Schools amend budgets to meet unexpected insurance expenses

More than 60 school districts recently received a surprise bill in the mail: hundreds of thousands of dollars due to SchoolCare, a health insurance risk management pool.

Officials said the costs of medical claims and prescriptions are rising, and the organization's reserves were depleted from returning surplus premiums to its members, especially during the COVID-19 pandemic.

The Sept. 23 letter issuing the assessments says they’ll be used to correct a projected $4.5 million deficit. It also alludes to fairness: “Just as contribution surpluses have been returned to member entities, contribution shortfalls must also be shared.”

SchoolCare collects money from each of its member entities, and it draws from the funds to cover the medical expenses of everyone in the risk pool. But unlike for-profit companies, when SchoolCare pays out fewer claims than expected, it is required by statute to return the surplus.

This is meant to discourage SchoolCare from asking for higher premiums to make a profit, and to keep the costs of health insurance low for educators — as well as some emergency responders and town staff — in the pool.

However, as noted in SchoolCare’s communication to its members, this also limits its ability to maintain surplus from good years as reserves, to be held for unexpected costs in bad years.

SchoolCare has seen “higher-than-expected medical and pharmacy claims” over the past two years, which are projected to continue, and it’s asking for contributions from its members to bring up their reserves to 12% of their annual contributions to cover the costs.

“In a fully insured plan … premiums must therefore cover anticipated claims, possible catastrophic losses, administrative costs, taxes, and regulatory expenses,” a Q&A statement from September says. Because SchoolCare does not insure anything and cannot make a profit, it cannot be ‘fully insured.’”

SchoolCare Marketing and Communications Specialist Carolyn Cote said the premiums returned to members increased dramatically during and immediately after the COVID-19 pandemic — there were fewer claims because less workers in the public sector were seeking non-essential medical services.

According to SchoolCare’s financial audits, the organization returns surplus to its members as “Premium Holiday Credit.” Over the last 10 years, the total premium holiday paid to members ranged from $1.2 million to $6.1 million — except from 2019 to 2022, where it exceeded $10 million each year. The highest amount was over $13.1 million in 2021.

In state Rep. John Hunt’s view, returning premiums during the pandemic set the stage for SchoolCare projecting a deficit in August, and prompted the organization to ask for $300 million in contributions from its members to correct it.

Hunt said municipal and school district risk pools have been regulated by the New Hampshire Secretary of State since they emerged in the mid-1980s, which controls them through statutes. Hunt has proposed legislation to move them under the oversight of the state Department of Insurance.

“It’s because they’re using (Revised Statutes Annotated) 5-B, which has the numbers for premiums statutorily set up, rather than the being regulated through the Department of Insurance, where they’d have more flexibility on what the numbers should be,” Hunt said.

Hunt said the Secretary of State’s Bureau of Securities has an ongoing enforcement action against HealthTrust, another public sector risk pool, ordering them to return “excess earnings” to their members.

According to a 2025 statement from the HealthTrust board of directors, its organization serves 191 municipalities, six counties, and 85 school groups. Hunt said depleting HealthTrust’s reserves could lead to similar problems facing SchoolCare.

In Hunt’s opinion, SchoolCare and HealthTrust should operate more like insurance groups in the private sector, where the company uses its surplus premiums to shore up larger cash reserves.

Changing regulations could expose public sector employees to higher premiums. However, the school district’s unanticipated expenses to SchoolCare also affect educators, emergency responders, and municipal workers, along with other local property owners.

Districts plan to amend their budgets and tap into trust funds to pay for their contributions. At least one district has also chosen to raise taxes to cover the costs. The Concord School Board of Education voted unanimously to increase local property taxes by 6% on Oct. 22.

Other districts still need to choose their next course of action, including Londonderry, which had the largest SchoolCare assessment at more than $2 million. The next Londonderry School Board meeting is scheduled for 7 p.m. on Tuesday.

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