NH school districts hit with unexpected health insurance costs

WEST CANAAN — Upper Valley school districts in New Hampshire are grappling with unexpected health insurance bills because their provider is projecting a deficit for this fiscal year.

On Sept. 23, SchoolCare — a nonprofit health benefits provider that serves New Hampshire school districts and municipalities — sent out a notice to its members to alert them to the projected $4.5 million deficit.

The notice also informed its 90 members, which include school districts, supervisory unions and municipalities throughout the state, that they must make additional payments to SchoolCare by Jan. 1 to bring the organization’s reserve fund to $30 million. In addition to addressing the deficit, the organization also seeks to build back its reserve fund, which its used in recent years to pay for higher claim costs.

The members including Lebanon, Mascoma Valley, Cornish and Plainfield are required to make a one-time payment equal to around a month and a half of what their typical monthly contributions are.

“This was truly a surprise expense for us.”

Lebanon Superintendent Amy Allen

Lebanon will have to pay $1.03 million. Mascoma will have to pay around $614,000. Plainfield owes $135,000 and Cornish is on the hook for $72,000.

“This was truly a surprise expense for us,” Lebanon Superintendent Amy Allen said in a Monday phone interview.

Lebanon has money in its reserve funds and current budget to cover the costs, which will not be passed along to employees. Their coverage — and that of their dependents — will continue on as is.

Mascoma, too, will be able to cover the money it owes through its reserve funds, including money the School Board set aside in case the district was not reimbursed for the pandemic-era federal grant it used to improve ventilation systems at its elementary schools in Canaan and Enfield, Superintendent Amanda Isabelle said in a Tuesday phone interview. Employees will not be forced to take on the extra cost.

“We are fortunate in the fact that we have those reserve funds we can fall back on,” she said. “Otherwise, we would not be able to do that.”

The Cornish and Plainfield school districts are starting to figure out what their options are for paying the unexpected bills, said Kyle A. Riley, who started in his role as superintendent for SAU 32 in Plainfield and SAU 100 in Cornish this summer.

“It’s ultimately a school board decision,” Riley said in a Tuesday phone interview.

The timing of the additional bills are particularly challenging for school districts, most of which start the fiscal year on July 1 and pass budgets months before that.

“My first thought would be is ‘I wish we saw it sooner’,” Riley said.

Rising costs

SchoolCare’s financial challenges are not new.

During the last fiscal year, SchoolCare had to use $10 million in reserve funds to cover increasing costs, which were “definitely driven by some catastrophic claims; by specialty medications,” executive director Lisa Duquette said in a Tuesday phone interview.

SchoolCare let its members know about its financial woes during its Dec. 2024 meeting, Duquette said. The organization, which provides insurance for 22,000 people, including employees and their dependents, came up with a plan to increase rates an extra 2% over the next three years to replace the $10 million in reserve funds.

That 2% was in addition to other increases SchoolCare users faced, which last year was an average of 9.9%.

From there, “things continued to escalate,” Duquette said.

SchoolCare received an actuary report in August that detailed the deficit the organization was facing, Duquette said. In that report, the organization’s leaders learned they’d be facing a projected $4.5 million deficit before the end of the fiscal year on June 30, 2026. The report also stipulated that SchoolCare would need a total of $30 million to stabilize its finances.

Within around 30 days of receiving the report about the projected deficit, the board “swiftly made the decision they thought was in the best interest of their members,” Duquette said.

SchoolCare informed members two days later. Those who cannot pay the full bill by Jan. 1 will be hit with 0.5% interest every month. SchoolCare is working with districts on payment plans if they cannot afford to pay what they owe in a lump sum, Duquette said.

Districts that do not pay their balances by July 15, 2026, will have all claims denied “and covered individuals of the member entity” will become responsible for costs, according to an information sheet from SchoolCare.

Timing issues

The timing gives school districts little time to plan for or come up with the money, Isabelle said. Mascoma closed out its fiscal year on June 30.

“I think this has been a concern for them the last six months and if they had approached school districts in the spring and let them know this was a possibility, school districts could have retained funds to help pay for this,” Isabelle said.

She noted that Mascoma, like other districts, has seen an increase in health insurance costs year after year. The School Board usually plans for a 10% health insurance increase in its annual budget. Typically, the increase comes in around 4 to 5%. Last year it was 13%.

“We received that health care insurance increases in enough time to adjust our budget before it went to the public so we were able to account for that,” Isabelle said.

Mascoma pays the majority of its employees’ health insurance premiums, as dictated by the contracts it signs with unions, including those that represent support staff and teachers. There are 179 employees that use SchoolCare, a number that doesn’t include employees’ dependents.

“I fully understand that health insurance is the reason why some of the people, especially the support staff, come here and take our jobs. They don’t make a huge salary, but they get solid benefits,” Isabelle said. “A lot of them are moms with kids so it’s worth their time to come here and work, for the benefits.”

Like Mascoma, Lebanon, which has 323 employees who use SchoolCare, has also been hit with higher health care costs. Lebanon’s increase was 8.9% this fiscal year, which followed an 8% increase from the previous year, according to data provided by Allen. Next year, the district is budgeting for a 16% increase.

“Health care is one of our highest costs,” Allen said.

Uncertain future

To help prevent future surprises, Allen is floating the idea of a legislative change.

Under New Hampshire state law RSA 5-B, which governs how pooled risk management programs operate, SchoolCare must pass along surplus funds to members. While it can accumulate some reserve funds, it is limited in how much it can carry over year to year.

“That’s because it’s taxpayer dollars,” Duquette said. During a 10-year period that began in 2012, it returned more than $90 million to its members.

The surpluses Lebanon receives don’t necessarily end up in taxpayers pockets; instead, they reduce rising premium costs. While Allen understands SchoolCare must operate under current state statues, she is encouraging lawmakers to reconsider how risk pools are managed.

“In those times of surplus, if they could retain that for themselves, to put that in their reserve so we don’t come to that situation where school districts are billed back with these surprise costs,” Allen said.

Districts are considering their options for shorter term solutions.

It is too early to say how much SchoolCare’s rates will increase for next year, Duquette said. Since July 1, they’ve had a 10% increase in members, “which will help to strengthen SchoolCare’s position in the future,” she said. In risk management pools, the more members there are, the more they can share costs.

In light of SchoolCare’s recent challenges, Lebanon and Mascoma officials are both exploring different health insurance providers for the coming fiscal year.

“To make a full change for next year it would be really tight, but we’ve already started looking at options,” Allen said.

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