P.O. Box 909 ● Trenton, NJ 08605-0909 ● Phone: 609.695.7600 ● Fax: 609.695.0413 ● Web: www.njsba.org/PI

Steep Rate Increases Expected for School Health Benefits Plan

TRENTON, May 28, 2009 — The recently created state-run health benefits program for school employees will experience double-digit premium increases in January, the director of the state pension system told the commission that governs the plan yesterday.

Pension Director Fred Beavers said the increases, which could range from 12 to 20 percent, resulted from an unusual pattern of high usage. He indicated that staff of the Division of Pensions, which oversees state-run health benefits plans, is developing new regulations to address the issue.

The School Employees Health Benefits Program went into operation in 2008-2009. Next year, 254 school districts will participate in the plan. (Other districts purchase coverage through private carriers.) Previously, school districts opting to secure employee health benefits through a state-operated system belonged to the State Health Benefits Program. That plan, which now provides coverage to state, municipal and county employees, is also anticipating double-digit premium increases.

Reforms Proposed Last Friday, Governor Corzine directed the commissions that govern the state-run health programs to review the following “broad-based reforms in anticipation of the rate increases”:

• Suspending an employer’s ability to delay premium payments, effective immediately.


• Placing a surcharge on employers who enter and leave the program within a two-year period.


• Terminating employers for non-payment of premiums after a certain number of days.


• Identifying any new cost-saving opportunities that will stabilize the program going forward.

Restrictions Feared NJSBA, which is represented on the SEHBP commission, has serious concerns about any changes that would impede school districts from selecting the insurance carrier that provides the desired coverage at the best price.

The Association is also concerned about the financial difficulties school boards would encounter as a result of double-digit premium increases in January 2010—midway through the budget year. School budgets are already set for 2009-2010. State law and regulation, including a restriction on the amount of surplus school boards may budget, have greatly limited the ability of districts to address unanticipated cost increases.