County and schools explain 24% health‑plan rate increase and proposed one‑time transfer to shore up reserves

Albemarle County and school finance leaders told the school board on Feb. 27 that the county’s self‑insured health plan has experienced sustained, above‑average claim growth and a recent year with an unusually large number of very high‑cost claims.

County and school staff said the fund’s expenditures have averaged roughly 16% annual growth over the past four years, driven in part by an unusually high number of high‑cost claimants in plan year 2024. The county’s assistant chief financial officer, Andy Bowman, said plan‑year 2024 had 16 claimants with more than $325,000 in claims and many more in the $100,000–$325,000 range.

To restore reserve levels and reduce the risk of future shortfalls, the county executive’s recommended FY26 budget proposes a one‑time transfer from county fund balance of $9 million to the health fund; the school division’s share of that infusion would be about $6.2 million (roughly 69 percent) because of its share of plan membership. School staff said they would budget the transfer as both revenue to the school fund and as a one‑time expenditure into the health fund, producing no net increase in the FY26 draft funding request totals but increasing both revenue and expenditure lines by the transfer amount.

County and school leaders also presented a planned 24% increase in employer contribution rates for plan year 2026. Officials said the transfer plus rate changes are intended to restore fund balance to a safer level and give time for other cost‑management strategies — including the recently opened employee health clinic, wellness incentives, dependent eligibility audits, changes to stop‑loss terms, and other mitigation measures — to take effect. Early utilization of the clinic has been strong, the county said; in the first two weeks one clinic recorded 99 visits, 62 of which were for school employees and dependents.

Board members asked whether the transfer and rate change are a recurring remedy or a multi‑year solution; county staff said projections show the infusion and rate increase would move reserves toward a 10–12% fund balance over the next two years but that ongoing monitoring and modeling are required. Officials said the health fund’s policy target minimum is roughly 17% of annual expenditures and that the fund’s balance had fallen to about 4.7% (roughly $3 million) at the end of plan year 2024 without additional action.

Board members requested follow‑up materials showing how the proposed changes affect minimum/maximum reserve levels in dollars, and asked for continued updates on clinic utilization and cost trends.