On September 14, 2022, the Statewide Council of New Jersey State Locals - AFT and four additional Unions representing State employees signed an agreement with the State of New Jersey concerning employee costs for health care. The agreement ameliorates the proposed drastic increases threatened by the State in employee contribution rates.
On July 13, Aon PLC, a risk management firm hired by the State of New Jersey, presented an actuarial analysis to the New Jersey State Health Benefits Commission (SHBC) recommending a 21% increase in health care plan premiums for NJ State employees and a 24% for local government employees. The SHBC, which sets the premiums of our plans, includes three representatives of the governor’s administration and two public employee labor representatives.
In response to Aon’s proposal, Unions representing both State and local government workers almost immediately came together to fight the proposed increase. For the first time, five Unions representing State employees (AFSCME, AFT, CWA, IBEW, and IFPTE) chose to negotiate collectively any changes in employee health care costs. During the negotiations process, these Unions were threatened that, if an agreement with the State was not reached by September 14, an 18% increase in employee premium contribution rates would be imposed. After multiple daily meetings over two weeks, the Union coalition concluded negotiations with the State, just hours before the deadline.
For those employees in Units covered by this agreement, increases in health care plan costs that will become effective January 1, 2023 consist of: (1) Plan contribution rates, (2) Copays for specialist visits, and (3) Copays for urgent care.
Contribution Rate Increase
Effective January 1, 2023, employee contributions for the NJ Direct and NJ Direct 2019 plans shall increase by 3%. The employee contribution for those enrolled in the Tiered Network plan shall be 75% of the new NJ Direct plan contribution rates.
For our members in the NJ Direct and NJ Direct 2019 plans with an annual salary less than $75,000, the employee contribution rate is presently based on a percentage of annual salary. For example, an employee in the single plan with an annual salary of $70,000 per year, now pays 4% of annual salary, which is $2,800 ($70,000 x 0.04 = $2,800). The cost in January 2023 will be 3% greater than $2,800, which is $2,884, an $84 annual increase.
For those in the NJ Direct and NJ Direct 2019 plans with an annual salary more than $75,000, the employee contribution is a flat rate, not a percentage of salary. For example, an employee with an annual salary of $130,000 in the single plan pays a flat fee of $3,190 per year, which is 2.45% of annual salary. The cost in January 2023 will increase 3% to $3,286, a $96 annual increase.
Copays for Specialist Visits
The Specialist copay per visit shall increase from $15 to $30 per visit, but the primary care physician and OB/GYN copay per visit will stay at $15. This increase in specialist copay shall also apply to the Tiered Network plan and the HMO plan.
Urgent Care Copays
The copay for approved urgent care facilities shall increase from $15 to $45 per visit. This $30 differential between urgent care copay and primary care physician copay shall also apply to the Tiered Network plan and the HMO plan.
Future Cost Calculations
The projected 2023 health care costs to the State in the Aon actuarial analysis were based on the increase in health care costs and utilization by New Jersey public employees from 2020 to 2021. However, most elective procedures were postponed in 2020 due to COVID 19 and many were then carried out in 2021. Therefore, the COVID anomaly resulted in large increases in costs and utilization in 2021 compared to 2020. To determine if the 2023 increases in copays for specialists and urgent care should be continued or revised in 2024 and beyond, it was agreed that the Unions and the State will review utilization and cost information for these services for 2022.