Sweeney Introduces New Jersey Educators Health Plan to Save Billions of Dollars for Taxpayers, Educators

Sweeney and Blistan

Senate President Steve Sweeney introduced landmark legislation to implement a new health benefits plan designed to produce more than $1 billion in annualized savings for property taxpayers and educators. The plan is the result of a ground-breaking agreement reached last week by the Senate President and Marie Blistan, President of the New Jersey Education Association, after months of negotiations.

“As the state rallies together to face the uncertainty of the global pandemic brought on by the coronavirus, we have to demonstrate to New Jersey that government will continue to function,” said Senator Sweeney (D-Gloucester/Salem/Cumberland). “This is truly a landmark agreement and it could never have happened without the hard-fought and good-faith efforts of NJEA’s President Marie Blistan. The law will provide real and lasting savings for property taxpayers and cost reductions for teachers and other education professionals.

“While we focus on the immediate threat to public health and economic stability, it’s important the public understands that their government is steadfastly working towards both their short and long-term welfare.”  

Actuaries employed by the state Division of Pension and Benefits and the Senate Majority Office project annual savings at $670 million for school districts, county colleges and the state budget and $403 million for NJEA members in annualized savings upon full implementation of the New Jersey Educators Health Plan. The actuaries project an additional $100 million in shared savings from the Garden State Health Plan, which will be created in 2021 with a network of New Jersey-only healthcare providers.

The specifics of the plan will be developed by the School Employee Health Benefits Plan design committee and made available to all SEHBP participants.

Effective July 1, 2020, with the creation of the new NJ Educators Health Plan, all new NJEA members shall be enrolled in the new NJEHP. The new plan will be tied to a new salary-based contribution schedule, which will deliver unprecedented savings back to NJEA members who today contribute a percentage of healthcare premiums. Those electing to stay in SEHBP’s more traditional plans will be required to pay for their healthcare based on a percentage of their premium as determined under Chapter 78 requirements.

The agreement also calls for the creation in 2021 of the new Garden State Health Plan, which will offer NJEA members the voluntary option of a plan that produces even more savings with a network of New Jersey-only healthcare providers. The plan will generate annual savings of at least $100 million, shared by employees and employers.

The level of benefits in the New Jersey-focused plan will match those of the NJSEHP and it will provide provisions for out-of-state care not available in the state. Estimates suggest care delivered outside of New Jersey is 50% to 100% more costly than the same services available in New Jersey for the same or better quality.

To track healthcare cost savings and determine the level of direct property tax relief for taxpayers in districts spending above adequacy, the legislation requires school districts to provide a full breakdown of both new and prior-year healthcare costs, employee contributions, and detailed enrollment and premium data, including the cost of family, parent/child, member/spouse and individual coverage, for each healthcare plan offered.

The agreement is the result of several months of intense negotiations and represents a culmination of several years of efforts to identify opportunities to address the quality of healthcare while dealing with the reality of its skyrocketing costs, Senator Sweeney said. 

New Benefit Plans and Payroll Contributions PDF
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