Treasury Announces Premium Contribution “Holiday” and Sizable Rate Declines for Employers and Members of NJ School Employees Health Benefits Program
School Districts & Employees Will Save a Combined $100 Million from Holiday
(TRENTON) – The New Jersey Department of the Treasury announced today that reforms instituted across the School Employees’ Health Benefits Program (SEHBP) in recent years have led to sizable reductions in projected premium rates for next year, including a first-ever one-month contribution “holiday” that will save participating employees and school districts over $100 million.
“The reforms and efficiencies the Murphy Administration has enacted over the last several years in partnership with the Legislature and organized labor have paid sizable dividends that will be reaped by both school districts and plan members this coming year,” said State Treasurer Elizabeth Maher Muoio. “As a result, our reserves have never been stronger, justifying a well-deserved contribution ‘holiday’ for participating SEHBP school districts and their members. Not only will this provide financial respite for SEHBP participants, it will also free up money to help meet other important priorities.”
The 2022 premium for the New Jersey Educators Health Plan (NJEHP) – born out of the 2020 law (chapter 44) signed by Governor Murphy that overhauled health benefits for school employees – is projected to be 11 percent lower than the 2022 premium for the NJDIRECT 10 health plan. The premiums for legacy plans NJDIRECT 10 and NJDIRECT 15 are also projected to decrease by 1.6 percent over last year, in stark contrast to the 3.8 percent median increase projected for private insurers in the ACA marketplace in 2022, according to the Kaiser Family Foundation.
Additionally, the SEHBP Commission voted on August 5 to approve a contribution “holiday” slated for next February for school districts participating in the plan as of July 1, 2021. The holiday is expected to produce an estimated $101.2 million in combined savings for both employers as well as members.
The decision to grant a contribution holiday was based on the healthier than usual position of the Claims Stabilization Reserves (CSR), which holds the excess funds from premiums paid to the State by participating SEHBP school districts after health benefit claims have been paid. The reserves are projected to top $652 million for Plan Year 2022, representing more than half of the yearly cost of health benefits for all participating SEHBP school districts. The minimum amount recommended to be held in reserve by actuaries is two months.
“It was not too long ago that the State was witnessing double digit increases in health insurance premiums. Nationally, most private insurance premiums continue to rise year over year. We have successfully bucked the trend by maintaining and even decreasing premium rates, thanks to the sustainable reforms we have put in place in recent years. This is a testament to the power of collaboration and the commitment we made to reining in these costs while still delivering superior health benefits,” said Dini Ajmani, Assistant State Treasurer.
“Over the last four years, the administration, Treasury, and the Division of Pension and Benefits, in particular, have worked closely with labor organizations to maintain the delivery of high quality health benefits at the most affordable costs,” said Kevin Kelleher, NJ Education Association Deputy Executive Director and SEHBP Commissioner. “This has been a true collaborative partnership that has resulted in rate decreases, some of the highest reserves, and now a premium holiday, which we haven’t seen since the SEHBP came into existence. We’ve never lowered benefits, instead we’ve really buckled down and demanded more from the way benefits are administered, and ultimately delivered true savings.”
The strong reserves are primarily due to reforms implemented by Treasury’s Division of Pensions and Benefits in recent years, including a more stringent claims review process, increased oversight, and payment integrity initiatives, as well as reforms directed by Chapter 44, including the adoption of long-sought-after out-of-network reforms that have lowered payments to physical therapists, chiropractors, and acupuncturists. Lower utilization of health services brought on by the pandemic also led to a small gain in 2020. However, the overall trend of lower health care premiums for SEHBP employers is sustainable.