NJPSA Discussion of Health Benefits Legislation to be Held on March 25th!
On March 19, the NJ Senate held a voting session to consider a series of bills already passed by the NJ General Assembly dealing with issues related to the coronavirus and its impacts on NJ citizens.
Several significant pieces of legislation impacting schools, not directly related to the current public health crisis, were also considered and passed by the Senate. These bills reflect the recent agreement reached between Senate President Steve Sweeney and the NJEA over health benefits reform, and they impact you, both as an individual employee and as a school leader.
In order to better inform you about the law, NJPSA presented a webinar on the law on Wednesday, March 25th at 3:00 pm, which you can watch here.
Two bills deal with long-term goals of the NJEA to expand employment protections for their membership. 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. It passed by a vote of 31 to 3, but still needs Assembly approval. S-993 (Greenstein, Singleton) was passed by a vote of 32 to 2. It 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. This bill also must be considered by the Assembly and Governor before becoming law.
Health Benefits Legislation Impacting You – Major Provisions
The primary piece of legislation, S-2273 (Sweeney, Cryan) modifies the health care plan offerings that will be available under the School Employees Health Benefits Program (SEHBP) and 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.
NJPSA is continuing to review and clarify provisions of this legislation as it moves through the legislative process. The following summary reflects our understanding of the bill provisions at this time. We will keep you updated about any significant changes or clarifications we receive.
As of March 20th, if the bill is signed into law, and it is clearly being fast-tracked to do so, the bill provides the following:
Members Impacted
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 July 1, 2020, 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 includes employees who leave one school district to begin employment in a new district, as well as new hires to the educational system.
SEHBP Plan Offerings
Effective July 1, 2020, the SEHBP can offer only three plans for medical and prescription drug benefits for active employees. 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. (NJPSA is seeking further clarification on this issue). Non-Medicare retirees and their dependents will be moved into the new NJEHP plan effective July 1, 2020.
- For the plan year July 1, 2020 until June 30, 2021, SEHBP plan offerings will include the current NJ Direct 10 or Direct 15, if available under member contract, at the Chapter 78 contribution level or other locally negotiated premium level, or a new health plan the NJ Educator Health Plan (NJEHP) where member contributions will be based upon a percentage of salary (see Contribution Schedule chart herein). It is our understanding that this is true even if a collective negotiations agreement was in effect on the effective date of this law that provided enrollment in a previously offered plan under the SEHBP. Those prior health plans under the SEHBP terminate effective July 1, 2020 other than Direct 10, Direct 15 or the NJEHP. NJPSA is still looking for clarification on this language of the law.
- For the year beginning July 1, 2021, a fourth plan will be offered by the SEHBP, the Garden State Health Plan (GSHP), which will provide the same level of benefits as the NJEHP except that members who choose this plan will be limited to the services of a New Jersey health care provider network. Members (active employees and non-Medicare retirees) choosing the GSP will have a contribution that is half the cost of the NJEHP.
Special Enrollment Period
A special enrollment period will be conducted by the Division of Pensions and Benefits prior to July 1, 2020. The bill provides that the Division, in conjunction with the School Employees Health Benefits Commission (SEHBC), will develop a guidance tool for confidential online consultations to assist members and retirees impacted by the bill in their decision making.
- Since the timeline is short, the bill does give the Division and the SEHBC the ability to delay the implementation until August 1 2020 if needed and if the reasons are set forth in writing.
Important! Possible Financial Penalty if Fail to Choose a Plan!
During the special enrollment period, active employees must affirmatively select one of the three options, Direct 10, Direct 15 or the NJEHP if their district is in the School Employees Health Benefits Plan. Employees who fail to affirmatively choose a plan will be placed in the NJEHP for plan year July 1 2020 to June 30, 2021 and if they were paying full cost, the individual will not be eligible for the cost savings available under the NJEHP contribution schedule. Members need to be aware of this financial penalty of lost cost savings for a lack of action in choosing a plan in the special enrollment period.
Non-Medicare Retirees- NJ Educator Health Plan Only
All current and future retirees that are not-Medicare eligible will be enrolled in the NJ Educator Health Plan for the time period July 1, 2020 through June 30, 2027, unless they choose to move to the Garden State Health Plan when it becomes available. Thereafter, such retirees may select any plan offered by the School Employees Health Plan. If as a non-Medicare retiree, you currently do not contribute toward your health care premium, this will not change. If you do, your cost will stay the same or, may decrease because you will contribute based upon the contribution schedule set forth in the legislation as a percentage of your pension.
Member Contributions
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. The bill provides the following contribution schedule whereby the employee or non-Medicare retiree contribution is deducted from pay/pension:
The Garden State Health Plan, to be developed next year, will provide the same level of benefits as the NJEHP, with a New Jersey only provider network at one half of these percentages. The bill does contain language that employees and non-Medicare retirees enrolled in the NJEHP or GSP cannot be required to pay more than the contribution levels set forth in the bill for their health benefits depending upon the plan selected.
Active employees not enrolled in these plans (NJEHP or GSP) will contribute toward their health benefits based either upon contractually-negotiated rates, Chapter 78 contribution levels under that law (Direct 10 or 15) or employer discretion (non-bargaining unit employees).
Wellness Options and Cost Reduction Efforts
The bill contains provisions including comprehensive health and wellness plans focused on health screenings, coaching services, and smoking cessation services and ensures that all school employees have access to these services. Other provisions promote the use of patient-centered medical homes within the SEHBP and efforts to support expanded population health arrangements to manage costs.
Non-SEHBP Districts
Employees in districts that do not participate in the SEHBP will be able to keep their existing negotiated health insurance at the Chapter 78 contribution level or other locally-negotiated premium sharing levels, but all districts must also offer the NJEHP or its equivalent through their private carriers at the statutory premium sharing level based on a percentage of salary. As noted, all new employees will only be offered the NJEHP whether the district is in the SEHBP or not. Beginning with plan year July 1, 2021 and thereafter, all districts, including non-SEHBP districts, must also offer employees the Garden State Plan (GSP) whether through the SEHBP or a private carrier.
Collective Bargaining
The bill defines the plans available and contribution levels for districts participating in the SEHBP for the 7 years this law would be in effect from July 1, 2020 through June 30, 2027; thereafter, the parties may negotiate the contribution levels of employees enrolled in the NJEHP or GSP. Negotiations shall be conducted as if the contribution levels contained in this bill were part of the parties’ prior contract. The parties can negotiate a new contribution schedule or method other than a percentage of salary at that time.
For districts not participating in the SEHBP, those districts are prohibited from adding any new health care benefit plans other than Direct 10, Direct 15, the NJEHP, and the GSP for the 7 year time period until June 30, 2027 except that these employers may continue to offer health benefits plans that result in additional premium cost reductions beyond those in the bill. Also, health benefits plans that were in place prior to the effective date of the bill becoming law may continue to be offered, probably until the contract expires (clarification needed). Beginning July 1, 2027, non-SEHBP districts can negotiate other health benefits plans and contributions with its employee bargaining units. Similar to SEHBP districts, negotiations shall be conducted as if the contribution levels of the bill were part of the parties’ prior contract. These provisions also apply when health benefits coverage is provided through an insurance fund or joint insurance fund.
Use of Savings
The savings realized by school districts that are spending at or above their adequacy level calculated under the School Funding Reform Act must be exclusively used for property tax relief. Districts spending below adequacy can spend the savings to support their educational program or other budget purposes. Each district must annually submit a data sheet to the NJDOE, the Division of Pensions and Benefits and the Legislature to track health care cost savings.
Details of the New Plans
The following charts detail the provisions of the NJ Educators Health Plan and provide a Comparison of Plans to be available under the School Employees Health Plan effective July 1, 2020 if S-2273 is signed into law:
NJPSA Advocacy and Next Steps
Immediately upon receiving a draft copy of S-2273, NJPSA analyzed the legislation and identified several areas of concern. Our core concern was to ensure that individuals earning higher salary levels based upon seniority or higher compensation levels were not financially penalized by the legislation. We worked to ensure that a contribution cap was included in the legislation so that the highest contribution level required would be linked to a capped salary levels of $125,000 and above. Upon review of the bill’s detailed contribution scheme, we have also sought amendments for individuals at that salary level who purchase single coverage who may pay minimally more for that benefit under the bill. NJPSA has submitted several amendment requests to Senate President Sweeney for his consideration and will continue to advocate on your behalf.
The following chart details the Potential Savings/Costs by Salary Range an Plan Level for Salary levels above $100,000 to the capped level of $125,000:
The bill is clearly being fast-tracked due to the tight timelines of the proposed implementation. S-2273 was introduced on March 16, 202 and passed by the full Senate on March 19, 2020 without any public hearing on the bill. Only written comments were accepted due to the current public health emergency. The bill must still be considered by the General Assembly and signed by Governor Murphy to become law.
As this legislation continues through the legislative process, NJPSA will keep you informed of all new developments. You can direct any questions to Robert Murphy, NJPSA Assistant Executive Director rmurphy@njpsa.org or Debra Bradley, Esq., NJPSA Director of Government Relations dbradley@njpsa.org.