An article on the April Town Meeting warrant will ask voters to transfer the full amount of the town's free cash -- approximately $1.2 million -- to the town's employee healthcare trust fund, in light of a recent audit that says the town has not been properly funding its portion of the fund.

Completed by independent auditor Powers & Sullivan, the audit revealed that the town has not been putting enough money into the fund, and a 2011 dip into the fund to use "extra" money to balance the town budget was a bad move.

Under a self-insurance plan, the town and employees pay premiums into a trust fund. All health claims are paid out of the trust fund, with insurance companies involved only in claims processing. Unlike a traditional insurance plan, the town saves money if claims cost less than expected. The town contributes 75% of the money in the fund, while the town employees contribute 25%.

A combination of transferring the free cash and giving the employees a "premium holiday," during which they do not pay into the fund, will rectify the problem, said Town Administrator Derek Sullivan.

"We are paying the bills out of [the fund] and will be able to, we just need to make sure that this money is put in there," Sullivan explained.

This situation is the result of a 2011 Town Meeting vote that approved a two-month long healthcare premium holiday for fiscal year 2012, in order to close a budget gap.

This meant that for that period of time, neither the town nor its employees would pay into the trust fund. The move would save approximately $1.5 million, which was used to balance the following year's budget for the cash-strapped town.

At the time, former Town Administrator Mark Andrews argued that the healthcare fund had more money than necessary, and the healthcare premium holiday was a valid way to balance the budget.

Unfortunately, now the town has to put that money back.

"That was a pretty good sales job, going to Town Meeting, he made," Selectmen Chair Steve Holmes said of Andrews, and called the idea the "worst idea on the planet."

Selectman Cara Winslow, who was also on the board at the time of that decision, was disappointed.

"As painful as this is, this is what needs to happen. There's a lot that we could have done with $1.2 million," she said, referring to the free cash the town won't have to spend on other things after putting it back in the trust. "It's important that we get this accomplished and put this behind us."

Nobody was particularly surprised by the audit, however.

"It still boggles my mind that we thought we could take this money at Town Meeting ... and didn't realize that the day would come that we would have to put it back in," said Selectman Peter Teitelbaum. Referring to the recurring theme of kicking the proverbial financial can down the road, he added: "Now the can's been kicked into the wall and it's not going any further."

Sullivan said he is currently researching an alternative to the trust fund, such as an insurance consortium, which would eventually do away with the fund.

A previous version of this article indicated that the audit was completed by the Mass. Department of Revenue. It was completed by independent auditor Powers & Sullivan. Wareham Week apologizes for this error.