Bill Text: NJ S220 | 2018-2019 | Regular Session | Introduced

New Jersey Senate Bill 220 (Prior Session Legislation)

Introduced

Bill Title: Sets level for health care benefits; requires employee contributions; prohibits reimbursement of Medicare Part B; adds member to SHBP/SEHBP plan design committees; requires retirees to purchase health benefits through exchanges; provides subsides for out-of-pocket costs.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2018-01-09 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S220 Detail]

Download: New_Jersey-2018-S220-Introduced.html

SENATE, No. 220

STATE OF NEW JERSEY

218th LEGISLATURE

PRE-FILED FOR INTRODUCTION IN THE 2018 SESSION

Sponsored by:

Senator DECLAN J. O'SCANLON, JR.

District 13 (Monmouth)

Senator STEVEN V. OROHO

District 24 (Morris, Sussex and Warren)

SYNOPSIS

Sets level for health benefits; requires employee contributions; prohibits reimbursement of Medicare Part B; adds member to SHBP/SEHBP plan design committees; requires retirees to purchase health benefits through exchanges; provides subsidies for out-of-pocket costs.

CURRENT VERSION OF TEXT

As introduced.

An Act concerning health care benefits for public employees and retirees and amending various parts of the statutory law and supplementing P.L.1961, c.49.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.1979, c.391 (C.18A:16-13) is amended to read as follows:

2. a. Any local board of education may directly or indirectly through a trust fund or otherwise enter into contracts of group life, accidental death and dismemberment, hospitalization, medical, surgical, major medical expense, minimum premium insurance policy or health and accident insurance with any insurance company or companies authorized to do business in this State, or may contract with a nonprofit hospital service, medical service or health service corporation with respect to the benefits which they are authorized to provide respectively. Such contract or contracts shall provide any one or more of such coverages for the employees of the local board of education and may include their dependents. A local board of education may enter into a contract or contracts to provide drug prescription and other health care benefits, or enter into a contract or contracts to provide drug prescription and other health care benefits as may be required to implement a duly executed collective negotiations agreement, or as may be required to implement a determination by a local board of education to provide such benefit or benefits to employees not included in collective negotiations units. Nothing herein contained shall be deemed to authorize coverage of dependents of an employee under a group life insurance policy or to allow the issuance of a group life insurance policy under which the entire premium is to be derived from funds contributed by the insured employee.

For purposes of this section, "minimum premium insurance policy" means a group insurance policy issued by an insurer licensed to do business in this State under which the policyholder agrees to directly fund specified claims of insureds covered under the policy, in lieu of payment of a portion of the premium.

b. (1) After the effective date of P.L. , c. (pending before the Legislature as this bill), a local board of education shall not enter into a contract under subsection a. of this section to provide any group health care benefit plan offering coverage that exceeds the definition of gold level, as set forth in section 1302 of "The Patient Protection and Affordable Care Act" (42 U.S.C. s.18022).

(2) (a) After the effective date of P.L. , c. (pending before the Legislature as this bill), a local board of education shall not enter into a contract under subsection a. of this section to provide any group health care benefit plan offering coverage to employees of the board unless the board has considered and included, to the extent appropriate, feasible, and cost effective, as part of each plan: wellness programs; patient-centered medical homes; reference- based pricing; on-site medical clinics; comprehensive urgent care centers; greater use of generic drugs and prescriptions by mail; network improvements to enhance in-network utilization and reduce out-of-network utilization; and adjustments to in-network deductibles, copays, and out-of-pocket expense limits, and other components, to enhance in-network utilization and reduce out-of-network utilization. The board of education shall also consider for each plan the inclusion of research-proven best practices in the delivery of health care and the optimization of a network of high-value providers.

The board of education shall have the authority to create, modify, or terminate any plan or component, at its sole discretion, with regard to this paragraph.

(b) A local board of education shall submit annually a written report to the Department of Education describing in detail the board's consideration or inclusion, or both, of each component set forth in subparagraph (a) of this paragraph, its analysis and conclusion on the feasibility of each component, and its analysis and calculations on the cost effectiveness of each component. The report shall be submitted by the date designated by the department. If a full and complete report is not received by the department by the end of business on the due date designated, the department shall contact, within three business days thereafter, each member of the board, the attorney for the board, and the superintendent by telephone, electronic communications, and mail to inform each individual that the report has not been received and to demand a full and complete report be submitted within 10 business days after receipt of the notice. If a board fails to submit a report or refuses to submit a report, the department shall notify the Governor in writing of the board's failure or refusal, and take such executive or administrative action as shall be within the authority of the department, or the Governor, or both, to impose a penalty or consequence, monetary or otherwise, upon the board or district until such time as a full and complete report is received for that year.

The department shall develop a program to monitor and assist local boards of education in complying with this paragraph (2) of subsection b. of this section. The department shall provide, or arrange to provide, expertise or technical assistance to a board of education that requests such assistance in writing for its considerations, analyses, and calculations within the limits of such funds as the Legislature may appropriate for such purposes or such funds as the department may use for such purposes from appropriations.

(3) Notwithstanding any other provision of law to the contrary, a public employee of a local board of education who retires from a State or locally-administered retirement system for whom health care benefits coverage in retirement is to be paid for, in whole or in part, by the employer or a public entity other than the employer pursuant to law or collective negotiations agreement shall be required to purchase health care benefits coverage through a health care insurance marketplace or exchange and shall be provided by the employer or entity with such funds as may be necessary to purchase the level and extent of health care benefits coverage the employer is committed to provide for the retiree and the retiree's dependents or the level and extent of coverage provided active employees of the employer, whichever is appropriate, but not to exceed in either case coverage set forth in paragraph (1) of subsection b. of section 2 of P.L.1979, c.391 (C.18A:16-13). For Medicare-eligible retirees, the employer or entity shall provide funds sufficient to cover the cost of a Medicare advantage prescription drug plan and the average cost of out-of-pocket expenses and prescription drug costs of such a plan.

After the full implementation of this paragraph by the public employer, no public employee who retires from a State or locally-administered retirement system shall be eligible for coverage under the health care benefits plan or program of that public employer provided for the employer's active employees. This prohibition shall apply to all retirees and their dependents whether the public employer or other public entity is paying in whole or in part the cost of such coverage.

Commencing with the effective date of P.L. , c. (pending before the Legislature as this bill), the public employer shall develop and initiate a plan for implementation of this paragraph. The plan shall include a schedule for transition of those public employees who retired prior to that effective date, and their dependents, to comply with the requirements of this paragraph. The transition may be completed in stages as may be necessary to ensure an orderly process, but shall be completed within three years after that effective date.

Each public employer shall prepare written explanations and notices for public employees and retirees affected to inform them of the requirement and process. The employer shall also provide such information in writing, and by presentation given by a knowledgeable individual, on the Internet site of the public employer in an appropriate and obvious location for such information.

The provisions of this paragraph shall be implemented and the transition shall be developed, initiated, and completed in compliance with applicable federal law and with any applicable State laws except to the extent provided otherwise in this paragraph.

The funds for the cost coverage shall be provided through such appropriate retiree reimbursement accounts that are most beneficial to the retiree as may be permitted by federal or State law.

This paragraph shall apply to all employees who retired before the effective date and also to survivors of retirees.

(4) This subsection shall apply when the health care benefits are provided through self-insurance, the purchase of commercial insurance or reinsurance, an insurance fund or joint insurance fund, or in any other manner, or any combination thereof.

(cf: P.L.1995, c.74, s.4)

2. Section 6 of P.L.1979, c.391 (C.18A:16-17) is amended to read as follows:

6. a. Any local board of education entering into a contract pursuant to this act is authorized to pay part or all of the premiums or charges for such contracts and may appropriate out of its general funds any money necessary to pay such premiums or charges or portions thereof.

The contribution required of any employee toward the cost of such coverage may be deducted from the pay, salary or other compensation of such employee upon authorization in writing made to the local board of education.

The local board of education may reimburse an active employee for his premium charges under Part B of the Federal Medicare Program covering the employee alone.

Nothing [herein] in this section shall be construed as compelling a local board of education to pay any portion of the premiums or charges attributable to such contracts.

b. 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 of a local board of education shall pay 1.5 percent of base salary, through the withholding of the contribution from the pay, salary or other compensation, for health care benefits coverage provided pursuant to P.L.1979, c.391 (C.18A:16-12 et seq.), notwithstanding any other amount that may be required additionally pursuant to subsection a. of this section 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.

c. (1) (a) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, employees of a local board of education shall contribute, through the withholding of the contribution from the pay, salary or other compensation, toward the cost of health care benefits coverage for the employee and any dependent provided pursuant to P.L.1979, c.391 (C.18A:16-12 et seq.) in an amount that shall be determined in accordance with section 15 of P.L. , c. (C. )(pending before the Legislature as this bill).

Additional payments for health care benefits coverage may be required by the employer for such coverage pursuant to other provisions of law or authority of the employer. The amount payable by any employee shall not be less than the 1.5 percent of base salary that is required by law, but an employee who pays the contribution required under this paragraph shall not also be required to pay the contribution of 1.5 percent of base salary.

(b) A board of education may enter into a contract or contracts to provide health care benefits, including prescription drug benefits and other health care benefits, as may be required to implement a duly executed collective negotiations agreement, and may provide through such agreement for an amount of employee or retiree contribution as a cost share or premium share that is other than the percentage set forth in section 15 of P.L. , c. (C. ) (pending before the Legislature as this bill), if the total aggregate savings during the term of the agreement from such contributions or plan design, or both, from that agreement as applied to employees and retirees covered by that agreement, and to employees and retirees not covered by that agreement but to whom the agreement has been applied by the employer, if any, equals or exceeds the annual savings that would have resulted had those employees or retirees made the contributions set forth in section 15 of P.L. , c. (C. ) (pending before the Legislature as this bill).

A board of education shall certify the savings in writing to the Department of Education and the Division of Pensions and Benefits in the Department of the Treasury. The Department of Education shall review and approve or reject the certification within 30 days of receipt. The certification is deemed approved if not rejected within that time. The agreement shall not be executed until approval is received or the 30-day period has lapsed, whichever occurs first.

(2) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, a local board of education shall not reimburse an active employee, or an employee who meets the qualifications for employer-paid health care benefits coverage in retirement on or after that effective or that expiration date, for the premium charges under Part B of the Federal Medicare Program covering the employee or retiree, or spouse.

(3) This subsection shall apply to employees for whom the employer has assumed a health care benefits payment obligation pursuant to subsection a. of this section to require that such employees pay at a minimum the amount of contribution specified in this subsection for health care benefits coverage.

(cf: P.L.2010, c.2, s.13)

3. N.J.S.40A:10-17 is amended to read as follows:

40A:10-17. (1) Any local unit or agency thereof, herein referred to as employers, may:

a. Enter into contracts of group life, accidental death and dismemberment, hospitalization, dental, medical, surgical, major medical expense, or health and accident insurance with any insurance company or companies authorized to do business in this State, or may contract with a nonprofit hospital service or medical service or dental service corporation with respect to the benefits which they are authorized to provide respectively. The contract or contracts shall provide any one or more of such coverages for the employees of such employer and may include their dependents;

b. Enter into a contract or contracts to provide drug prescription and other health care benefits, or enter into a contract or contracts to provide drug prescription and other health care benefits as may be required to implement a duly executed collective negotiation agreement, or as may be required to implement a determination by a local unit to provide such benefit or benefits to employees not included in collective negotiations units;

c. Enter into a contract with an insurance company authorized to do business in this State to provide to its employees on a group or individual basis, individual retirement annuities, as defined by section 408(b) of the Federal Internal Revenue Code of 1954 as amended (26 U.S.C. s.408(b)). The contract shall provide for coverage under these annuities of any employee of the employer and may provide for the establishment of annuities on behalf of the spouse of the employee.

Nothing herein contained shall be deemed to authorize coverage of dependents of an employee under a group life insurance policy or to allow the issuance of a group life insurance policy under which the entire premium is to be derived from funds contributed by the insured employees.

(2) (a) After the effective date of P.L. , c. (pending before the Legislature as this bill), an employer shall not enter into a contract under subsection (1) of this section to provide any group health care benefit plan offering coverage that exceeds the definition of gold level, as set forth in section 1302 of "The Patient Protection and Affordable Care Act" (42 U.S.C. s.18022).

(b) (i) After the effective date of P.L. , c. (pending before the Legislature as this bill), an employer shall not enter into a contract under subsection (1) of this section to provide any group health care benefit plan offering coverage to employees of the employer unless the employer has considered and included, to the extent appropriate, feasible, and cost effective, as part of each plan: wellness programs; patient-centered medical homes; reference-based pricing; on-site medical clinics; comprehensive urgent care centers; greater use of generic drugs and prescriptions by mail; network improvements to enhance in-network utilization and reduce out-of-network utilization; and adjustments to in-network deductibles, copays, and out-of-pocket expense limits, and other components, to enhance in-network utilization and reduce out-of-network utilization. The employer shall also consider for each plan the inclusion of research-proven best practices in the delivery of health care and the optimization of a network of high-value providers.

An employer shall have the authority to create, modify, or terminate any plan or component, at its sole discretion, with regard to this paragraph.

(ii) An employer shall submit annually a written report to the Department of Community Affairs describing in detail the employer's consideration or inclusion, or both, of each component set forth in (i) of this paragraph, its analysis and conclusion on the feasibility of each component, and its analysis and calculations on the cost effectiveness of each component. The report shall be submitted by the date designated by the department. If a full and complete report is not received by the department by the end of business on the due date designated, the department shall contact, within three business days thereafter, each member of the governing body of the employer, the attorney for the governing body, and the holder of the highest elective public office overseeing the employer by telephone, electronic communications, and mail to inform each individual that the report has not been received and to demand a full and complete report be submitted within 10 business days after receipt of the notice. If an employer fails to submit a report or refuses to submit a report, the department shall notify the Governor in writing of the employer's failure or refusal, and take such executive or administrative action as shall be within the authority of the department, or the Governor, or both, to impose a penalty or consequence, monetary or otherwise, upon the employer until such time as a full and complete report is received for that year.

The department shall develop a program to monitor and assist employers in complying with this paragraph (b) of this subsection (2) of this section. The department shall provide, or arrange to provide, expertise or technical assistance to an employer that requests such assistance in writing for its considerations, analyses, and calculations within the limits of such funds as the Legislature may appropriate for such purposes or such funds as the department may use for such purposes from appropriations.

(c) Notwithstanding any other provision of law to the contrary, a public employee of an employer who retires from a State or locally-administered retirement system for whom health care benefits coverage in retirement is to be paid for, in whole or in part, by the employer or a public entity other than the employer pursuant to law or collective negotiations agreement shall be required to purchase health care benefits coverage through a health care insurance marketplace or exchange and shall be provided by the employer or entity with such funds as may be necessary to purchase the level and extent of health care benefits coverage the employer is committed to provide for the retiree and the retiree's dependents or the level and extent of coverage provided active employees of the employer, whichever is appropriate, but not to exceed in either case coverage set forth in paragraph (a) of subsection 2 of this section. For Medicare-eligible retirees, the employer or entity shall provide funds sufficient to cover the cost of a Medicare advantage prescription drug plan and the average cost of out-of-pocket expenses and prescription drug costs of such a plan

The funds for the cost coverage shall be provided through such appropriate retiree reimbursement accounts that are most beneficial to the retiree as may be permitted by federal or State law.

This paragraph shall apply to all employees who retired before the effective date and also to survivors of retirees.

(d) This subsection shall apply: when the health care benefits are provided through self-insurance, the purchase of commercial insurance or reinsurance, an insurance fund or joint insurance fund, or in any other manner, or any combination thereof; and to any county and municipality, any agency, board, commission, authority, and instrumentality of a local unit, any fire district, any county college, any entity created by a county or municipality, and any local authority as defined under the "Local Authorities Fiscal Control Law," P.L.1983, c.313 (C.40A:5A-1 et seq.).

(cf: P.L.1983, c.445, s.2)

4. N.J.S.40A:10-21 is amended to read as follows:

40A:10-21. a. Any employer entering into a contract pursuant to this subarticle is hereby authorized to pay part or all of the premiums or charges for the contracts and may appropriate out of its general funds any money necessary to pay premiums or charges or portions thereof. The contribution required of any employee toward the cost of coverage may be deducted from the pay, salary or other compensation of the employee upon an authorization in writing made to the appropriate disbursing officer.

The employer may reimburse an active employee for his premium charges under Part B of the Federal Medicare Program covering the employee alone.

Nothing herein shall be construed as compelling an employer to pay any portion of the premiums or charges attributable to the contracts.

b. 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 of an employer shall pay 1.5 percent of base salary, through the withholding of the contribution from the pay, salary or other compensation, for health care benefits coverage provided pursuant to N.J.S.40A:10-17, notwithstanding any other amount that may be required additionally pursuant to subsection a. of this section 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) (a) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, employees of an employer shall contribute, through the withholding of the contribution from the pay, salary or other compensation, toward the cost of health care benefits coverage for the employee and any dependent provided pursuant to N.J.S.40A:10-17 et seq. in an amount that shall be determined in accordance with section 15 of P.L. , c. (C. )(pending before the Legislature as this bill).

(b) A local unit may enter into a contract or contracts to provide health care benefits, including prescription drug benefits and other health care benefits, as may be required to implement a duly executed collective negotiations agreement, and may provide through such agreement for an amount of employee or retiree contribution as a cost share or premium share that is other than the percentage set forth in section 15 of P.L. , c. (C. ) (pending before the Legislature as this bill), if the total aggregate savings during the term of that agreement from such contributions or plan design, or both, from that agreement as applied to employees and retirees covered by that agreement, and to employees and retirees not covered by that agreement but to whom the agreement has been applied by the employer, if any, equals or exceeds the annual savings that would have resulted had those employees or retirees made the contributions set forth in section 15 of P.L. , c. (C. ) (pending before the Legislature as this bill).

A local unit shall certify the savings in writing to the Division of Local Government Services in the Department of Community Affairs and the Division of Pensions and Benefits in the Department of the Treasury. The Department of Community Affairs shall review and approve or reject the certification within 30 days of receipt. The certification shall be deemed approved if not rejected within that time. The agreement shall not be executed until approval is received or the 30-day period has lapsed, whichever occurs first.

(2) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, an employer shall not reimburse an active employee, or an employee who meets the qualifications for employer-paid health care benefits coverage in retirement on or after that effective or that expiration date, for the premium charges under Part B of the Federal Medicare Program covering the employee or the retiree, or spouse.

(4) This subsection shall apply: when the health care benefits are provided through self-insurance, the purchase of commercial insurance or reinsurance, an insurance fund or joint insurance fund, or in any other manner, or any combination thereof; and to any county and municipality, any agency, board, commission, authority, and instrumentality of a local unit, any fire district, any county college, any entity created by a county or municipality, and any local authority as defined under the "Local Authorities Fiscal Control Law," P.L.1983, c.313 (C.40A:5A-1 et seq.).

(cf: P.L.2010, c.2, s.14)

5. Section 4 of P.L.1961, c.49 (C.52:14-17.28) is amended to read as follows:

4. a. The commission shall negotiate with and arrange for the purchase, on such terms as it deems to be in the best interests of the State and its employees, from carriers licensed to operate in the State or in other jurisdictions, as appropriate, contracts providing hospital, surgical, obstetrical, and other covered health care services and benefits covering employees of the State and their dependents, and shall execute all documents pertaining thereto for and on behalf and in the name of the State.

b. Except for contracts entered into after June 30, 2007, the commission shall not enter into a contract under this act unless the benefits provided thereunder equal or exceed the minimum standards specified in section 5 of P.L.1961, c.49 (C.52:14-17.29) for the particular coverage which such contract provides, and unless coverage is available to all eligible employees and their dependents on the basis specified by section 7 of P.L.1961, c.49 (C.52:14-17.31), except that a State employee enrolled in the program on or after July 1, 2003 and all law enforcement officers employed by the State for whom there is a majority representative for collective negotiations purposes may not be eligible for coverage under the traditional plan as defined in section 2 of P.L.1961, c.49 (C.52:14-17.26) pursuant to a binding collective negotiations agreement or pursuant to the application by the commission, in its sole discretion, of the terms of any collective negotiations agreement binding on the State to State employees for whom there is no majority representative for collective negotiations purposes.

c. The commission shall not enter into a contract under P.L.1961, c.49 (C.52:14-17.25 et seq.) after June 30, 2007, unless the contract includes the successor plan, one or more health maintenance organization plans and a State managed care plan that shall be substantially equivalent to the NJ PLUS plan in effect on June 30, 2007, with adjustments to that plan pursuant to a binding collective negotiations agreement or pursuant to action by the commission, in its sole discretion, to apply such adjustments to State employees for whom there is no majority representative for collective negotiations purposes, and unless coverage is available to all eligible employees and their dependents on the basis specified by section 7 of P.L.1961, c.49 (C.52:14-17.31), except as provided in subsection d. of this section.

d. Eligibility for coverage under the successor plan may be limited pursuant to a binding collective negotiations agreement or pursuant to the application by the commission, in its sole discretion, of the terms of any collective negotiations agreement binding on the State to State employees for whom there is no majority representative for collective negotiations purposes. Coverage under the successor plan and under the State managed care plan required to be included in a contract entered into pursuant to subsection c. of this section shall be made available in retirement to all State employees who accrued 25 years of nonconcurrent service credit in one or more State or locally-administered retirement systems before July 1, 2007. Coverage under the State managed care plan required to be included in a contract entered into pursuant to subsection c. of this section shall be made available in retirement to all State employees who accrue 25 years of nonconcurrent service credit in one or more State or locally-administered retirement systems on or after July 1, 2007.

e. Actions taken by the commission before the effective date of P.L.2007, c.103 in anticipation of entering into any contract pursuant to subsection c. of this section are hereby deemed to have been within the authority of the commission pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.).

f. (1) After the effective date of P.L. , c. (pending before the Legislature as this bill), the commission shall not enter into a contract under P.L.1961, c.49 (C.52:14-17.25 et seq.) to provide any health care benefit plan that exceeds the definition of gold level, as set forth in section 1302 of "The Patient Protection and Affordable Care Act" (42 U.S.C. s.18022), notwithstanding any other provisions of law to the contrary.

(2) After the effective date of P.L. , c. (pending before the Legislature as this bill), the commission shall not enter into a contract to provide any health care benefit plan unless the State Health Benefits Plan Design Committee has considered and included, to the extent appropriate, feasible, and cost effective, as part of each plan: wellness programs; patient-centered medical homes; reference-based pricing; on-site medical clinics; comprehensive urgent care centers; greater use of generic drugs and prescriptions by mail; network improvements to enhance in-network utilization and reduce out-of-network utilization; and adjustments to in-network deductibles, copays, and out-of-pocket expense limits, and other components, to enhance in-network utilization and reduce out-of-network utilization. The committee shall also consider for each plan the inclusion of research-proven best practices in the delivery of health care and the optimization of a network of high-value providers.

The State Health Benefits Plan Design Committee shall have the authority to create, modify, or terminate any plan or component, at its sole discretion, with regard to this paragraph.

The commission shall submit annually a written report to the State Treasurer and Governor describing in detail the committee's consideration or inclusion, or both, of each component set forth above in this paragraph, its analysis and conclusion on the feasibility of each component, and its analysis and calculations on the cost effectiveness of each component. The report shall be submitted by the date designated by the State Treasurer. If a full and complete report is not received by the State Treasurer by the end of business on the due date designated, the State Treasurer shall contact, within three business days thereafter, each member of the commission and committee by telephone, electronic communications, and mail to inform each individual that the report has not been received and to demand a full and complete report be submitted within 10 business days after receipt of the notice. If the commission fails to submit a report or refuses to submit a report, the State Treasurer shall notify the Governor in writing of the commission's failure or refusal, and take such executive or administrative action as shall be within the authority of the department, or the Governor, or both, to achieve compliance until such time as a full and complete report is received for that year.

(3) This subsection shall apply also to an independent State authority that is not a participating employer in the program to the same extent as to an authority that is a participating employer, with the governing body of the authority responsible for compliance. As used in this paragraph, "independent State authority" means a public authority, board, commission, corporation, or other agency or instrumentality of the State allocated, in but not of, a principal department of State government pursuant to Article V, Section IV, paragraph 1 of the New Jersey Constitution, or which is not subject to supervision or control by the department in which it is allocated, and a regional authority, but shall not include a college or university.

(cf: P.L.2007, c.103, s.21)

6. 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) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, employees of the State or of an independent State authority, board, commission, corporation, agency, or organization shall contribute, through the withholding of the contribution from the pay, salary or other compensation, toward the cost of health care benefits coverage for the employee and any dependent provided pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.) in an amount that shall be determined in accordance with section 15 of P.L. , c. (C. )(pending before the Legislature as this bill).

(2) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, the State and an independent State authority, board, commission, corporation, agency, or organization shall not reimburse an active employee, or an employee who meets the qualifications for employer-paid health care benefits coverage in retirement on or after that effective or that expiration date, for the premium charges under Part B of the Federal Medicare Program covering the employee or the retiree, or spouse, notwithstanding any other provision of law to the contrary including this section and section 8 of P.L.1961, c.49 (C.52:14-17.32).

(3) This subsection shall apply to employees for whom the employer has assumed a health care benefits payment obligation to require that such employees pay at a minimum the amount of contribution specified in this subsection for health care benefits coverage.

(4) This subsection shall apply also to an independent State authority that is not a participating employer in the program to the same extent as to an authority that is a participating employer, with the governing body of the authority responsible for compliance. As used in this paragraph, "independent State authority" means a public authority, board, commission, corporation, or other agency or instrumentality of the State allocated, in but not of, a principal department of State government pursuant to Article V, Section IV, paragraph 1 of the New Jersey Constitution, or which is not subject to supervision or control by the department in which it is allocated, and a regional authority, but shall not include a college or university.

(5) Paragraph (6) of subsection c. of this section shall not be deemed to apply with regard to contributions specified and made under this subsection. Paragraph (7) of subsection c. of this section shall apply with regard to contributions specified and made under this section. Part-time State employees and part-time faculty members participating under section 1 of P.L.2003, c.172 (C.52:14-17.33a) shall not pay less than the contribution specified in this subsection.

(cf: P.L.2010, c.2, s.1)

7. Section 7 of P.L.1964, c.125 (C.52:14-17.38) is amended to read as follows:

7. a. (1) The Division of Pensions and Benefits shall certify to the certifying agent of each employer electing participation under the program the premium rates and periodic charges applicable to the coverage provided for employees and dependents. The participating employer shall remit to the division all contributions to premiums and periodic charges in advance of their due dates, subject to the rules and regulations of the commission.

Notwithstanding the provisions of any other law to the contrary, the obligations of a participating employer other than the State 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. 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 of an employer other than the State shall pay 1.5 percent of base salary, through the withholding of the contribution, for health benefits coverage provided under P.L.1961, c.49 (C.52:14-17.25 et seq.), notwithstanding any other amount that may be required additionally pursuant to this paragraph by means of a binding collective negotiations agreement or the modification of payment obligations.

(2) (a) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, employees of an employer shall contribute, through the withholding of the contribution from the pay, salary or other compensation, toward the cost of health care benefits coverage for the employee and any dependent provided pursuant to P.L.1961, c.49 (C.52:14-17.25 et seq.) in an amount that shall be determined in accordance with section 15 of P.L. , c. (C. )(pending before the Legislature as this bill).

(b) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, an employer shall not reimburse an active employee, or an employee who meets the qualifications for employer-paid health care benefits coverage in retirement on or after that effective or that expiration date, for the premium charges under Part B of the Federal Medicare Program covering the employee or the retiree, or spouse, notwithstanding paragraph (1) of subsection b. of this section.

(c) This paragraph shall apply to employees for whom the employer has assumed a health care benefits payment obligation to require that such employees pay at a minimum the amount of contribution specified in this paragraph for health care benefits coverage.

b. (1) From funds allocated therefor, the employer other than the State, upon the adoption and submission to the division of an appropriate resolution prescribed by the commission, may pay the premium or periodic charges for the benefits provided to a retired employee and the employee's dependents covered under the program, if the employee retired from a State or locally-administered retirement system, excepting the employee who elected deferred retirement, and may also reimburse the retired employee for the employee's premium charges under Part B of Medicare covering the retired employee and the employee's spouse if the employee:

(a) retired on a disability pension; or

(b) retired after 25 or more years of nonconcurrent service credit in one or more State or locally-administered retirement systems, excluding service credited under the Defined Contribution Retirement Program established pursuant to P.L.2007, c.92 (C.43:15C-1 et al.), 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) retired and reached the age of 65 years or older with 25 years or more of nonconcurrent service credit in one or more State or locally-administered retirement systems, excluding service credited under the Defined Contribution Retirement Program, 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) retired and reached the age of 62 years or older with at least 15 years of service with the employer, excluding service credited under the Defined Contribution Retirement Program.

"Retired employee and the employee's dependents" may, upon adoption of an appropriate resolution therefor by the participating employer, also include otherwise eligible employees, and their dependents, who retired from one or more State or locally-administered retirement systems prior to the date that the employer became a participating employer in the New Jersey State Health Benefits Program or who did not elect to continue coverage in the program during such time after the employer became a participating employer that the employer did not pay premium or periodic charges for benefits to retired employees and their dependents pursuant to this section. Eligibility and enrollment of such employees and dependents shall be in accordance with such rules and regulations as may be adopted by the State Health Benefits Commission.

The employer other than the State may, by resolution, pay the premium or periodic charges for the benefits provided to the surviving spouse of a retired employee and the employee's dependents covered under the program as provided in this section.

(2) Notwithstanding the provisions of any other law to the contrary, the obligations of an employer other than the State, except an independent State authority, board, commission, corporation, agency, or organization deemed to be covered by section 6 of P.L.1996, c.8 (C.52:14-17.28b) and except school boards whose employees are covered by 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) and section 1 of P.L.1995, c.357 (C.52:14-17.32f2), to pay the premium or periodic charges for health benefits coverage under the provisions of paragraph (1) may be determined by means of a binding collective negotiations agreement, including any agreement in force at the time of the adoption of this act, P.L.1999, c.48. With respect to employees for whom there is no majority representative for collective negotiations purposes, the employer may, in its sole discretion, determine the payment obligations for the employer and the employees, except that if there are collective negotiations agreements binding upon the employer for employees who are within the same community of interest as employees in a collective negotiations unit but are excluded from participation in the unit by the "New Jersey Employer-Employee Relations Act," P.L.1941, c.100 (C.34:13A-1 et seq.), the payment obligations shall be determined in a manner consistent with the terms of any collective negotiations agreement applicable to the collective negotiations unit. 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, for health benefits coverage provided under P.L.1961, c.49 (C.52:14-17.25 et seq.), notwithstanding any other amount that may be required additionally pursuant to this paragraph by means of a binding collective negotiations agreement or the determination of payment obligations.

c. Notwithstanding the provisions of any other law to the contrary, the payment obligations of an employee of an employer other than the State, except an independent State authority, board, commission, corporation, agency, or organization, for health benefits coverage under subsection b. shall be the payment obligations applicable to the employee on the date the employee retires on a disability pension or the date the employee meets the service credit and service requirements for the employer payment for the coverage, as the case may be.

(cf: P.L.2010, c.2, s.5)

8. Section 35 of P.L.2007, c.103 (C.52:14-17.46.5) is amended to read as follows:

35. a. The commission shall negotiate with and arrange for the purchase, on such terms as it deems in the best interests of the State, participating employers and those persons covered hereunder from carriers licensed to operate in the State or in other jurisdictions, as appropriate, contracts providing benefits required by the School Employees' Health Benefits Program Act, as specified in section 36 of P.L.2007, c.103 (C.52:14-17.46.6), or such benefits as the commission may determine to provide, so long as such modification of benefits is in the best interests of the State, participating employers and those persons covered hereunder, and is consistent with the provisions of section 40 of that act (C.52:14-17.46.10). The commission shall have authority to execute all documents pertaining thereto for and on behalf of the State. The commission shall not enter into a contract under the School Employees' Health Benefits Program Act, unless the benefits provided thereunder are equal to or exceed the standards specified in section 36 of that act, or as such standards are modified pursuant to section 40 of that act.

b. The rates charged for any contract purchased under the authority of the School Employees' Health Benefits Program Act shall reasonably and equitably reflect the cost of the benefits provided based on principles which in the judgment of the commission are actuarially sound. The rates charged shall be determined based upon accepted group rating principles with due regard to the experience, both past and contemplated, under the contract. The commission shall have the right to particularize subgroups for experience purposes and rates. No increase in rates shall be retroactive.

c. The commission shall be authorized to accept an assignment of contract rights from or enter into an agreement, contract, memorandum of understanding or other terms with the State Health Benefits Commission to ensure that coverage for eligible employees, retirees and dependents under the School Employees' Health Benefits Program whose benefits had been provided through the State Health Benefits Program is continued without interruption. The transition provided for in this subsection shall occur within one year of the effective date of 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).

d. Benefits under the contract or contracts purchased as authorized by the School Employees' Health Benefits Program Act may be subject to such limitations, exclusions, or waiting periods as the commission finds to be necessary or desirable to avoid inequity, unnecessary utilization, duplication of services or benefits otherwise available, including coverage afforded under the laws of the United States, such as the federal Medicare program, or for other reasons.

e. The initial term of any contract purchased by the commission under the authority of the School Employees' Health Benefits Program Act shall be for such period to which the commission and the carrier may agree, but permission may be made for automatic renewal in the absence of notice of termination by the commission. Subsequent terms for which any contract may be renewed as herein provided shall each be limited to a period not to exceed one year.

f. (1) After the effective date of P.L. c. (pending before the Legislature as this bill), the commission shall not enter into a contract under P.L.2007, c.103 (C.52:14-17.46.1 et seq.) to provide any health care benefit plan that exceeds the definition of gold level, as set forth in section 1302 of "The Patient Protection and Affordable Care Act" (42 U.S.C. s.18022), notwithstanding any other provisions of law to the contrary.

(2) After the effective date of P.L. , c. (pending before the Legislature as this bill), the commission shall not enter into a contract to provide any health care benefit plan unless the School Employees' Health Benefits Plan Design Committee has considered and included, to the extent appropriate, feasible, and cost effective, as part of each plan: wellness programs; patient-centered medical homes; reference-based pricing; on-site medical clinics; comprehensive urgent care centers; greater use of generic drugs and prescriptions by mail; network improvements to enhance in-network utilization and reduce out-of-network utilization; and adjustments to in-network deductibles, copays, and out-of-pocket expense limits, and other components, to enhance in-network utilization and reduce out-of-network utilization. The committee shall also consider for each plan the inclusion of research-proven best practices in the delivery of health care and the optimization of a network of high-value providers.

The School Employees' Health Benefits Plan Design Committee shall have the authority to create, modify, or terminate any plan or component, at its sole discretion, with regard to the provisions of this paragraph.

(cf: P.L.2007, c.103, s.35)

9. 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. (1) 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.

(2) (a) Commencing on the effective date of P.L. , c. (pending before the Legislature as this bill) and upon the expiration of any applicable binding collective negotiations agreement in force on that effective date, employees of an employer shall contribute, through the withholding of the contribution from the pay, salary or other compensation, toward the cost of health care benefits coverage for the employee and any dependent provided pursuant to P.L.2007, c.103 (C.52:14-17.46.1 et seq.) in an amount that shall be determined in accordance with section 15 of P.L. , c. (C. )(pending before the Legislature as this bill).

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. 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.

(cf: P.L.2011, c.78, s.54)

10. Section 3 of P.L.1987, c.384 (C.52:14-17.32f) is amended to read as follows:

3. A qualified retiree from the Teachers' Pension and Annuity Fund (N.J.S.18A:66-1 et seq.) and dependents of a qualified retiree, but not including survivors, are eligible to participate in the State Health Benefits Program until June 30, 2008, and beginning July 1, 2008, in the School Employees' Health Benefits Program, regardless of whether the retiree's employer participated in the program.

A qualified retiree is a retiree who:

a. Retired on a benefit based on 25 or more years of service credit;

b. Retired on a disability pension based on fewer years of service credit; or

c. Elected deferred retirement based on 25 or more years of service credit and who receives a retirement allowance.

The program shall reimburse a qualified retiree who participates in the program for the premium charges under Part B of the federal Medicare program for the retiree and the retiree's spouse. A qualified retiree who retired under subsections a. and b. of this section prior to the effective date of this 1987 amendatory and supplementary act is eligible for the coverage if the retiree applies to the program for it within one year after the effective date, and a qualified retiree as defined under subsection c. of this section whose retirement allowance commenced prior to the effective date of this 1992 amendatory act is eligible for the coverage if the retiree applies to the program for it within one year after the effective date.

The premium or periodic charges for benefits provided to a qualified retiree and the dependents of the retiree, and the cost for reimbursement of Medicare premiums shall be paid by the State. An employee who becomes a member of the Teachers' Pension and Annuity Fund on or after the effective date of P.L.2010, c.2 shall pay as a qualified retiree 1.5 percent of the retiree's monthly retirement allowance, including any future cost-of-living adjustments, 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.) and the State shall pay the remainder of the premium or periodic charges for benefits provided to a qualified retiree and the dependents of the retiree, and the cost for reimbursement of Medicare premiums.

The payments required by the State under this section shall be reduced to the extent that the former employers of retirees realize savings from the implementation of P.L. , c. (pending before the Legislature as this bill). The former employers of retirees shall annually certify such savings to the Department of Education. Each former employer shall submit annually an amount of payment for the benefits under this section, in such manner as the commission shall require, equal to the amount that the State's payment obligation has been reduced for the former employer's retirees.

If an employee meets the qualifications set forth in this section on or after the effective date of P.L. , c. (pending before the Legislature as this bill) for participation in the program upon retirement, the State shall not reimburse the qualified retiree for the premium charges under Part B of the Federal Medicare Program for the retiree and the retiree's spouse.

(cf: P.L.2010, c.2, s.2)

11. Section 2 of P.L.1992, c.126 (C.52:14-17.32f1) is amended to read as follows:

2. The provisions of section 3 of P.L.1987, c.384 (C.52:14-17.32f) shall apply to:

a. any employee of a board of education who retires on a benefit or benefits based in the aggregate upon 25 or more years of nonconcurrent service credit in one or more State or locally-administered retirement systems, or retires on a disability pension based upon fewer years of service credit in that system or systems, or elected deferred retirement based in the aggregate upon 25 or more years of nonconcurrent service credit in one or more State or locally-administered retirement systems and receives a retirement allowance from that system or systems;

b. any employee of a county college who retires on a benefit or benefits based in the aggregate upon 25 or more years of nonconcurrent service credit in one or more State or locally-administered retirement systems, or retires on a disability pension based upon fewer years of service credit in that system or systems, or elected deferred retirement based in the aggregate upon 25 or more years of nonconcurrent service credit in one or more State or locally-administered retirement systems and receives a retirement allowance from that system or systems; or who receives a disability benefit pursuant to section 18 of P.L.1969, c.242 (C.18A:66-184); and

c. any employee of a county college who retires on a benefit based upon 10 or more years of service credit in the alternate benefit program P.L.1969, c.242 (C.18A:66-167 et seq.) and who has additional years of service credited in another defined contribution retirement program as an employee of a private institution of higher education which, under contract with a county government, provided services as a county college and subsequently merged with a county technical institute to become a county college, which additional years of service when added to the service credited in the alternate benefit program totals 25 or more years and any such employee who retired prior to the effective date of P.L.1999, c.382 if the employee applies to the program for coverage within one year after the effective date of P.L.1999, c.382.

The costs of the premium or periodic charges for the benefits and reimbursement of medicare premiums provided to a retiree and the dependents of the retiree under this section shall be paid by the State. 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 as a qualified retiree 1.5 percent of the retiree's monthly retirement allowance, including any future cost-of-living adjustments, 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.) and the State shall pay the remainder of the premium or periodic charges for benefits provided to a qualified retiree and the dependents of the retiree, and the cost for reimbursement of Medicare premiums.

(cf: P.L.2010, c.2, s.3)

12. Section 1 of P.L.1995, c.357 (C.52:14-17.32f2) is amended to read as follows:

1. The provisions of section 3 of P.L.1987, c.384 (C.52:14-17.32f) shall apply to any employee of a board of education who is a member of a pension fund created prior to January 5, 1996 under the provisions of article 2 of chapter 66 of Title 18A of the New Jersey Statutes (N.J.S.18A:66-94 et seq.) and who retires on a benefit based upon 25 or more years of service credit in the pension fund, or retires on a disability pension based upon fewer years of service credit in that pension fund, or elected deferred retirement based upon 25 or more years of service credit and receives a retirement allowance from that pension fund, except that the costs of the premium or periodic charges for the benefits and reimbursement of medicare premiums provided to a retiree and the dependents of the retiree under this section shall be paid by the State. An employee who becomes a member of the pension fund 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, for health benefits coverage provided under P.L.2007, c.103 (C.52:14-17.46.1 et seq.) and the State shall pay the remainder of the premium or periodic charges for benefits provided to a qualified retiree and the dependents of the retiree, and the cost for reimbursement of Medicare premiums.

An employee who retired prior to the effective date of this act is eligible for the coverage if the employee applies to the program for it within one year after the effective date.

Program for the retiree and the retiree's spouse.

(cf: P.L.2010, c.2, s.4)

13. Section 3 of P.L.1961, c.49 (C.52:14-17.27) is amended to read as follows:

3. a. There is hereby created a State Health Benefits Commission, consisting of five members: the State Treasurer; the Commissioner of Banking and Insurance; the Chairperson of the Civil Service Commission; a State employees' representative chosen by the Public Employee Committee of the AFL-CIO; and the fifth member of the commission shall be a local employees' representative chosen by the Public Employee Committee of the AFL-CIO.

The treasurer shall be chairman of the commission and the health benefits program authorized by P.L.1961, c.49 shall be administered in the Treasury Department. The Director of the Division of Pensions and Benefits shall be the secretary of the commission. The commission and committee shall establish a health benefits program for the employees of the State, the cost of which shall be paid as specified in section 6 of P.L.1961, c.49 (C.52:14-17.30). The commission, in consultation with the committee, shall establish rules and regulations as may be deemed reasonable and necessary for the administration of P.L.1961, c.49.

The Attorney General shall be the legal advisor of the commission and committee.

The members of the commission and committee shall serve without compensation but shall be reimbursed for any necessary expenditures. The public employee members shall not suffer loss of salary or wages during service on the commission or committee.

The commission shall publish annually a report showing the fiscal transactions of the program for the preceding year and stating other facts pertaining to the plan. The commission shall submit the report to the Governor and furnish a copy to every employer for use of the participants and the public.

b. There is established a State Health Benefits Plan Design Committee, composed of [12] 13 members as follows:

one member of the public who shall be appointed by the Governor;

six members who shall be appointed by the Governor as representatives of public employers whose employees are enrolled in the program;

three members who shall be appointed by the Public Employee Committee of the AFL-CIO;

one member who shall be appointed by the head of the union, that is not affiliated with the AFL-CIO, that represents the greatest number of police officers in this State;

one member who shall be appointed by the head of the union, that is not affiliated with the AFL-CIO, that represents the greatest number of firefighters in this State; and

one member who shall be appointed by the head of the State Troopers Fraternal Association.

The members of the committee shall serve for a term of three years and until a successor is appointed and qualified. Of the initial appointments by the Governor, three members shall serve for two years and until a successor is appointed and qualified, and two shall serve for one year and until a successor is appointed and qualified. Of the initial appointment by the head of the union representing the greatest number of police officers in the State, the member shall serve for two years and until a successor is appointed and qualified. Of the initial appointment by the head of the union representing the greatest number of firefighters in the State, the member shall serve for one year and until a successor is appointed and qualified.

The members of the committee shall select a chairperson from among the members, who shall serve for a term of one year, with no member serving more than one term as chairperson until all the members of the committee have served a term in a manner alternating among the employer representatives and employee representatives, unless the committee determines otherwise with regard to this process.

The committee shall have the responsibility for and authority over the various plans and components of those plans, including for medical benefits, prescription benefits, dental, vision, and any other health care benefits, offered and administered by the program. The committee shall have the authority to create, modify, or terminate any plan or component, at its sole discretion. Any reference in law to the State Health Benefits Commission in the context of the creation, modification, or termination of a plan or plan component shall be deemed to apply to the committee.

The members of the committee shall have the same duty and responsibility to the program as do the members of the commission.

If any matter before the committee receives at least seven votes in the affirmative, the commission shall approve and implement the committee's decision.

If any matter before the committee receives six votes in the affirmative and six votes in the negative [or the committee otherwise reaches an impasse on a decision], the public member of the committee appointed as result of the amendment to the membership of the committee made pursuant to P.L. , c. (pending before the Legislature as this bill) shall be permitted to vote. That public member shall otherwise be a non-voting member of the committee.

If the committee otherwise reaches an impasse on a decision, the

provisions of section 55 of P.L.2011, c.78 (C.52:14-17.27b) shall be followed.

(cf: P.L.2011, c.78, s.45)

14. Section 33 of P.L.2007, c.103 (C.52:14-17.46.3) is amended to read as follows:

33. a. There is hereby created a School Employees' Health Benefits Commission, consisting of nine members:

(1) the State Treasurer and the Commissioner of the Department of Banking and Insurance serving ex officio;

(2) a member appointed by the Governor who is a New Jersey resident and is qualified by experience, education, or training in the review, administration, or design of health insurance plans for self-insured employers;

(3) a member appointed by the Governor from among three persons nominated by the New Jersey School Boards' Association, which member shall be qualified by experience, education, or training in the review, administration, or design of health insurance plans for self-insured employers;

(4) three members appointed by the Governor from among five persons nominated by the New Jersey Education Association, of whom two shall be qualified by experience, education, or training in the review, administration, or design of health insurance plans for self-insured employers;

(5) a member appointed by the Governor from among three persons nominated by the education section of the New Jersey State AFL-CIO, which member shall be qualified by experience, education, or training in the review, administration, or design of health insurance plans for self-insured employers; and

(6) a member appointed pursuant to subsection b. of this section who shall be the chairperson.

b. The Governor shall appoint the chairperson from among three persons nominated jointly by at least six of the eight members appointed pursuant to subsection a. of this section.

c. If the Governor declines to make an appointment from among the persons nominated for membership, the Governor shall request that a new list of nominees be provided in compliance with subsection a. of this section. If the Governor declines to make an appointment from the new list, the process set forth in this subsection shall be repeated until the Governor makes an appointment from a list of nominees. Except with respect to the appointment of the chairperson, if a new list of nominees is not submitted within 45 days of the Governor's request, the Governor shall make the appointment without the need to select from any list of nominees.

d. The initial terms of the members of the commission shall be as follows:

(1) the member appointed pursuant to paragraph (3) of subsection a. of this section and the two members appointed pursuant to paragraph (4) of subsection a. of this section who are required to be qualified by experience, education, or training shall serve for a term of three years;

(2) the member appointed pursuant to paragraph (2) of subsection a. of this section, the member appointed pursuant to paragraph (4) of subsection a. of this section who is not required to be qualified by experience, education, or training, and the member appointed pursuant to paragraph (5) of subsection a. of this section shall serve for a term of two years; and

(3) the chairperson shall serve for a term of six years.

All subsequent terms shall be for three years, except that the term of the chairperson shall be five years. A member of the commission may be reappointed to succeeding terms without limit in the same manner as the original appointment. A vacancy occurring on the commission shall be filled in the same manner as the original appointment and only for the unexpired term.

e. There is established a School Employees' Health Benefits Plan Design Committee, composed of [six] seven members as follows:

one member of the public who shall be appointed by the Governor;

three members who shall be appointed by the Governor as representatives of public employers whose employees are enrolled in the program;

two members who shall be appointed by the New Jersey Education Association; and

one member who shall be appointed by the education section of the New Jersey State AFL-CIO.

The members of the committee shall serve for a term of three years and until a successor is appointed and qualified. Of the initial appointments by the Governor, two members shall serve for two years and until a successor is appointed and qualified, and one shall serve for one year and until a successor is appointed and qualified. Of the initial appointments by the New Jersey Education Association, one member shall serve for one year and until a successor is appointed and qualified.

The committee shall have the responsibility for and authority over the various plans and components of those plans, including for medical benefits, prescription benefits, dental, vision, and any other health care benefits, offered and administered by the program. The committee shall have the authority to create, modify, or terminate any plan or component, at its sole discretion. Any reference in law to the School Employees' Health Benefits Commission in the context of the creation, modification, or termination of a plan or plan component shall be deemed to apply to the committee.

The members of the committee shall have the same duty and responsibility to the program as do the members of the commission.

If any matter before the committee receives at least four votes in the affirmative, the commission shall approve and implement the committee's decision.

If any matter before the committee receives three votes in the affirmative and three votes in the negative [or the committee otherwise reaches an impasse on a decision], the public member of the committee appointed as result of the amendment to the membership of the committee made pursuant to P.L. , c. (pending before the Legislature as this bill) shall be permitted to vote. That public member shall otherwise be a non-voting member of the committee.

If the committee otherwise reaches an impasse on a decision, the provisions of section 55 of P.L.2011, c.78 (C.52:14-17.27b) shall be followed.

(cf: P.L.2011, c.78, s.46)

15. (New section) The amount of contribution to be paid pursuant to paragraph (1) of subsection c. of section 6 of P.L.1979, c.391 (C.18A:16-17), paragraph (1) of subsection c. of N.J.S.40A:10-21, paragraph (1) of subsection e. of section 6 of P.L.1996, c.8 (C.52:14-17.28b), paragraph (2) of subsection a. of section 7 of P.L.1964, c.125 (C.52:14-17.38), and paragraph (2) of subsection b. of section 39 of P.L.2007, c.103 (C.52:14-17.46.9) by public employees of the State or of employers other than the State for health care benefits coverage for the employee and any dependent shall be as follows:

for family coverage or its equivalent -

an employee who earns less than $25,000 shall pay 3 percent of the cost of coverage;

an employee who earns $25,000 or more but less than $30,000 shall pay 4 percent of the cost of coverage;

an employee who earns $30,000 or more but less than $35,000 shall pay 5 percent of the cost of coverage;

an employee who earns $35,000 or more but less than $40,000 shall pay 6 percent of the cost of coverage;

an employee who earns $40,000 or more but less than $45,000 shall pay 7 percent of the cost of coverage;

an employee who earns $45,000 or more but less than $50,000 shall pay 9 percent of the cost of coverage;

an employee who earns $50,000 or more but less than $55,000 shall pay 12 percent of the cost of coverage;

an employee who earns $55,000 or more but less than $60,000 shall pay 14 percent of the cost of coverage;

an employee who earns $60,000 or more but less than $65,000 shall pay 17 percent of the cost of coverage;

an employee who earns $65,000 or more but less than $70,000 shall pay 19 percent of the cost of coverage;

an employee who earns $70,000 or more but less than $75,000 shall pay 22 percent of the cost of coverage;

an employee who earns $75,000 or more but less than $80,000 shall pay 23 percent of the cost of coverage;

an employee who earns $80,000 or more but less than $85,000 shall pay 24 percent of the cost of coverage;

an employee who earns $85,000 or more but less than $90,000 shall pay 26 percent of the cost of coverage;

an employee who earns $90,000 or more but less than $95,000 shall pay 28 percent of the cost of coverage;

an employee who earns $95,000 or more but less than $100,000 shall pay 29 percent of the cost of coverage;

an employee who earns $100,000 or more but less than $110,000 shall pay 32 percent of the cost of coverage;

an employee who earns $110,000 or more shall pay 35 percent of the cost of coverage;

for individual coverage or its equivalent -

an employee who earns less than $20,000 shall pay 4.5 percent of the cost of coverage;

an employee who earns $20,000 or more but less than $25,000 shall pay 5.5 percent of the cost of coverage;

an employee who earns $25,000 or more but less than $30,000 shall pay 7.5 percent of the cost of coverage;

an employee who earns $30,000 or more but less than $35,000 shall pay 10 percent of the cost of coverage;

an employee who earns $35,000 or more but less than $40,000 shall pay 11 percent of the cost of coverage;

an employee who earns $40,000 or more but less than $45,000 shall pay 12 percent of the cost of coverage;

an employee who earns $45,000 or more but less than $50,000 shall pay 14 percent of the cost of coverage;

an employee who earns $50,000 or more but less than $55,000 shall pay 20 percent of the cost of coverage;

an employee who earns $55,000 or more but less than $60,000 shall pay 23 percent of the cost of coverage;

an employee who earns $60,000 or more but less than $65,000 shall pay 27 percent of the cost of coverage;

an employee who earns $65,000 or more but less than $70,000 shall pay 29 percent of the cost of coverage;

an employee who earns $70,000 or more but less than $75,000 shall pay 32 percent of the cost of coverage;

an employee who earns $75,000 or more but less than $80,000 shall pay 33 percent of the cost of coverage;

an employee who earns $80,000 or more but less than $95,000 shall pay 34 percent of the cost of coverage;

an employee who earns $95,000 or more shall pay 35 percent of the cost of coverage;

for member with child or spouse coverage or its equivalent -

an employee who earns less than $25,000 shall pay 3.5 percent of the cost of coverage;

an employee who earns $25,000 or more but less than $30,000 shall pay 4.5 percent of the cost of coverage;

an employee who earns $30,000 or more but less than $35,000 shall pay 6 percent of the cost of coverage;

an employee who earns $35,000 or more but less than $40,000 shall pay 7 percent of the cost of coverage;

an employee who earns $40,000 or more but less than $45,000 shall pay 8 percent of the cost of coverage;

an employee who earns $45,000 or more but less than $50,000 shall pay 10 percent of the cost of coverage;

an employee who earns $50,000 or more but less than $55,000 shall pay 15 percent of the cost of coverage;

an employee who earns $55,000 or more but less than $60,000 shall pay 17 percent of the cost of coverage;

an employee who earns $60,000 or more but less than $65,000 shall pay 21 percent of the cost of coverage;

an employee who earns $65,000 or more but less than $70,000 shall pay 23 percent of the cost of coverage;

an employee who earns $70,000 or more but less than $75,000 shall pay 26 percent of the cost of coverage;

an employee who earns $75,000 or more but less than $80,000 shall pay 27 percent of the cost of coverage;

an employee who earns $80,000 or more but less than $85,000 shall pay 28 percent of the cost of coverage;

an employee who earns $85,000 or more but less than $100,000 shall pay 30 percent of the cost of coverage;

an employee who earns $100,000 or more shall pay 35 percent of the cost of coverage.

Base salary shall be used to determine what an employee earns for the purposes of this provision.

As used in this section, "cost of coverage" means the premium or periodic charges for medical and prescription drug plan coverage, but not for dental, vision, or other health care, provided under the State Health Benefits Program or the School Employees' Health Benefits Program; or the premium or periodic charges for health care, prescription drug, dental, and vision benefits, and for any other health care benefit, provided pursuant to P.L.1979, c.391 (C.18A:16-12 et seq.), N.J.S.40A:10-16 et seq., or any other law by a local board of education, local unit or agency thereof, and including a county college, an independent State authority as defined paragraph (4) of subsection e. of section 6 of P.L.1996, c.8 (C.52:14-17.28b), and a local authority as defined in in paragraph (4) of subsection c. of N.J.S.40A:10-21, when the employer is not a participant in the State Health Benefits Program or the School Employees' Health Benefits Program.

16. a. The contribution under paragraph (1) of subsection c. of section 6 of P.L.1979, c.391 (C.18A:16-17), paragraph (1) of subsection c. of N.J.S.40A:10-21, paragraph (1) of subsection e. of section 6 of P.L.1996, c.8 (C.52:14-17.28b), paragraph (2) of subsection a. of section 7 of P.L.1964, c.125 (C.52:14-17.38), and paragraph (2) of subsection b. of section 39 of P.L.2007, c.103 (C.52:14-17.46.9) shall commence: (1) upon the effective date of P.L. , c. (pending before the Legislature as this bill) for employees who do not have a majority representative for collective negotiations purposes, notwithstanding that the terms of a collective negotiations agreement binding on the employer have been applied or have been deemed applicable to those employees by the employer, or have been used to modify the respective payment obligations of the employer and those employees in a manner consistent with those terms, before that effective date; and (2) upon the expiration of any applicable binding collective negotiations agreement in force on that effective date for employees covered by that agreement with the contribution required commencing in the first year after that expiration, or upon the effective date of P.L. , c. (pending before the Legislature as this bill) if such an agreement has expired before that effective date with the contribution required commencing in the first year after that effective date.

Any extension, alteration, re-opening, amendment, or other adjustment to a collective negotiations agreement in force on the effective date of P.L. , c. (pending before the Legislature as this bill), or to an agreement that is expired on that effective date, shall be considered a new collective negotiations agreement entered into after that effective date for the purposes of the sections of law cited.

b. Actions taken under subsection b. of section 2 of P.L.1979, c.391 (C.18A:16-13), subsection c. of section 6 of P.L.1979, c.391 (C.18A:16-17), subsection (2) of N.J.S.40A:10-17, subsection c. N.J.S.40A:10-21, subsection f. of section 4 of P.L.1961, c.49 (C.52:14-17.28), subsection e. of section 6 of P.L.1996, c.8 (C.52:14-17.28b), paragraph (2) of subsection a. of section 7 of P.L.1964, c.125 (C.52:14-17.38), subsection f. of section 35 of P.L.2007, c.103 (C.52:14-17.46.5), paragraph (2) of subsection b. of section 39 of P.L.2007, c.103 (C.52:14-17.46.9), and section 17 of P.L. , c. (C. ) (pending before the Legislature as this bill) before the effective date of P.L. , c. (pending before the Legislature as this bill) in anticipation of implementation are hereby deemed to have been within the authority of the employer or commission pursuant to those sections of law.

17. (New section) Notwithstanding any other provision of law to the contrary, a public employee who retires from a State or locally-administered retirement system for whom health care benefits coverage in retirement is to be paid for in whole or in part by the employer or a public entity other than the employer pursuant to law or collective negotiations agreement shall be required to purchase health care benefits coverage through a health care insurance marketplace or exchange and shall be provided by the employer or entity with such funds as may be necessary to purchase the level and extent of health care benefits coverage the employer is committed to provide for the retiree and the retiree's dependents or the level and extent of coverage provided active employees of the employer, whichever is appropriate, but not to exceed in either case coverage set forth in paragraph (1) of subsection f. of section 4 of P.L.1961, c.49 (C.52:14-17.28) and paragraph (1) of subsection f. of section 35 of P.L.2007, c.103 (C.52:14-17.46.5). For Medicare-eligible retirees, the employer or entity shall provide funds sufficient to cover the cost of a Medicare advantage prescription drug plan and the average cost of out-of-pocket expenses and prescription drug costs of such a plan.

After the full implementation of this section by the commissions and public employers, no public employee who retires from a State or locally-administered retirement system shall be eligible for coverage under the State Health Benefits Program or the School Employees' Health Benefits Program provided for the active employees of the State and participating employers other than the State. This prohibition shall apply to all retirees and their dependents whether the public employer or other public entity is paying in whole or in part the cost of such coverage.

Commencing with the effective date of P.L. , c. (pending before the Legislature as this bill), the commissions and public employers shall develop and initiate a plan for implementation of this section. The plan shall include a schedule for transition of those public employees who retired prior to that effective date, and their dependents, to comply with the requirements of this section. The transition may be completed in stages as may be necessary to ensure an orderly process, but shall be completed within three years after that effective date.

The commissions and public employers shall prepare written explanations and notices for public employees and retirees affected to inform them of the requirement and process. The commissions and employers shall also provide such information in writing, and by presentation given by a knowledgeable individual, on the Internet site of the commissions and public employers in an appropriate and obvious location for such information.

The provisions of this section shall be implemented and the transition shall be developed, initiated, and completed in compliance with applicable federal law and with any applicable State laws except to the extent provided otherwise in this section. The funds for the cost coverage shall be provided through such appropriate retiree reimbursement accounts that are most beneficial to the retiree as may be permitted by federal or State law.

This section shall apply to all employees who retired before the effective date and also to survivors of retirees.

The State Health Benefits Program Commission and the School Employees' Health Benefits Program Commission may modify any provision or process under the State Health Benefits Program law and the School Employees' Health Benefits Program law, respectively, as may be necessary to implement the provisions of this section but only to the extent of that necessity. All other provisions including those concerning payment obligations shall remain applicable.

This section shall apply also to an independent State authority that is not a participating employer in the program to the same extent as to an authority that is a participating employer, with the governing body of the authority responsible for compliance. As used in this paragraph, "independent State authority" means a public authority, board, commission, corporation, or other agency or instrumentality of the State allocated, in but not of, a principal department of State government pursuant to Article V, Section IV, paragraph 1 of the New Jersey Constitution, or which is not subject to supervision or control by the department in which it is allocated, and a regional authority, but shall not include a college or university.

18. (New section) The State Treasurer shall establish a program to provide subsidies for out-of-pocket health care costs to active and retired public employees, having an annual income not in excess of limitations determined by the State Treasurer. Subsidies to retirees shall be provided through those appropriate retiree reimbursement accounts that are most beneficial to the retiree, as may be permitted by federal or State law. Subsidies to active employees shall be provided through those appropriate health savings accounts that are most beneficial to the employee, as may be permitted by federal or State law. The State Treasurer shall fund the program established under this section by an annual appropriation of five percent or more of the savings realized from the implementation of P.L. , c. (pending before the Legislature as this bill) into a dedicated fund from which subsidies shall be disbursed to active and retired public employees prioritized based on income level and with priority given to retirees over active employees.

19. This act shall take effect on the first day of the fourth month following the approval by the voters of Assembly Concurrent Resolution No. 190 of 2016 or a substantially similar amendment to the New Jersey Constitution.

STATEMENT

This bill is one component of a three-part package that is essential to ensuring New Jersey's long-term fiscal viability. The package will responsibly require a return to full pension payments, cover a portion of the costs with health benefit reforms, and create a task force to oversee implementation and resolve issues of detail. The viability and affordability of New Jersey's public pension and health benefit systems are integral to the State's overall fiscal condition and thus bear strongly on other key areas of concern, from funding priorities such as school aid, hospital aid and safety-net programs to controlling and reducing property taxes.

The provisions of this bill reflect some of the recommendations of the New Jersey Pension and Health Benefit Study Commission set forth in its February 24, 2015 and February 11, 2016 reports. This bill is part of an overall effort to reform and continue high-level health care benefits for public employees and retirees and the savings realized from these reforms would make it possible to preserve retirement benefits and support the unfunded accrued liability of the current retirement systems. Specifically, the commission states that the reforms "would reduce the State's health benefits spending to a sustainable level and permit the resulting savings to be used to bolster pension funding."

This bill is intended to be considered in conjunction with Assembly Concurrent Resolution No. 190 of 2016 which proposes to amend the New Jersey Constitution to authorize the Legislature to change pensions and health care benefits for public employees and retirees in this State and to require the State to make its annual contributions to those pension systems. Therefore, this bill will take effect four months after the approval by the voters of the constitutional amendment.

The bill is also intended to be considered in conjunction with a bill to establish a task force that will develop the details needed to implement the commission's recommendations.

The commission made comprehensive proposals in its reports for modifications to both the pension and health care benefits for public employees and retirees. The commission stated that its "proposed approach is simple: reset the retirement and health benefits that public-sector employees will receive in the future to private-sector levels and use the resulting savings going forward to pay off the existing pension deficit." The commission stated that "the resulting mixture of benefit adjustments, additional funding and structural changes offers the State its best chance to avoid the painful collapse of its public employee benefits system." Such is the gravity of the crisis that the status quo is not acceptable.

The commission also found that "significant reduction of health benefits costs at the State and local levels is an essential element of any effort to provide public-sector employees with adequate, sustainable and certain retirement benefits funding." The commission concluded that there are "no plausible solutions to closing the pension funding gap without comprehensive benefits reform. Without reforming health benefits and using the savings to help pension funding, it is simply impossible to provide adequate, sustainable and certain employee benefits funding at a cost that the State's citizens can bear." The commission found that a constitutional amendment as described above would make the State's power to alter benefits clear and would provide the flexibility necessary to craft a workable, long-term solution to the current crisis. The commission stated that, with a constitutional amendment, "the longstanding gap between [pension] funding required and funding provided will finally be closed by reducing funding requirements to a set schedule of payments at a sustainable level." The commission concluded that if "benefit obligations, particularly health benefits costs, can be reduced to a sustainable level," a constitutional amendment should provide a mechanism to guarantee the pension funding obligations defined in the commission's reports.

This bill provides that no health care benefits plan for public employees and retirees can exceed the gold level as set forth in the federal "The Patient Protection and Affordable Care Act" (42 U.S.C. s.18022). This limit will apply to the contracts providing such plans entered into after the bill's effective date. According to the commission, the gold level standard serves as a benchmark for high quality plans in the private sector.

Under the bill, all government entities in the State will be required to consider and include, to the extent appropriate, feasible, and cost effective, as part of each plan: wellness programs; patient-centered medical homes; reference-based pricing; on-site medical clinics; comprehensive urgent care centers; greater use of generic drugs and prescriptions by mail; network improvements to enhance in-network utilization and reduce out-of-network utilization; and adjustments to in-network deductibles, copays, and out-of-pocket expense limits, and other components, to enhance in-network utilization and reduce out-of-network utilization. The government entity must consider for each plan the inclusion of research-proven best practices in the delivery of health care and the optimization of a network of high-value providers. The commission states that " in general the State should follow the best practices which have evolved elsewhere to minimize costs while providing quality health benefits."

The bill prohibits the payment of any reimbursement by a government entity for the premium for the Federal Medicare Program to active public employees and certain future public retirees, and their spouses. The commission states that significant savings could be realized "system-wide by eliminating Medicare Part B reimbursement, an anachronism dating from an era when incentives were deemed necessary to encourage what is now near-universal enrollment in Medicare. Not surprisingly, private employers are increasingly declining to offer this benefit to new retirees and are capping it or eliminating it for existing retirees."

Under the bill, all public employees would be required to pay a portion of the cost of the health care benefits coverage they receive. The default payment would a percentage of salary identical to those percentages required by P.L.2011, c.78. However, like that law, the bill allows boards of education and local units to negotiate with employee representatives to achieve the same or greater savings to taxpayers through an alternative to those percentages, through plan design changes, or both. P.L.2011, c.78 required all public employees to contribute toward the cost of health care benefits coverage, with the same provisions concerning negotiated alternatives, but expired after four years. The commission states that preserving the P.L.2011, c.78 "below-average employee contribution grid ensures public employees will continue to enjoy better than private sector health benefits, since they will continue to make below average premium contributions while receiving high private sector gold level health benefits."

The bill adds one additional member to the State Health Benefits Plan Design Committee and the School Employees' Health Benefits Plan Design Committee. The new member would be a member of the public appointed by the Governor. This new member will be a non-voting member except in the event there is a tie vote, in which case the member will be permitted to vote. Currently, the two committees each have an even number of members. The commission states that the committees "which by statute must have equal labor/management membership, were created as a forum for employer-employee collaboration. In practice, this built-in mutual veto has blocked reform efforts proposed by either side and has had the effect of locking in above-Platinum-level health benefits for public employees. Both labor and management have expressed acute frustration with the workings" of the committees.

As a result of the implementation of this bill, local boards of education will realize savings in their cost for providing health care benefits to their employees. This bill requires that those savings be applied as payments toward the cost of health care benefits provided to the board's retired employees. Currently, the total cost for SEHBP health care benefits for retirees is borne by the State. The commission's report recommends this shift in cost and recommends that it be limited to the extent savings are realized from the reforms in this bill.

The bill requires public employees for whom health care benefits coverage in retirement is to be paid for, in whole or in part, by the employer or a public entity other than the employer pursuant to law or collective negotiations agreement to purchase health care benefits coverage through a health care insurance marketplace or exchange with the cost of the coverage to be reimbursed by the employer or entity with such funds as may be necessary to purchase the level and extent of health care benefits coverage the employer is committed to provide for the retiree and the retiree's dependents. However, the coverage cannot exceed that of a "gold level" plan and, for Medicare-eligible retirees, the employer or entity will provide funds sufficient to cover the cost of a Medicare advantage prescription drug plan and the average cost of out-of-pocket expenses and prescription drug costs of such a plan. This provision will apply to all current and future retirees. The funds for the cost of coverage will be provided through such appropriate retiree reimbursement accounts that are most beneficial to the retiree as may be permitted by federal or State law.

The public employer must develop and initiate a plan for implementation of this requirement in compliance with applicable federal and State law. The plan must include a schedule for transition of all current retirees, which may be completed in stages as may be necessary to ensure an orderly process, but is to be completed within three years after the bill's operative date.

Finally, the bill requires that the State Treasurer establish a program to provide subsidies for out-of-pocket health care costs to active and retired public employees. The savings realized through the implementation of this bill will fund the subsidies.

New Jersey's State-administered retirement systems are collectively in a dire state of underfunding. There is no serious disagreement among policymakers that regular State payments must be made in amounts as close as possible to the actuarially required contribution until full payments can be made on a sustained basis. The only significant disagreement is on which course of action to take in funding those contributions: to do the responsible work of identifying how to pay for them, or to simply create a constitutional mandate to make the contributions without a credible plan to cover the cost. Yet history has shown that when State officials fail to plan for the costs they incur, the taxpayers suffer the consequences.

This bill is part of a comprehensive plan to take the responsible approach. This plan is to move health benefits for public employees closer to those that most workers for large companies receive, and mandate that the resulting savings go towards paying down New Jersey's pension debt. Retirement system changes will also ensure that pension system costs will not again balloon beyond affordability.

Without such changes to public employee benefits, it will be mathematically impossible to make full pension payments in the short term except with extreme cuts in State services or in priorities such as education aid, or raising taxes to a level that would pummel the State's taxpayers and stunt its economy. The Pension and Health Benefit Study Commission estimated that the amount of money needed would equal raising the sales tax to 10 percent or increasing income taxes by 29 percent. Anything close to those levels of taxation would be clearly disastrous, wiping out jobs and pushing even more families out of the State.

Those who claim that full pension payments can be made without reforming benefits owe it to the taxpaying public to be honest with them about how they, the taxpayers, will pay the cost. Responsible policymakers will show taxpayers their plan in advance, rather than take the tragically common route of cementing a huge fiscal obligation first, and only later sending them the bill.

Common sense and mathematics make clear the need for benefit reform, but confirmation also comes from the nonpolitical agencies that assess New Jersey's finances. Moody's Investors Service wrote in April 2015: "Without meaningful structural changes to the state's budget, such as pension reform that dramatically improves pension affordability, the state's structural imbalance will continue to grow, and the state's [credit] rating will continue to fall." S&P Global wrote in August 2015: "A positive rating action or outlook revision would require the implementation of credible pension reform."

The package of which this measure is a part is designed to ensure the continuation of retirement and health benefits for public employees in a fiscally responsible manner that will protect all New Jersey residents from the calamitous results of failure to properly address the State's most serious and pressing budgetary issues.

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Bill Text: NJ S220 | 2018-2019 | Regular Session | Introduced

New Jersey Senate Bill 220 (Prior Session Legislation)

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