Local select boards are beginning to build their budgets for next year – including facing increased health care costs – while local residents are doing the same.
Valley residents who are insured through Vermont Health Connect were able to access the state’s health care portal this week to see firsthand how eliminating the enhanced federal health care subsidies will impact them. Local financial advisor Craig Eilers who works with individuals, towns and businesses on health care and investment options, said people are facing significant increases due to the loss of the enhanced federal subsidies.
State Representative Dara Torre, D-Moretown, said she’d heard from her constituents with concerns about the significant rise in the state health insurance offerings. In Vermont, people can obtain health care through an employer, through the health care exchange and/or through Medicaid/Medicare and Dr. Dynosaur.
One type of Medicare plan, Medicare Advantage was discontinued for most Vermonters by Blue Cross Blue Shield, UnitedHealthcare, MVP, and WellCare with coverage ending December 31, 2025.
While those on the exchange grapple with the loss of the enhanced federal tax credits that provided income-based subsidies, towns and soon, the Harwood Unified Union School District, will be facing the same choices.
OPTIONS FOR TOWN EMPLOYEES
The Warren Select Board, on October 28, heard from Eilers about its options for health care for town employees next year. Eilers told board members that the town’s current plan, offered through a Blue Cross “captive” pool, will increase by 12% in 2026 if the town renews. A plan available through Vermont Health Connect, the state’s insurance exchange, would raise premiums by less than 5%, he said.
“2025 has not been a great year from a claims standpoint,” Eilers said. “We hoped claims would go down, but unfortunately that didn’t happen.”
The town currently covers all employee health care costs – paying not only the full premiums but also employee deductibles through a Health Reimbursement Arrangement, or HRA. Under that setup, employees don’t pay anything out of pocket for covered medical expenses.
The HRA arrangement also means employees can’t contribute to a Health Savings Account, Eilers said, because IRS rules prevent both structures from operating together.
Under the town’s existing plan, the deductible is $3,000 for individuals and $6,000 for families, which the town pays through the HRA. On the state exchange, the comparable Blue Cross plan would have slightly higher deductibles – $3,200 and $6,400 – but still offer similar coverage.
Craig said the exchange plan would save the town money because it is not experience-rated, meaning the rates aren’t based on the town’s own claims history. “It has nothing to do with demographics or claims,” he said. “It’s just what’s filed with the state.”
If the town sticks with its captive plan, there is a chance of a refund if claims come in lower than expected – up to 50% of the unused claim funding – but that hasn’t happened for the past two years. “You’ve had two years of more-than-expected claims,” Craig said. “It’s a guess, but with a small group, risk is harder to predict.”
POTENIAL MOVE TO MVP REVIEWED
The board also reviewed a potential move from Blue Cross to MVP Health Care, another insurer on the exchange that submitted a lower rate filing to the state. The MVP plan would cost roughly $222,000 a year, compared with $246,000 for Blue Cross.
Craig said the lower MVP price reflects the company’s stronger financial position. The Green Mountain Care Board required Blue Cross to raise its reserves this year, forcing a rate increase statewide. MVP’s reserves were already in good shape, allowing it to hold premiums lower.
Still, board members recalled a rocky experience with MVP several years ago. “We got a significant amount of feedback from employees that it was really challenging – very hard to maintain consistency with the care they’d been getting,” one member said, citing issues with prescription coverage and claim processing.
Craig acknowledged that some providers still don’t participate in MVP’s network, particularly chiropractors and mental health specialists.
DECIDE BY MID-DECEMBER
The board must decide by mid-December, when rates lock in for 2026. Craig suggested that each of the eight employees on the plan contact their current providers to confirm whether they accept MVP, Blue Cross, or both before the board’s next meeting.
“Moving to the exchange feels like a relatively easy decision,” one member said. “It means a reduction in cost.”
Craig cautioned that the exchange offers no refunds in low-claim years, but said it would likely lower the town’s fixed costs. “Regardless of how you structure it, you’re still going to have HRA claims,” he said. “The difference is the premiums.”
The board plans to revisit the question later this month.
Eilers said that Fayston is likely to move to the state’s health care exchange as well because it did not get a renewal offer from Blue Cross Blue Shield due to high claims. Fayston insures five town employees and Warren insures six.
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