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The Massachusetts Group Insurance Commission has finalized next year’s municipal health insurance rates, giving Marblehead officials a clearer picture of one of the largest cost pressures facing the town’s fiscal year 2027 budget.
The commission voted to increase premiums by 11.17 percent for active employees and 5.1 percent for retirees, according to Finance Director Aleesha Benjamin. The rates will apply to municipalities that participate in the state’s Group Insurance Commission program, including Marblehead
Town budget projections had already assumed roughly that level of increase, and Benjamin said the final numbers landed almost exactly where finance officials expected.
Benjamin had projected Marblehead’s total health insurance spending would reach about $15,829,661 next fiscal year. Based on the adopted rates, the town now expects costs of approximately $15,814,317, a difference of just over $15,000.
“I was pretty spot on,” Benjamin said after the vote.
The result avoids a budget shock but does little to ease the larger fiscal challenge facing the town.
Health insurance has become one of the fastest-growing and least flexible components of Marblehead’s budget. The town spent $12.3 million on employee and retiree health insurance in fiscal 2025, including roughly $9.9 million for active employees and $2.4 million for retirees.
That figure rose to about $13.6 million in the fiscal 2026 budget, increasing health insurance’s share of the operating budget to roughly 14 percent, the highest level in more than a decade.
With the newly adopted GIC rates, spending is projected to climb to nearly $15.8 million in fiscal 2027.
Against a projected municipal budget of about $112 million, that means roughly one out of every $7 the town spends goes toward employee and retiree health coverage.
Town officials say those rising benefit costs are a major factor behind the structural deficit currently facing Marblehead.
Town Administrator Thatcher Kezer recently told the Select Board that balancing the fiscal 2027 budget without new revenue could require significant reductions in municipal services. Under one scenario presented to the board, the town could be forced to eliminate 56 positions and defund several departments, including the library, Council on Aging and recreation programs.
The core challenge stems from a mismatch between revenue growth and mandatory cost increases.
Under Proposition 2½, Marblehead’s property tax levy typically increases by about $2.2 million per year. But several major cost drivers are rising faster than that limit, including health insurance, pension obligations and a new municipal trash contract.
In some projections, health insurance alone could consume nearly the entire annual increase in property tax revenue.
“That increase eats it all,” Benjamin said previously when discussing the long-range forecast.
The exact cost to Marblehead will depend in part on how employees distribute themselves among the plans offered through the GIC. The commission provides a menu of options, including plans administered by Harvard Pilgrim, Tufts Health Plan and Mass General Brigham. Each carries different premium levels, meaning the town’s final cost depends on employee enrollment choices during the spring open enrollment period.
Still, the newly adopted rates give officials more certainty as they finalize next year’s budget proposal for Town Merating’s consideration in May.
Earlier budget modeling had assumed an increase of roughly 11 percent for active employees, meaning the commission’s vote largely confirms the town’s financial projections.
Even so, the broader fiscal challenge remains unresolved.
Town leaders are continuing to evaluate a range of options to close the projected budget gap, including a household trash fee that would shift a portion of waste collection costs off the tax levy, additional reductions in municipal and school spending, or a possible Proposition 2½ override.
The Select Board is expected to continue discussing those options in the coming weeks as officials work to finalize the fiscal 2027 budget and determine whether new revenue measures will be needed to maintain current town services.
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