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S3949
SENATE, No. 3949
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED MARCH 16, 2026
Sponsored by:
Senator� BENJIE E. WIMBERLY
District 35 (Bergen and Passaic)
SYNOPSIS
���� Requires proportional distribution of payment between
employers for health benefit payment obligations for certain retirees.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
concerning payment for public employer-paid retirement
health benefits and amending N.J.S.40A:10-23, P.L.1996, c.8, and P.L.2007,
c.103.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.���
N.J.S.40A:10-23
is amended to read as follows:
���� 40A:10-23.� a.� Retired
employees shall be required to pay for the entire cost of coverage for
themselves and their dependents at rates which are deemed to be adequate to
cover the benefits, as affected by Medicare, of the retired employees and their
dependents on the basis of the utilization of services which may be reasonably
expected of the older age classification; provided, however, that the total
rate payable by a retired employee for himself and his dependents, for coverage
under the contract and for Part B of Medicare, shall not exceed by more than
25% the total amount that would have been required to have been paid by the
employee and his employer for the coverage maintained had he continued in
office or active employment and he and his dependents were not eligible for
Medicare benefits.�
���� The employer may, in its
discretion, assume the entire cost or a portion of the cost of such coverage
and pay all or a portion of the premiums for employees a. who have retired on a
disability pension, or b. who have retired after 25 years or more of service
credit in a State or locally administered retirement system and a period of
service of up to 25 years with the employer at the time of retirement, such
period of service to be determined by the employer and set forth in an
ordinance or resolution as appropriate, or c. who have retired and reached the
age of 65 years or older with 25 years or more of service credit in a State or
locally administered retirement system and a period of service of up to 25
years with the employer at the time of retirement, such period of service to be
determined by the employer and set forth in an ordinance or resolution as
appropriate, or d. who have retired and reached the age of 62 years or older
with at least 15 years of service with the employer, including the premiums on
their dependents, if any, under uniform conditions as the governing body of the
local unit shall prescribe.� The period of time a county law enforcement
officer has been employed by any county or municipal police department,
sheriff's department or county prosecutor's office, may be counted cumulatively
as "service with the employer" for the purpose of qualifying for
payment of health insurance premiums by the county pursuant to this section.�
���� b.� An employee who becomes a
member of a State or locally-administered retirement system on or after the
effective date of P.L.2010, c.2 shall pay in retirement 1.5 percent of the
retiree's monthly retirement allowance, including any future cost-of-living
adjustments, through the withholding of the contribution from the monthly
retirement allowance, for health care benefits coverage provided under
N.J.S.40A:10-22, notwithstanding any other amount that may be required
additionally by the employer or through a collective negotiations agreement for
such coverage.� This subsection shall apply also when the health care benefits
coverage is provided through an insurance fund or joint insurance fund or in
any other manner.� This subsection shall apply to any agency, board,
commission, authority, or instrumentality of a local unit.
����
c.���� (1)
Notwithstanding any provision of this section, or any other law, rule, or
regulation to the contrary, if an employee qualifies for employer-paid health
benefits coverage in retirement and was employed during the employee�s years of
service by more than one State or local government entity or an institution of
higher education, or is a retirant of a State-administered retirement system,
the cost of the employer share for such coverage shall be paid on a pro rata
basis by each former employer, commensurate with the period of employment with
the employer.
����
(2) �This section shall not
be construed to require local government entities which have not opted to
provide employer-paid health benefits coverage in retirement to contribute to
the cost of such coverage for a retiree.
����
(3) This section shall not
be construed to alter any applicable binding collective negotiations agreement
in effect prior to the effective date of P.L.��� , c.��� (pending before the
Legislature as this bill).
(cf: P.L.2010, c.2, s.15)
���� 2.��� Section 6 of P.L.1996,
c.8 (C.52:14-17.28b) is amended to read as follows:
���� 6. a. Notwithstanding the
provisions of any other law to the contrary, the obligations of the State or an
independent State authority, board, commission, corporation, agency, or
organization to pay the premium or periodic charges for health benefits coverage
provided under P.L.1961, c.49 (C.52:14-17.25 et seq.) may be determined by
means of a binding collective negotiations agreement, including any agreements
in force at the time of the adoption of P.L.1996, c.8. With respect to State
employees for whom there is no majority representative for collective
negotiations purposes, the commission may, in its sole discretion, modify the
respective payment obligations set forth in P.L.1961, c.49 for the State and
such employees in a manner consistent with the terms of any collective
negotiations agreement binding on the State. With respect to employees of an
independent State authority, board, commission, corporation, agency, or
organization for whom there is no majority representative for collective
negotiations purposes, the employer may, in its sole discretion, modify the
respective payment obligations set forth in P.L.1961, c.49 for such employer
and such employees in a manner consistent with the terms of any collective
negotiations agreement binding on such employer. The provisions of this
subsection shall also apply to employees deemed or considered to be employees
of the State pursuant to subsection (c) of section 2 of P.L.1961, c.49
(C.52:14-17.26).
���� b. (1) Notwithstanding the
provisions of any other law to the contrary, for each State employee who
accrues 25 years of nonconcurrent service credit in one or more State or
locally-administered retirement systems before July 1, 1997, excepting the
employee who elects deferred retirement, the State, upon the employee's
retirement, shall pay the full cost of the premium or periodic charges for the
health benefits provided to a retired State employee and dependents covered
under the State Health Benefits Program, but not including survivors, and shall
also reimburse the retired employee for premium charges under Part B of
Medicare covering the retired employee and the employee's spouse.
���� (2)�� Notwithstanding the
provisions of any other law to the contrary, and except as otherwise provided
by section 8 of P.L.1961, c.49 (C.52:14-17.32) as amended by P.L.2005, c.341,
and by subsection c. of this section, for each State employee who accrues 25 years
of nonconcurrent service credit in one or more State or locally-administered
retirement systems on or after July 1, 1997, excepting the employee who elects
deferred retirement, the State, upon the employee's retirement, shall pay the
premium or periodic charges for the health benefits provided to a retired State
employee and dependents covered under the State Health Benefits Program, but
not including survivors, and shall reimburse the retired employee for premium
charges under Part B of Medicare covering the retired employee and the
employee's spouse: (a) in accordance with the provisions, if any, concerning
health benefits coverage in retirement which are in the collective negotiations
agreement applicable to the employee at the time of the employee's accrual of
25 years of nonconcurrent service credit in one or more State or
locally-administered retirement systems, or (b) if the employee has no majority
representative for collective negotiations purposes, in a manner consistent
with the terms, if any, concerning health benefits coverage in retirement which
are in any collective negotiations agreement deemed applicable by the State
Health Benefits Commission to that employee at the time of the employee's
accrual of 25 years of nonconcurrent service credit in one or more State or
locally-administered retirement systems. The terms for the payment of premiums
or periodic charges established pursuant to this paragraph for the traditional
plan shall apply to the successor plan, and the terms for the payment of
premiums or periodic charges established pursuant to this paragraph for the NJ
PLUS plan shall apply to the State managed care plan required to be included in
a contract entered into pursuant to subsection c. of section 4 of P.L.1961,
c.49 (C.52:14-17.28).
���� c. (1) Effective July 1, 2007,
but, with respect to employees to whom this subsection applies who are paid
through the State centralized payroll, effective with the first pay period
beginning after July 1, 2007, the cost of benefits provided pursuant to P.L.1961,
c.49 (C.52:14-17.25 et seq.) shall be shared by employees through the
withholding of a contribution in an amount as determined in accordance with
paragraph (2) of this subsection.
���� (2)�� The amount of the
contribution required pursuant to paragraph (1) of this subsection as to State
employees and employees of an independent State authority, board, commission,
corporation, agency, or organization for whom there is a majority representative
for collective negotiations purposes shall be determined by means of a binding
collective negotiations agreement.� Commencing on the effective date of
P.L.2010, c.2 and upon the expiration of any applicable binding collective
negotiations agreement in force on that effective date, the amount of the
contribution required pursuant to paragraph (1) of this subsection by State
employees and employees of an independent State authority, board, commission,
corporation, agency, or organization for whom there is a majority
representative for collective negotiations purposes shall be 1.5% of base
salary, notwithstanding any other amount that may be required additionally
pursuant to this paragraph by means of a binding collective negotiations
agreement.
���� The amount of the contribution
required pursuant to paragraph (1) of this subsection as to State employees for
whom there is no majority representative for collective negotiations purposes
shall be determined in a manner consistent with the terms, if any, concerning
health benefits coverage which are in a collective negotiations agreement
deemed applicable by the commission to the employee.� The amount of the
contribution required pursuant to paragraph (1) of this subsection as to
employees of an independent State authority, board, commission, corporation,
agency, or organization for whom there is no majority representative for
collective negotiations purposes shall be determined in a manner consistent
with the terms, if any, concerning health benefits coverage which are in a
collective negotiations agreement deemed applicable by the employer to the
employee.� The amount of the contribution required pursuant to paragraph (1) of
this subsection as to State employees or employees of an independent State authority,
board, commission, corporation, agency, or organization for whom there is no
majority representative for collective negotiations purposes shall be 1.5
percent of base salary, notwithstanding any other amount that may be required
additionally pursuant to this paragraph by means of the application of the
terms of a binding collective negotiations agreement.
���� (3)�� Except as provided in
paragraph (5) of this subsection, the cost of benefits provided pursuant to
P.L.1961, c.49 (C.52:14-17.25 et seq.) shall be shared by retirees to whom this
subsection applies through the withholding of a contribution in an amount as
determined in accordance with paragraph (4) of this subsection.
���� (4)�� The amount of the
contribution required pursuant to paragraph (3) of this subsection as to State
employees and employees of an independent State authority, board, commission,
corporation, agency, or organization for whom there is a majority representative
for collective negotiations purposes who accrue 25 years of nonconcurrent
service credit in one or more State or locally-administered retirement systems
on or after July 1, 2007, and who retire on or after July, 1, 2007, excepting
employees who elect deferred retirement, but including those who retire on a
disability pension after July 1, 2007, shall be determined by means of a
binding collective negotiations agreement applicable at the time of the
employee's accrual of 25 years of nonconcurrent service credit in one or more
State or locally-administered retirement systems. The amount of the
contribution required pursuant to paragraph (3) of this subsection as to State
employees or employees of an independent State authority, board, commission,
corporation, agency, or organization for whom there is no majority
representative for collective negotiations purposes who accrue 25 years of
nonconcurrent service credit in one or more State or locally-administered
retirement systems on or after July 1, 2007, and who retire on or after July 1,
2007, excepting employees who elect deferred retirement, but including those
who retire on a disability pension after July 1, 2007, shall be determined in a
manner consistent with the terms, if any, concerning health benefits coverage
in retirement which are in any collective negotiations agreement deemed
applicable by the commission to that employee at the time of the employee's
accrual of 25 years of nonconcurrent service credit in one or more State or
locally-administered retirement systems, except that for employees who accrue
25 years of nonconcurrent service credit in one or more State or
locally-administered retirement systems in the period beginning July 1, 2007,
and ending June 30, 2011, the contribution shall be 1.5 percent of the monthly
retirement allowance, including any future cost-of-living adjustments, or, with
respect to retirees for whom there is no majority representative and who are
members of the alternate benefit program, an amount determined pursuant to a formula
developed by the commission that shall be designed to result in a contribution
that is comparable to the contribution that applies to retirees who are not
members of the alternate benefit program.
���� (5)�� The contribution
required pursuant to paragraph (3) of this subsection shall not take effect
until the New Jersey Retirees' Wellness Program is open for enrollment and
thereafter the contribution shall be waived for a retiree who participates in
the New Jersey Retirees' Wellness Program. The Division of Pensions and
Benefits shall issue a report on the New Jersey Retirees' Wellness Program. The
report shall include, but need not be limited to, the claims experience with
regard to retirees in the program, and the costs and savings realized. The
report shall be issued at the end of the third year after the program's
implementation or by December 30, 2010, whichever is earlier. The report shall
be submitted to the Governor, the Legislature, and the State Treasurer.�
���� (6)�� Any employee or retiree
from whom withholding of a contribution is required pursuant to this subsection
shall not be required to pay any percentage of the premiums or periodic charges
for health care benefits provided under P.L.1961, c.49 (C.52:14-17.25 et seq.),
other than dental benefits.
���� (7)�� The contribution
required pursuant to this subsection may be terminated only upon withdrawal
from all health care benefits coverage as an employee or retiree, other than
coverage for dental benefits, and the submission to the commission of written
certification by the employee that the employee is covered by other health care
benefits and that those benefits are in force. The commission shall not apply
the written certification requirement to retirees or to employees to whom
Article VI, Section VI, paragraph 6 of the New Jersey Constitution applies.
���� d.��� The amount of
contribution required pursuant to paragraph (3) of subsection c. of this
section in retirement as to a State employee and employee of an independent
State authority, board, commission, corporation, agency, or organization who
becomes a member of a State or locally-administered retirement system on or
after the effective date of P.L.2010, c.2, for whom there is a majority
representative for collective negotiations purposes and for whom there is no
such representative, shall be 1.5 percent of the retiree's monthly retirement
allowance, including any future cost-of-living adjustments, or with respect to
members of the alternate benefit program, an amount determined pursuant to the
formula specified in paragraph (4) of subsection c. of this section,
notwithstanding any other amount that may be required additionally pursuant to
paragraph (4) of subsection c. of this section by means of a binding collective
negotiations agreement or by means of the application of the terms of such an
agreement.� The contribution required by this subsection or pursuant to
paragraph (4) of subsection c. of this section for officers or employees
specified in this subsection shall not be waived for a retiree who participates
in the New Jersey Retirees' Wellness Program.
����
e.���� (1) Notwithstanding
any provision of this section, or any other law, rule, or regulation to the
contrary, if an employee qualifies for employer-paid health benefits coverage
in retirement and was employed during the employee�s years of service by more
than one State or local government entity or an institution of higher
education, or is a retirant of a State-administered retirement system, the cost
of the employer share for such coverage shall be paid on a pro rata basis by
each former employer, commensurate with the period of employment with the
employer.
����
(2)� This section shall not
be construed to require local government entities which have not opted to
provide employer-paid health benefits coverage in retirement to contribute to
the cost of such coverage for a retiree.
����
(3) This section shall not
be construed to alter any applicable binding collective negotiations agreement
in effect prior to the effective date of P.L.��� , c.��� (pending before the
Legislature as this bill).
(cf: P.L.2010, c.2, s.1)
���� 3.��� Section 39 of P.L.2007,
c.103 (C.52:14-17.46.9) is amended to read as follows:
���� 39. a. For each active covered
employee and for the eligible dependents the employee may have enrolled at the
employee's option, from funds appropriated therefor, the employer shall pay to
the commission the premium or periodic charges for the benefits provided under
the contract in amounts equal to the premium or periodic charges for the
benefits provided under such a contract covering the employee and the
employee's enrolled dependents.
���� b.��� The obligations of any
employer to pay the premium or periodic charges for health benefits coverage
provided under the School Employees' Health Benefits Program Act, sections 31
through 41 of P.L.2007, c.103 (C.52:14-17.46.1 through C.52:14-17.46.11), may
be determined by means of a binding collective negotiations agreement,
including any agreement in force at the time the employer commences
participation in the School Employees' Health Benefits Program. With respect to
employees for whom there is no majority representative for collective
negotiations purposes, the employer may, in its sole discretion, modify the
respective payment obligations set forth in law for the employer and such
employees in a manner consistent with the terms of any collective negotiations
agreement binding on the employer.
���� Commencing on the effective
date of P.L.2010, c.2 and upon the expiration of any applicable binding
collective negotiations agreement in force on that effective date, employees
shall pay 1.5 percent of base salary, through the withholding of the contribution,
for health benefits coverage provided under P.L.2007, c.103 (C.52:14-17.46.1 et
seq.), notwithstanding any other amount that may be required additionally
pursuant to this subsection by means of a binding collective negotiations
agreement or the modification of payment obligations.
���� c.���� There is hereby
established a School Employee Health Benefits Program fund consisting of all
contributions to premiums and periodic charges remitted to the State treasury
by participating employers for employee coverage. All such contributions shall
be deposited in the fund and the fund shall be used to pay the portion of the
premium and periodic charges attributable to employee and dependent coverage.
���� d.��� The fund shall contain a
dedicated subaccount reserved for payment of claims and other health services
fees for covered health services and prescription drug benefits provided to
covered employees and their enrolled eligible dependents. No person shall use
or authorize the use of the assets in the subaccount, or the investment
earnings thereon, for any purpose other than for the provision of benefits in
accordance with the terms of the School Employees' Health Benefits Program and
for defraying the reasonable costs of administering the subaccount.� A
third-party medical claims reviewer, procured pursuant to section 2 of
P.L.2019, c.143 (C.52:14-17.30b), shall, in the performance of services for the
program, act in the best interests of the State, participating employers, and
covered employees and their enrolled eligible dependents. Nothing in this
subsection shall be construed as subjecting the program, its plans, the State,
or any participating employer to the provisions of the "Employee
Retirement Income Security Act of 1974" (29 U.S.C. s.1001 et seq.).
���� The third-party medical claims
reviewer shall collect, store and maintain a secure archive of medical and
prescription drug claims data and other health services payment information and
provide such data and other reports in compliance with applicable State and
federal laws, including the "Health Insurance Portability and
Accountability Act of 1996," Pub.L.104-191, to document the cost and
nature of claims incurred, demographic information on the covered population,
emerging utilization and demographic trends, and such other information as may
be available to assist in the governance of the program and in timely response
to any requests from the Governor, the State Treasurer, the Division of
Pensions and Benefits, the School Employees' Health Benefits Commission, the
School Employees' Health Benefits Plan Design Committee, the President of the
Senate, and the Speaker of the General Assembly. Such claims data shall
include, but not be limited to, for each claim, the claim number, provider
information, amount charged, amount paid, and the Current Procedural
Terminology (CPT) code. The School Employees' Health Benefits Commission, the
School Employees' Health Benefits Plan Design Committee, the State Treasurer,
or the Division of Pensions and Benefits may direct the third-party medical
claims reviewer to provide appropriate medical and prescription drug claims and
other health services payment data to a health care services provider or other
authorized entity, in compliance with applicable State and federal laws,
including the "Health Insurance Portability and Accountability Act of
1996," Pub.L.104-191, for the specific purpose of improving the quality
and value of health care services delivered to program participants.
���� The State Treasurer shall
deposit into the subaccount the moneys necessary to accomplish the purposes of
this subsection, including moneys paid by employers participating in the
program, and contributed by covered employees and retirees.� Deposits and contributions
to the subaccount shall be applied to the distribution of payments for the
costs of health care services and prescription drug benefits and to fund the
reasonable costs of administering the subaccount. Assets in the subaccount
shall be expended or withdrawn, and deposits and withdrawals shall be
reconciled, in accordance with regulations and procedures adopted pursuant to
this subsection.
���� Moneys in the subaccount shall
be invested in permitted investments or shall be held in interest-bearing
accounts in such depositories as the State Treasurer may select, and may be
invested and reinvested in permitted investments or invested and reinvested in
the same manner as other accounts in the custody of the State Treasurer as
provided by law. All interest or other income or earnings derived from the
investment or reinvestment of moneys in the subaccount shall be credited
thereto and shall be determined on an aggregate basis for all participating
employers.
���� The State Treasurer shall
adopt, pursuant to the "Administrative Procedure Act," P.L.1968,
c.410 (C.52:14B-1 et seq.), such rules and regulations as may be necessary to
implement the provisions of this act, P.L.2019, c.143 (C.52:14-17.30a et al.).
���� e.���� Notwithstanding any law
to the contrary and except as provided by amendment by P.L.2010, c.2, and by
P.L.2011, c.78, the payment in full of premium or periodic charges for eligible
retirees and their dependents pursuant to section 3 of P.L.1987, c.384 (C.52:14-17.32f),
section 2 of P.L.1992, c.126 (C.52:14-17.32f1), or section 1 of P.L.1995, c.357
(C.52:14-17.32f2) shall be continued without alteration or interruption and
there shall be no premium sharing or periodic charges for certain school
employees in retirement once they have met the criteria for vesting for pension
benefits, which criteria for purposes of this subsection only shall mean the
criteria for vesting in the Teachers' Pension and Annuity Fund. For purposes of
this subsection, "premium sharing or periodic charges" shall mean
payments by eligible retirees based upon a proportion of the premiums for
health care benefits.
����
f.���� (1) Notwithstanding
any provision of this section, or any other law, rule, or regulation to the
contrary, if an employee qualifies for employer-paid health benefits coverage
in retirement and was employed during the employee�s years of service by more
than one State or local government entity or an institution of higher
education, or is a retirant of a State-administered retirement system, the cost
of the employer share for such coverage shall be paid on a pro rata basis by
each former employer, commensurate with the period of employment with the
employer.
����
(2)� This section shall not
be construed to require local government entities which have not opted to
provide employer-paid health benefits coverage in retirement to contribute to
the cost of such coverage for a retiree.
����
(3) This section shall not
be construed to alter any applicable binding collective negotiations agreement
in effect prior to the effective date of P.L.��� , c.��� (pending before the
Legislature as this bill).
(cf: P.L.2019, c.143, s.6)
���� 4.��� This act shall take
effect 180 days after the date of enactment.� The State Treasurer may take any
anticipatory action necessary prior to the effective date to implement the
provisions of this act.
STATEMENT
���� This bill requires the
proportional distribution of payment between employers for health benefit
payment obligations for certain retirees.
���� This bill requires the State
and local government entities and institutions of higher education to
distribute post-employment health benefit payment obligations proportionally
between employers if a retiree who qualifies for retirement health benefits worked
for more than one State, local, or higher education employer, or is a retirant
of a State-administered retirement system.� For example, if a retiree worked
for 20 years at a State department and 20 years at a qualifying municipality,
the department and the municipality will equally share the employer-paid
portion of the cost of health benefits coverage for the retiree and any
dependents in retirement.�
���� Under current law, local
government entities are not required to provide employer-paid health benefits
coverage in retirement, with some exceptions for certain retirees and certain
municipalities.� However, a local government entity may choose to provide such
benefits, and assume the liability for all or a part of such coverage, in
certain cases by its own discretion or by ordinance of the appropriate
governing body.� Under the bill, if a local government entity chooses to
provide such benefits, then the employer contribution would be required to be
proportional.
���� This bill does not require
local government entities which have not opted to provide employer-paid health
benefits coverage in retirement to contribute to the cost such coverage.� This
bill also will not alter any applicable binding collective negotiations
agreement in force prior to the effective date of this bill.