AMHERST — Prompted by higher-than-anticipated costs for hospital stays and doctor visits from its members, officials are exploring alternatives to the self-insured plan that has covered town and school employees for 31 years.

The town continues to wrestle with a critically low balance in its Amherst-Pelham Health Claims Trust Fund, the self-insured trust that has existed since 1986. The drop in funding is the result of the number of claims going up, along with other general costs, Town Manager Paul Bockelman told the Select Board Oct. 2.

Bockelman said he is looking into three avenues to address the issue, with support from the Insurance Advisory Committee, as the trust dropped from $7.9 million in fiscal 2015 to $2.06 million as of Aug. 31.

The first is to seek bids from fully insured plans that would allow Amherst to gain entry into a larger pool.

Second, Bockelman will seek quotes for consolidating participants into one risk pool, rather than separating them between Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care. He will solicit bids from those, as well as Tufts Community Health Plan.

Finally, he will explore options available from the state’s Group Insurance Commission.

Over the summer, Amherst employees, and schools employees in Amherst and Pelham as well as retirees, were notified that a 10 percent increase for both PPO and HMO plans would go into effect Oct. 1 as a way to counteract the decline.

Projections show that Blue Cross and Harvard Pilgrim’s family PPO would rise from $436 to $480, PPO individual would go up from $182 to $201, HMO family would increase from $255 to $280 and HMO individual would escalate from $106 to $117.

Because the town matches these contributions, an additional $235,500 is needed for the remainder of fiscal 2018.

Co-pays and deductibles are also being adjusted.

The self-insured trust means premiums collected from employees and the town’s share are placed in a separate trust fund, then paid out when claims are made or bills come in.

Kay Zlogar, who administers the health claims trust, said this marks the third time it has faced issues since formed by Amherst, Pelham, and the Amherst-Pelham Regional Schools.

Each time, she said, large claims of more than $100,000 are the culprit. An aging population, she said is not to blame.

The trust had rebounded well since having a deficit of $705,000 in 2005, and had grown to $7.9 million in 2014. That allowed two premium holidays, in May 2009 and April 2013, when no premiums were collected from employees, meaning higher take-home pay, and no payments had to be made by the town and schools.

Even with the recent adjustments, Zlogar said the premium rates and co-pays both remain low.

Scott Merzbach can be reached at smerzbach@gazettenet.com.