Fire department sees savings from change in insurance practice

May 2, 2019

BULLHEAD CITY — A decision to change the way it handles employee health insurance has been a boon for the Bullhead City Fire Department, an assistant chief reported Tuesday.

Assistant Chief Scott Neal told governing board members that the department has built up a capital reserve fund of about $500,000 since becoming partially self-insured.

Neal said the department’s health insurance costs averaged about $1 million a year when it was insured by an outside company. Since the 2013 fiscal year, he said, the BCFD is spending about $915,000 a year.

One major difference: Neal said that regardless of the claim volume the fire department realized, whatever it paid to the insurance company, the company kept. Under the new setup, anything unspent stays in BCFD coffers.

“We’ve lowered the amount we spend, and I believe we’re getting a better product,” Neal told the board. “We’ve got more services and better coverage.”

He said the department now has access to Teladoc services, which allow for remote medical care via telephone and videoconferencing technology, in place of an emergency room visit.

The BCFD’s prescription drug plan, Neal said, includes rebate coupons that sent about $40,000 back to the department last year.

The BCFD maintains a reinsurance policy that pays out claims greater than $75,000.

Neal said the department made the switch to partial self-insurance as a way of controlling costs and having more ownership in its plan. He said department leaders have maximized plan benefits by educating personnel on the available services and what using them means to the organization.

Renewal costs included increases of 8% to 12% each year with the insurance company, Neal said, but now the BCFD is budgeting for annual increases of 2% to 4%.

Also at the meeting, Fire Chief Patrick Moore told the board that the Arizona Legislature has passed two recent laws that will affect fire districts. One abolishes limits on where district employees may live. BCFD policy requires that firefighters live within 150 miles of the district and chief-level officers live within 50 miles.

The other bill signed by Arizona Gov. Doug Ducey strips away a requirement that a governing board’s vote on a merger or consolidation with other fire districts be unanimous. A simple majority vote now would pass such a measure.

Moore said that the BCFD has received the first of two refurbished ambulances back from Henderson, Nevada-based Firetrucks Unlimited. He said the second is expected in about two weeks.

Moore told board members that the department did not receive any applications for the open position of training division chief. He said the BCFD is evaluating other options for the long term.

Moore said after the meeting that Capt. Marvin McCabe has been filling the role on an interim basis for about 16 months. McCabe eventually would like to return to shift work, Moore said.

The board set budget workshops for May 7 and 21. Moore said he has asked departments within the BCFD for budget requests and is gathering other numbers. He said one challenge will be in handling escalating pension costs.

About 10 years ago, Moore said, the BCFD put 7% of an employee’s pay into the Arizona Public Safety Personnel Retirement System. A couple of years of double-digit increases, followed by increases of 4% to 6% made the rate about 46% last year and an estimated 50.2% this year.

Also, Moore said, the taxing ratio for commercial properties has declined through time, from 25% before 2005 to 18% since 2016.

With residential taxing ratios remaining the same, he said, that means that more of the burden of financing the fire department has been shifted to residential property owners.

Moore said the BCFD is among three of the 16 Mohave County fire districts that have not reached the property tax cap of $3.25 per $100 of assessed value. Its tax rate for the current fiscal year is $3.15.

Moore said he hopes to present a budget for approval to the board in June. The new fiscal year starts July 1.

Neal told the board that BCFD staff recently collected abut 40,000 pounds of hazardous materials at one event and installed 46 child car seats at another.