October 2, 2006
State Health Benefits Commission Changes Benefits & Rates for 2007
More actions expected in coming months
Despite extensive lobbying by NJEA, the State Health Benefits Commission (SHBC) voted on Sept. 5, 2006, to make major changes to benefits in the State Health Benefits Plan (SHBP). In addition, beginning Jan. 1, 2007, board-paid premiums will increase in the Traditional, NJ PLUS, HMO, and the SHBP Prescription Drug Card plans. In addition, rates were adopted for under age-30 dependents.
When news leaked out about the commission’s plans to adopt benefits changes, NJEA members, including a large contingent of retirees, packed the commission’s recent meetings. The commission, however, rejected the issues raised by public employee representatives about the negative impact of the proposed modifications to the plan.
The commission-adopted SHBP rates are based on the following modifications to the state plan:
· Eliminating dual coverage, known as coordination of benefits, in the SHBP when a husband and wife or domestic partners are both eligible for coverage whether active employees or retired. This means that if both individuals are eligible for enrollment or participation in the SHBP, one can enroll for single coverage and the other for parent/dependent coverage. The two individuals would no longer both be able to enroll for family coverage with each covering their spouse/partner and eligible dependents. While included in the rate action, this proposal will not take effect until adopted as regulation under the Administrative Procedures Act, following a 60-day public comment period.
· Increasing the NJ PLUS/HMO office visit co-payments from $5 to $10 for both active employees and retirees.
· Increasing the SHBP Prescription Drug Card program co-pays for active employees from $1 for generic/$5 for brand names at retail and mail-order pharmacies to $3 for generic/$10 for brand names at retail stores and $5 for generic/$15 for brand names through mail-order.
· Increasing the Retiree Prescription Drug Card Program out-of-pocket maximum from $1,000 to $1,082 in 2007 and increasing by $1 certain prescription co-payments for retirees.
Proposed changes to be adopted through regulatory process
Change in dependent premium sharing ---
Under current regulations, all employees in a school district must be treated the same in terms of premium sharing for dependents (the benefits and additional cost an employer must pay for dependent coverage.)
The State Health Benefits Commission is proposing to allow public employers, including school boards, to bargain different premium-sharing arrangements for dependent coverage for different categories of employees. If this change passes a board could choose, for example, to provide free coverage for the chief school administrator’s spouse and try to bargain 50 percent premium sharing for other school staff.
These proposed changes to the administrative code are being published in the New Jersey Register for official public notification. There must be a 60-day public comment period prior to final adoption.
Plan to mandate generic and mail-order drugs delayed until January
The commission tabled until its January meeting further discussion of a proposal for mandatory substitution of generic and mail-order drugs for prescriptions.
The N.J. Division of Pensions and Benefits has stated the delay will give it time to develop an education program for plan participants prior to the proposal’s implementation. The division indicated it intends to seek commission approval for this change in January.
NJEA’s response ---
A group of NJEA officers, staff, and attorneys are meeting to review the legality of the commission’s actions in adopting changes in the SHBP, particularly those which were not published in advance nor adequately advertised to allow for public comment.
An advisory outlining the actions of the SHBC will be sent to NJEA UniServ staff to assist them in providing guidance to NJEA affiliates.
SHBP fiscally sound, commission’s actuary says ---
The changes come at a time when the commission’s actuarial firm, Aon, Inc., reported that the SHBP’s medical claims experience has been much lower than the benchmark values from Aon’s national trend survey. This means that the claims filed through the SHBP are increasing at a lower rate than comparable plans nationwide, a trend that has continued for at least the past two years.
According to Aon, Inc., the SHBP local employer group is financially solvent, with a projected cumulative surplus of approximately $247 million or about two months of projected plan expenses.
