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Health insurance costs jump 17% in Revere's FY2026 budget; officials warn fund strain
Summary
CFO Rich Vasquez told the Ways and Means Subcommittee that city health insurance premiums for active plans are rising 17% in the FY2026 budget and that the self-insured fund is running a multi-million-dollar deficit this fiscal year, prompting warnings that further changes may be required if reserves fall below contractual thresholds.
Revere City officials said health insurance costs in the FY2026 budget are increasing by 17% for HMO and PPO plans, a line-item pressure the CFO told the Ways and Means Subcommittee is one of the most difficult to absorb in the proposed budget.
CFO Rich Vasquez said the city negotiated a nine-year agreement with unions in fiscal 2024 that phases employee premium contributions over time but does not change plan design. "17% was a a really tough number for us to deal with this year," Vasquez said, adding the city's self-insurance fund is currently running an estimated $3 million deficit in fiscal 2025.
Why it matters: health insurance is a major fixed cost for municipalities. Revere operates a self-insured fund for active employees and retirees under 65; swings in claims and high-cost medications can materially affect the city's fiscal position and future budget choices.
Details shared at the hearing: - Health insurance premiums (active HMO/PPO) projected to rise 17% for FY2026; retiree medex plans rose ~4%. - The city negotiated a nine-year PEC agreement in FY2024 that gradually shifts premium burden to employees in 2.5 percentage-point steps but does not change overall plan designs. - Vasquez said the fund balance had moved into a deficit position in the current fiscal year (about $3 million) and warned that if the self-insured fund balance drops below a contract trigger (3.1 million, per the negotiated terms), the city may reopen negotiations or explore alternatives.
Councilor McKenna asked whether moving to the Group Insurance Commission (GIC) would save money; Vasquez said earlier analyses indicated potential multi-million-dollar savings in some scenarios but noted the GIC is a premium-based program (not self-insured) and that savings depend on plan mix and enrollment. He cautioned that the GIC itself faces fiscal pressures and that the trade-offs between a self-insured fund and a premium pooled plan are complex.
Ending: The city will monitor the health insurance fund balance through year-end close and may need to present alternatives if the fund balance erodes further; the issue was raised repeatedly as a primary driver of FY2026 budget pressure.
