During his remarks at the Delegates Luncheon at the 110th League Annual Conference, Governor Murphy announced his proposal to address the “death spiral” of the State Health Benefits Plan (SHBP) for the Local Government Employer Group. Governor Murphy noted that “unless we take sweeping action– now– to shore up this program, there are tens of thousands of New Jerseyans whose access to health care will be in serious jeopardy. And next June’s rate increases will be astronomical. We cannot allow that to happen. Because, let’s remember: This program provides health care coverage to our state’s valiant, and often under-appreciated, public servants.”
Under the Governor’s proposal, plan options would be limited to three–a PPO, tiered network, or high deductible plan; require participating municipalities to remain in the plan for at least five years; create a State Health Benefits–local government governance; and provide a $260 million appropriation to repay the loan to the State Health Benefits State Plan for the funds loaned to the State Health Benefits–local government plan and bring the claims stabilization reserve to its proper level.
According to the draft legislation, beginning January 1, 2027, all active members and retirees that are not Medicare eligible would be offered three options under the State Health Benefits Plan (SHBP): a high-deductible plan with a health savings account, a PPO plan, or a Tiered Network plan. If during open enrollment, active employees or retirees not Medicare eligible fail to select a plan, they are automatically enrolled in the Tiered Network. Starting in plan year 2029, the State Health Benefits–Local Part Commission may modify the PPO and Tiered Network plans, however, at no time can the actuarial value of a plan exceed a value of 88%.
In addition, the copays and benefits will change as follows:
For the PPO Plan Insurance
| In Network Benefits | Out of Network Benefits |
Member Coinsurance | 25%. Applies only to ambulance, durable medical equipment, diagnostic tests and imaging, advanced radiology facility charges, outpatient surgery facility fees, inpatient hospital facility and physician charges, skilled nursing, and hospice if paid on a fee for service basis. | 50% of the Out-of-Network Fee Schedule |
Deductible | $1,000 Single / $2,500 Family | $2,000 Single / $5,000 Family |
Coinsurance Maximum | $3,000 Single / $7,500 Family | |
Out-of-Pocket Maximum | $8,480 Single / $16,960 Family (covers all in network copayments, coinsurance, and deductible) | $6,500 Single / $13,000 Family |
Out-of-Network Fee Schedule | | 175% of CMS – Medicare |
Emergency Room Copayment | $300 (To be Waived if Admitted) | |
PCP Office Visit Copayment | $30 | |
Specialist Office Visit Copayment | $50 | |
Urgent Care Copayment | $100 | |
Outpatient Physical Therapy & Chiropractic Copayment | $50 (subject to 30 visit annual limitation) | |
For the Tiered Network Plan Insurance
| In Network Benefits | Out of Network Benefits |
Member Coinsurance | 5% in Tier 1 / 20% in Tier 2. Applies only to ambulance, durable medical equipment, diagnostic tests and imaging, outpatient surgery facility fees, inpatient hospital facility and physician charges, skilled nursing, and hospice if paid on a fee for service basis. | Tiered Network Plan shall not provide payment for any charges incurred out-of-network |
Deductible | $250 Single / $625 Family in Tier 1 / $2,000 Single / $5,000 Family in Tier 2 | |
Coinsurance Maximum | | |
Out-of-Pocket Maximum | $2,000 Single / $5,000 Family in Tier 1 / $4,000 Single / $10,000 Family in Tier 2 (covers all in network copayments, coinsurance, and deductible) | |
Emergency Room Copayment | $200 in Tier 1 and Tier 2 | |
PCP Office Visit Copayment | $0 in Tier 1 / $30 in Tier 2 | |
Specialist Office Visit Copayment | $35 in Tier 1 / $60 in Tier 2 | |
Urgent Care Copayment | $75 in Tier 1 / $125 in Tier 2 | |
Outpatient Physical Therapy & Chiropractic Copayment | $35 in Tier 1 / $60 in Tier 2 (Subject to 30-visit annual limitation) | |
Inpatient Stay Coinsurance | $150 in Tier 1 / 20% in Tier 2 | |
In addition, the PPO and Tiered Network Plan Pharmacy benefits are as follows:
Pharmacy | Coverage |
Out-of-Pocket Maximum | $2,120 Single / $4,240 Family (Indexed Annually Pursuant to Federal Law) |
Generic Copayment | $10 Retail 30 Day Supply / $20 Mail 90 Day Supply / $50 Specialty 30 Day Supply |
Preferred Brand Copayment | $20 Retail 30 Day Supply / $40 Mail 90 Day Supply / $100 Specialty 30 Day Supply |
Non-Preferred Brand Copayment | $50 Retail 30 Day Supply / $100 Mail 90 Day Supply / $250 Specialty 30 Day Supply |
Mandatory Generic | Member Pays Difference in Cost Between Generic and Brand, Plus Brand Copayment |
Mandatory Mail | Maintenance drugs |
Formulary | Closed Formulary as contracted with the Pharmacy Benefit Manager and the State Health Benefits Commission |
Non-diabetic GLP-1 Prescribed for Weight Loss Copayment | $45 for a 30-Day Supply |
To stabilize the pool, beginning August 1, 2026, municipalities must remain in the SHBP for at least 5 consecutive plan years following the date of initial enrollment. If a municipality leaves the SHBP, they cannot enroll in the plan for 5 years. If a municipality terminates participation prior to the 5-year period, the municipality will be liable for the remittance of premium and periodic charges until the end of the 5-year period. Failure to remit any payment will cause the municipality to be ineligible to receive any state aid or grants.
The proposal changes the governance and creates a State Health Benefits–Local Part Commission. The seven-member board will include the State Treasurer, who is chairperson, the Commissioner of Department of Banking and Insurance, Chair of the Civil Service Commission, the Commissioner of Department of Community Affairs, who serves as ex-officio, and three governor appointments. The Governor appoints will be one based the recommendation of the League, one from the AFL-CIO Public Employee Committee, and one based on a joint recommendation of PBA & FMBA. The Director of Division of Pensions and Benefits will serve as Secretary. The State Health Benefits – Local Part Commission will oversee the program, and has the responsibility and authority over the plan design, can modify the plans, and establish the rules and regulations for the plans. The State Health Benefits–Local Part Commission – cannot create or terminate plans set by the proposed legislation.
The proposed legislation also appropriates $260 million to reimburse health benefit funds for amount transferred on or before January 1, 2026, from loan. In addition, the State Health Benefits–Local Part Commission will be required to establish and maintain claims stabilization reserve of not less than 5% of total claims paid the prior year and requires a surcharge if necessary to cover cost of service and claims stabilization reserve. The State Health Benefits – Local Part Commission will be prohibited from offering a “holiday” or temporary suspension of premium contributions.
Please review the draft legislation and PowerPoint of the proposal, provided by the Governor’s office. We will continue to provide updates.
Contacts: Lori Buckelew, Deputy Executive Director, lbuckelew@njlm.org, 609-695-3481, x112, or Erin Knoedler, Legislative Analyst, eknoedler@njlm.org, 609-695-3481, x116.