State Representatives of the State Health Benefits Program Plan Design Committee Submit Recurring Cost Savings Proposals to State Actuary as Required by State Law
Fourteen Total Cost Savings Proposals Submitted Maintain Affordability and High Quality of Care While Bolstering a More Sustainable Present and Future for the State Health Benefits Program
Ideas Include Streamlining Plan Options, Modifying Prescription Drug Co-Payments, Eliminating Expensive Legacy Plans, Excluding Certain Coverage for GLP-1 Drugs, and Increasing Deductible and Out-of-Pocket Maximums, Among Other Proposals
(TRENTON) – Pursuant to the Fiscal Year 2026 (FY2026) Appropriations Act, P.L. 2025, c. 74, on July 31, the State representatives of the State Health Benefits Program Plan Design Committee (“SHBP PDC”) submitted legislatively-mandated recurring cost saving plan design proposals for the New Jersey State Health Benefits Program to Aon, the actuary contracted by the State to service the public health benefit plans. Per this fiscal year’s budget, the recurring cost savings that are ultimately chosen must save a total of $100 million in State funds during the first six months of Plan Year 2026. Labor representatives on the SHBP PDC also submitted their recurring cost savings proposals to Aon.
Currently, the most subscribed SHBP PPO plans have actuarial values (“AVs”) in excess of 97% – making them national outliers compared to health care plans available in other states, according to Aon. The AV is the percentage of total average costs for covered benefits that will be paid by the health benefits plan.
Plan design changes submitted by the State today vary in scope, but include some of the following features:
- More material differences between co-pays and co-insurance levels for higher and lower-cost services and prescription drugs;
- Scaling back the total number of available plan options to reduce complexity for members that stifles, rather than enhances, choice, while also lowering overall costs;
- Higher deductibles in tandem with increased out-of-pocket and co-insurance annual maximums, while still maintaining affordability.
A copy of the State’s proposed cost saving measures is attached.
Managing Rising Costs of the State Health Benefits Program
Benefit costs have steadily increased over the last five years, with double-digit recommended rate increases this year for the three State-administered health benefits plans for Plan Year 2026.
As a result of this trend, the Governor and Legislature agreed to a process to generate recurring cost savings in the first six months of Plan Year 2026 in the hopes of creating a more sustainable future for the plans. As such, the first part of the legislatively-mandated process is the submission of these proposals to the plan actuary, Aon, by July 31, 2025.
Once submitted, Aon will review the proposals to determine if they will result in verifiable cost savings within the first six months of the plan year. Any that are either not verified or determined to result in lower cost savings than proposed will be adjusted to reflect actuarially verified cost savings or eliminated from further consideration if no savings are actuarially verified. If Aon determines the cost savings proposals submitted by the labor and administration representatives will not result in recurring and verifiable total savings of at least $100 million during the first six months of Plan Year 2026, labor and administration representatives will submit additional proposals in an effort to get to the $100 million savings target before September 30, 2025. The SHBP PDC will meet and vote upon the proposals that Aon has verified.
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