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Facing an 18.92% increase in health insurance costs for fiscal year 2026, Winchester officials warn that residents should prepare for difficult financial decisions ahead.
With Town Meeting approaching in April, officials are evaluating potential cost-saving measures to mitigate the budget impact and avoid deeper deficits in the coming years.
Health insurance expenditures have jumped nearly 8% from fiscal year 2024 to fiscal year 2025, growing from $12.9 million to $13.9 million. At the halfway point of the current fiscal year, Winchester has already spent $6.6 million on employee health insurance, up from $5.7 million at the same time last year.
Town officials said they were prepared for a cost increase, but were caught off guard when the Massachusetts Interlocal Insurance Association (MIIA) projected a much higher rate hike than expected for FY26.
“As I had mentioned during the budget summit and other meetings prior to this one, we had been advised by MIIA, our health insurance provider, that we should be carrying a 10% increase for FY26,” Town Administrator Beth Rudolph said at a recent Select Board meeting. “At their annual meeting a couple weeks ago, MIIA announced that their average was 14.8% with a low of 9.9 and a high of 19%. Unfortunately, our number has come in at 18.92%. When you add in all of the additional retiree health insurance costs, it’s about a 20% increase.”
Town Comptroller Stacie Ward noted the unprecedented nature of the increase.
“We did well keeping our costs under control in recent years by switching providers and making other adjustments,” she said. “But this 20% jump is something we didn’t anticipate, and it’s going to be a real challenge.”
Town officials are confronting a rapidly expanding budget deficit that has grown to $3.57 million for FY26, nearly $1 million higher than projections from just weeks ago, driven largely by an unexpected spike in employee health insurance costs.
This shortfall could grow even larger in coming years, potentially reaching more than $14 million by fiscal year 2030 if left unchecked.
The School Committee has requested $70 million for FY26, a 5.84% increase over the current year, describing it as a “level services budget” that maintains existing programs without funding new initiatives.
Select Board member Bill McGonigle emphasized fiscal caution, noting, “We’re in a situation now with our budget that we have to be careful about every dollar.”
Town officials are working with their health insurance consultant to evaluate options for reducing costs before the April Spring Town Meeting, where members will play a crucial role in determining how to manage these rising expenses.
The Finance Committee will hold a public meeting on March 10 to discuss potential cost-saving measures before the FY26 budget is finalized.
Select Board Chair Michelle Prior highlighted the mounting financial pressures on residents, noting they already face $1,000 in additional annual property taxes — $800 per household for Lynch School borrowing and $200 for the Community Preservation Act — before any potential general override is considered to plug the expanding shortfall.
