State to Roll Back Prescription Co-pays for Retirees

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The Christie Administration announced March 25 that will drastically roll back prescription copays for thousands of retired public employees  after illegally raising them in 2013.

According to a report in NJ Advance Media, the deal follows a ruling from a state appeals court in December that New Jersey's pension division overstepped its authority when it hiked the drug rates following celebrated pension reforms Christie enacted in 2011.

The deal return the rates to 2012 levels. In addition, the state will cut rates more severely, anywhere from 80 to 100 percent, in the last six months of this year to compensate retirees who have been overpaying for more than two years.

According to the report, the state overcharged its retired workers $13.1 million through the end of 2014, and workers will continue to overpay $1.1 million a month until the deal kicks in July 1.  The rollback affects more than 100,000 retirees and their family members enrolled in the state health benefits plans.

The state will slash copays for generic drugs for retired workers beginning in July from $14 to zero; preferred, name-brand drugs from $27 to $3; and non preferred from $54 to $11. Figures are slightly different for retirees enrolled in HMO plans.  After the six-months of cut-rate prices, co-pays will return to their 2012 levels.

Rather than reimbursing retirees for the increased cost in their prescriptions, the state will effectively credit them going forward.


The sweeping pension reform legislation, P.L.2011, c.78, shifted authority over state health benefits plans to a 12-person State Health Benefits Plan Design Committee, with representation split equally between union and gubernatorial appointees.  When that panel deadlocked over retiree prescription co-pays, the board that had previously made such decisions — the State Health Benefits Commission, whose members were appointed by the governor — voted to approve higher rates and the Division of Pensions made them effective in January 2013.  Union representatives argued that the pension division had overreached, and the court agreed, saying the law "unmistakably gave (State Health Benefits Plan Design Committee) the authority to set, among other things, retiree prescription copayment levels…"

The state should have maintained the status quo while the plan design committee hashed it out, the court said. The ruling forces the design committee to negotiate changes to the health care plan.

Source: NJ Advanced Media