A Capehart Scatchard Blog

Governor Signs Law Establishing New Health Care Plans and Contribution Levels

By on July 2, 2020 in Legislation with 0 Comments

On July 1, 2020, Governor Philip Murphy signed Senate Bill 2273 which requires alterations in health insurance plans and changes to school employee contributions toward the cost of health coverage.  The law takes effect immediately and in some respects overrides collective negotiations agreement provisions.  The new law will impact negotiations, budgeting and insurance benefit planning.  Key components include:

  1. Establishment of New Jersey Educators Health Plan (“NJEHP”) by the School Employees’ Health Benefit Program (“SEHBP”) for the 2021 plan year and creation of an equivalent plan by non-SEHBP school districts;

  2. Establishment of a less costly Garden State Health Plan (“GSHP”) by the SEHBP beginning July 1, 2021 and the requirement that non SEHBP districts create an equivalent plan;

  3. Beginning on January 1, 2021, mandatory placement of all employees commencing employment on or after July 1, 2020 but prior to January 1, 2028  in the NJEHP or if selected, the GSHP (or their non SEHBP equivalent plans);

  4. Requirement to hold a special enrollment period prior to January 1, 2021 for employees employed prior to July 1, 2020 for the purpose of affirmatively selecting plans with the default plan being the NJEHP should the employee fail to select a plan;

  5. Implementation of new contribution levels for employees placed in or selecting the NJEHP or its equivalent plan, said contributions to be a percentage of base salary in accordance with certain salary tiers;

  6. Implementation of a contribution level for employees selecting the GSHP which is one-half (½) the applicable base salary percentage for employees in the NJEHP but not less than 1 ½ % of base salary;

  7. Contribution levels for the NJEHP and GSHP (and their non SEHBP equivalents) will be the status quo when the levels become negotiable in January 1, 2028;

  8. Prohibition against adding any new plans to collective bargaining agreements unless the plan is less costly than the NJEHP;

  9. Use of any actual savings to reduce the tax levy in districts spending above adequacy;

  10. A provision for the SEHBP Design Committee to assess annual State-wide savings in the second half of 2023 and, if savings are less than $300 million, make adjustments to plans or contribution rates effective January 2024 (with the Treasurer stepping in if the Committee is unable to decide on adjustments); and

  11. A requirement to negotiate over the financial impact of the difference if on July 1, 2020 the net cost to the employer of health care benefit coverage under a collective negotiations agreement in effect is lower than the net cost would be compared to the NJEHP.

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About the Author

About the Author:

Robert A. Muccilli, Esq. is Co-Chair of Capehart Scatchard’s School Law Group and a Shareholder in the Labor and Employment Group. For over 25 years, he has focused his practice in the areas of school law, and labor and employment. He has represented school districts with respect to a variety of education law issues involving students, teachers, school construction and special education issues including questions pertaining to inclusion, least restrictive environment, discipline, behavior management, transition, evaluation, discrete trial instruction, medically fragile students, dyslexia, Down Syndrome, Aspergers Syndrome, and equal access to activities and services for disabled individuals. He has also been recognized as one of South Jersey’s Top Attorneys as published by SJ Magazine. Mr. Muccilli is admitted to practice law in New Jersey, the United States District Court for the District of New Jersey and Washington, DC.


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