the job.
• Occupational illnesses should be considered job-related disabilities, but unlike most states, the federal government
does not presume that illnesses associated with fire fighting were contracted in the line of duty.
• To qualify for disability retirement, a federal fire fighter who suffers from an occupational illness must specify the
precise exposure that caused his or her illness. This burden of proof is extraordinarily difficult for fire fighters to
meet because they respond to a wide variety of emergency calls, constantly working in different environments
under different conditions.
• The Federal Firefighters Fairness Act creates a rebuttable presumption that federal fire fighters who become
disabled by heart and lung disease, certain cancers and certain infectious diseases contracted the illness on the
job.
• Because the presumption is rebuttable, illnesses would not be considered job-related if the employing agency can
demonstrate that the illness likely has another cause. For example, a fire fighter who smokes would not be able to
receive line-of-duty disability for lung cancer. But the burden of proof would be on the employer, rather than the
injured employee or his or her family.
• The Congressional Budget Office has found the cost of implementing the Federal Firefighters Fairness Act to be
quite low: approximately $26 million over ten years.
• It is fundamentally unfair that fire fighters employed by the federal government are not eligible for disability
retirement for the same occupational diseases as their municipal counterparts. This disparity is especially glaring
in instances where federal fire fighters work alongside municipal fire fighters during mutual aid responses and are
exposed to the same hazardous conditions, such as the responses to Hurricane Katrina and the California wildfires.
• If the federal government wants to be able to recruit and retain qualified fire fighters, it must be able to offer a
benefits package that is competitive with the municipal sector, including having occupational illness covered by
worker’s compensation.
• Congress has provided presumptive disability benefits to other groups of individuals, such as military veterans,
World Trade Center responders and public safety officers who die in the line of duty. For example, serviceconnected
disability benefits are provided to Vietnam veterans who contract certain diseases which are presumed
to be caused by herbicide exposure.
13

IAFF LEGISLATIVE FACT SHEET
TAX EXEMPTION FOR EMPLOYER-PROVIDED
HEALTH CARE
BACKGROUND
The IAFF opposes the taxation of employer-provided health benefits.
Health care benefits provided by employers to their employees are not currently counted as taxable income. Similarly,
employee contributions toward their health care premiums are made on a pre-tax basis. As the federal budget deficit
continues to grow, policy makers are considering all options for increasing revenue, including ending the current tax
exemption for employer-provided health benefits.
The amount generated by ending the tax exclusion for employer-provided health benefits is significant. In 2009, the
bipartisan Joint Committee on Taxation estimated that capping the exclusion to half of the total premium amount would net
$1.173 trillion over ten years. As a result, the National Commission on Fiscal Responsibility and Reform, a bipartisan
commission charged with finding ways to reduce the deficit, recently proposed the gradual elimination of the tax exclusion
for employer-provided health care. Another debt commission, created by the Bipartisan Policy Center, also recommended
phasing out the tax exclusion in its report, “Restoring America’s Future.” Finally, the Chairman of the House Budget
Committee, Representative Paul Ryan (R-WI), proposed in his “Roadmap for America’s Future” replacing the tax exemption
with a tax credit that would put affordable health care out of reach for many Americans.
Taxing health benefits would particularly hurt fire fighters. For years, fire fighters have accepted lower wages in exchange
for better health coverage. Fire fighters also face higher insurance premiums due to the risks posed by their profession.
That’s why fire fighter health plans often exceed $20,000 a year. Removing the exemption would add thousands of dollars
in additional taxes even though fire fighters earn middle-class salaries.
Congress previously rejected taxing health benefits during the health care debate. Because of the excessive tax burden on
fire fighters and other workers, Congress opted for an alternative tax on insurance companies to discourage the sale of high
cost plans. No tax on health benefits was included in the final health care law.
Eliminating the tax exemption is now back under consideration as a way to reduce the federal deficit even though it still
remains unwise economic policy. Removing the exemption will raise taxes on those least able to afford it. Many fire
fighters have had their wages frozen or cut during these bad economic times. And it could undermine a fragile economic
recovery. Many economists have already noted that raising taxes now could increase the chances of a double-dip recession.
Taxing health benefits will also undermine an integral component of our health care system. Enacted into law over 50
years ago, the tax exemption is a major reason why most Americans receive health care coverage through their employer.
Ending the exemption would undermine a system that provides affordable health care to over 157 million Americans.
CONGRESSIONAL ACTION
Senators Mark Warner (D-VA) and Saxby Chambliss (R-GA) are preparing to introduce legislation that will implement the
recommendations of the Deficit Commission. Specific details of the Warner-Chambliss legislation are still being developed
at this time. In addition, the leaders of both the House and Senate, as well as the Obama Administration, have expressed
support for examining various tax exemptions as a way to generate additional revenue. The House Committee on Ways
and Means and the Senate Committee on Finance are expected to hold hearings on various proposals in 2011.
14

KEY POINTS
TAX EXEMPTION FOR EMPLOYER-PROVIDED
HEALTH CARE
• Under current law, health care benefits provided by employers to their employees are not counted as taxable
income. Similarly, employee contributions toward their health care premiums are made on a pre-tax basis.
As policy makers consider options to reduce the deficit, some have proposed ending the tax exemption for
employer-provided health benefits.
• Removing the exemption will raise taxes on those least able to afford it. For years, fire fighters have
accepted lower wages in exchange for better health coverage. Now during these difficult economic times,
many fire fighters have had their wages frozen or cut. Taxing health benefits will only make things worse
for fire fighters by adding thousands of dollars in extra taxes.
• Removing the exemption will also lead to greater out-of-pocket costs. In order to make plans cheaper to
limit exposure to the new tax, employees will be forced to accept greater cost-sharing in the form of higher
deductibles, and larger copayments and coinsurance.
• Removing the exemption would unfairly penalize fire fighters simply for the work that they do. Fire fighters
face high insurance premiums due to the risks posed by their profession. That’s why it’s common to see
health plans for fire fighters exceed $20,000 a year. Removing the exemption would unfairly tax fire
fighters simply for being fire fighters.
• Fire fighters aren’t the only ones who will be hurt. 157 million Americans receive health insurance through
an employer. According to the Kaiser Family Foundation, the average premium for a family health plan in
2010 was $13,770. Removing the exemption means exposing this amount to both income and payroll taxes
for millions of Americans.
• You don’t raise taxes during a recession. Many economists have already pointed out that raising taxes could
increase the chances of a double-dip recession or undermine the fragile economic recovery. Yet removing
the exemption would do exactly that by raising taxes for millions of Americans.
• Congress already rejected taxing health benefits during the health care debate. Because of the excessive
tax burden on fire fighters and other workers, Congress opted for an alternative tax on insurance companies
to discourage the sale of high cost plans. Congress shouldn’t try to take a second bite at the apple now in
order to reduce the federal deficit.
• Ending the exemption would undermine health care for over 157 million Americans. Enacted over 50 years
ago, the tax exemption is a major reason why most Americans receive health care coverage through their
employer. Removing the exemption will dismantle this system and increase health care costs for millions
of Americans.
• Employer-sponsored health insurance is an effective, affordable way to provide health insurance to millions
of Americans. Because of the large size of employer-sponsored plans, they can provide affordable insurance
by pooling the risk to minimize catastrophic costs. Employer-sponsored plans can also use economies-ofscale
to lower administrative costs and gain better bargaining power when negotiating with insurance
companies.
15

Notes
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INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS, AFL-CIO, CLC
1750 New York Avenue, N.W. Washington D.C. 20006
Phone 202-737-8484 Fax 202-783-4570
www.iaff.org
Harold A. Schaitberger
General President
Peter L. Gorman
Chief of Staff
Thomas H. Miller
General Secretary-Treasurer
Kevin B. O’Connor
Assistant to the General President
Barry Kasinitz
Governmental Affairs Director
Shannon A. Meissner
Governmental Affairs Representative
James Cho
Governmental Affairs Representative
David B. Billy
Political Director
Kimberly B. Benenson
FIREPAC Representative
Andrew R. LaVigne
Political Representative
Thomas K. McEachin
Grassroots Coordinator