Health Benefits Plan Changes Under “Chapter 44” Law Result in Significant Savings for State Educators & Employers

Over $462.7 Million in Savings Achieved in Three Years

TRENTON – Employers in the State Educators Health Benefit Plan (SEHBP) saved $462.7 million from changes resulting from legislation signed by Governor Murphy three years ago, far surpassing the $300 million in net savings required under the law.

AON, the State’s actuary of its health benefits plans, calculated the net savings as part of the requirements of Chapter 44, the law instituting the plan changes. AON released its long-awaited report this week.

“This is welcome news for hardworking school employees, their employers, and New Jersey taxpayers as a whole,” said Governor Phil Murphy. “This is a testament to the power of collaboration and proof positive that there are savings to be had through creative solutions that prioritize both quality health benefits and greater affordability.”

“This truly represents a win for both employees and employers in our state,” said State Treasurer Elizabeth Maher Muoio. “This report shows that Chapter 44 is working as intended in delivering savings, while still ensuring plan members have access to high-quality health benefits.”

Signed in July 2020, the Chapter 44 law impacted active employees and retirees not yet eligible for Medicare and included changes to plan designs offered through the SEHBP, two additional plans that must be offered by all school districts, and changes to participant contributions for individuals who enroll in certain plan design options.

Had the three-year net savings estimate fallen below the $300 million threshold called for under the law, further plan design changes would have been required.

“We are proud but not surprised to see that Ch. 44 is working exactly as intended,” said NJEA President Sean M. Spiller. “When NJEA first started pushing for this law more than four years ago, we promised a win-win-win solution where school employees, school districts and the state would all save money. This report proves that we have more than delivered on that promise and it shows that good things happen when we are brought in as partners to address the challenges facing our schools and our profession. We look forward to working even more with the Legislature and Gov. Murphy on other innovative ways to support school employees and to keep our schools the best in the nation.”

AON’s report can be found here.