N.J. teachers could pay lower premiums for health care benefits under bill headed to Murphy

Posted Jun 29, 2020

Breaking a logjam that’s held up the proposal since March, New Jersey’s legislature passed a bill Monday overhauling health care benefits for teachers.

The measure, which proponents say will save an estimated $1 billion a year for educators, local school districts and the state, passed the state Senate and Assembly without any opposition. It now heads to Gov. Phil Murphy, who said he will sign the bill.

“With our state facing historic public health and economic challenges, it is more important than ever that we ensure access to high-quality, affordable health care for our educators, while also ensuring cost-savings for our taxpayers,” Murphy said in a statement.

The bill (S2273) pares down health care plans teachers can choose from in the School Employees’ Health Benefits Program to two of the most popular offerings while introducing two lower-cost plans.

The legislation is the result of an unlikely deal between the state’s powerful teachers union and its foe, Senate President Stephen Sweeney, D-Gloucester. The two sided have praised the deal as meeting the demands of each side: reducing costs for taxpayers and lowering premiums for teachers.

Sweeney’s office has suggested the plan will save school districts $640 million a year, with another $404 million in savings for teachers and $30 million for the state. But actual savings will depend on how many teachers opt for one of the less generous plans.

Teachers have for years have been asking for lower premiums, which are anywhere from 3 percent to 35 percent of the total plan cost. If they choose one of the two new health care plans, they’ll have the chance to save thousands of dollars a year, according to the Senate Majority Office.

Sweeney told reporters Monday that with the NJEA on board, selling the proposal to its members, he’s confident the savings on all sides will come to pass.

“We’ve achieved fairness and financial relief for NJEA members and savings for school districts and the state,” NJEA Vice President Sean Spiller said in a statement. “Instead of fighting to create winners and losers, we came together to create a win for everyone. This is a very important accomplishment at a time when New Jersey deserves some good news.”

If signed by the governor, come Jan. 1 teachers will choose between three health care plans, NJ Direct 10, NJ Direct 15 and the New Jersey Educators Health Plan. For teachers who enroll in the new educators plan only, premiums would be based on percentage of their salary rather than a percentage of the entire plan cost.

The New Jersey Educators Health Plan shifts some out-of-network costs to teachers to encourage them to stay in-network and slashes reimbursements to out-of-network providers. It also includes mandatory generic prescription drugs and requires teachers to pick up the tab if they want name brand drugs.

Premiums in the new educators plan range from 1.7 percent for someone making $40,000 on a single plan to 7.2 percent for someone making more than $100,000 and enrolled in a family plan. A teacher earning $70,000 a year would pay 2.8 percent of their salary for an individual plan and 5.5 percent for a family, saving between $2,000 and $5,000 a year, according to the Senate Majority Office

By July 2021, a fourth plan, the Garden State Health Plan, which would restrict enrollees to New Jersey health care providers, will become available. That plan rewards teachers with premiums that are half those of the educators plan.

New hires will only be able to enroll in one of the two new plans.

Districts that self insure or independently contract for health benefits would be required to offer comparable plans unless they already include low-cost options.

Under an amendment pushed by the Assembly, the bill requires an actuary review the savings achieved by the new law and that changes be made to the plans or to employees’ contributions if they’re falling short.

The bill stalled in the Assembly after passing the Senate in March. The Assembly voted 73-0 Monday in favor of the bill. The Senate approved it again Monday with the Assembly amendments, 36-0. The votes follow an aggressive campaign by the New Jersey Education Association.

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