Health Benefits Reform Legislation Moving Toward Finish Line

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Legislation that would reform the health benefits options available to NJPSA members was favorably considered by the Assembly Appropriations Committee on June 26, 2020, an important step forward to a final vote in the State Assembly which is likely to occur next week. This legislation, A-20 (Coughlin)/S- 2273 (Sweeney), passed the State Senate on March 19, 2020, however the bill has been modified so the version passed by the Assembly will have to be voted upon again in the Senate for concurrence with the amended version.  Two other bills dealing with long-term goals of the NJEA to expand employment protections for their membership were also moved out of the Assembly Appropriations Committee.   These bills were part of the agreement reached between the NJEA and Senate President Sweeney earlier this year and all three pieces of legislation are moving forward as a de facto package.

A-4140 (Freiman)/ S-2303 (Bucco, Singleton) prohibits employers (school districts and higher education institutions) from entering into subcontracting agreements impacting bargaining unit employees during the term of existing collective bargaining agreements. A-631(Caputo)/ S-993 (Greenstein, Singleton) provides non-teaching employees of local, county or regional school districts, boards or commissions the right to binding arbitration regarding disputes over reprimands, increment withholding termination, non-renewal, expiration/lapse of employment contracts or continuation of employment regardless of the employer’s reason for the employer’s action or failure to act, and irrespective of any contractual or negotiated provision or lack thereof.  The burden of proof is placed upon the employer.  


As currently amended, A-20 provides for significant changes in the health plan choices available to both active and retired members, whether they are enrolled in the School Employees Health Benefits Plan (SEHBP) or a plan offered by a private provider.  If enacted and signed into law by Governor Murphy as expected, this legislation would become effective for the January 1, 2021 leave year with an enrollment period set prior to that date.  Further amendments to the bill clarify that employers that participate in the SEHBP can do so for medical only plan and may separately purchase pharmacy and dental plans outside of the program without limitation or restriction. 

As you recall, the legislation modifies the health care plan offerings that will be available under the School Employees Health Benefits Program (SEHBP) but will also impact non-SEHBP school districts and employees.  The goal of the legislation is to maintain a high quality of health care benefits for school employees while producing savings for employees, employers and taxpayers.  The bill does maintain the platinum level of benefits in all health care plans offered by the SEHBP for school employees. 

The bill impacts active school employees and retirees who are not-eligible for Medicare only.  Medicare retirees are not impacted by this legislation in any way.  Whether a district participates in the SEHBP or not, effective January 1, 2021, all new employees in a district will ONLY be offered the NJ Educators Health Plan described below.  It is our understanding that the term “new” employees include employees who leave one school district to begin employment in a new district.

Effective January 1, 2021, the SEHBP can offer only three plans for medical and prescription drug benefits for active employees, although a fourth plan will be developed a year later. All other health benefit plans offered by the SEHBP prior to that date are to be terminated.  Any bargaining units with contracts containing other SEHBP plans, that are terminated by this bill, will address their issues through bargaining or contract enforcement. Non-Medicare retirees and their dependents will be moved into the new NJEHP plan.

All current and future retirees that are not-Medicare eligible will be enrolled in the NJ Educator Health Plan for the time period January 1, 2021 through June 30, 2027, unless they choose to move to the Garden State Health Plan (the fourth plan) when it becomes available.  Thereafter, such retirees may select any plan offered by the School Employees Health Plan.  

An important component of the bill is the switch in employee/retiree contribution rates toward health care from a percentage of premium model to a percentage of salary or percentage of retirement allowance model.  This change is expected to save employees, boards of education and the state significant money.  These cost savings are a significant impetus for the bill’s current momentum in this difficult economic climate.  

As this legislation is extremely complex, NJPSA will be issuing more detailed guidance and webinars to describe the legislation and your options for health care once a final version of the legislation is signed into law.