LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

ASSEMBLY, No. 5118

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: JUNE 10, 2025

 

 

SUMMARY

 

Synopsis:

Provides health care benefits to disabled members of TPAF and PERS.

Type of Impact:

Indeterminate expenditure increase to the State and indeterminate expenditure increase for certain local governments.

Agencies Affected:

Division of Pensions and Benefits in the Department of the Treasury; certain local governments.

 

 

Office of Legislative Services Estimate

Fiscal Impact

 

Annual 

 

 

State Expenditure Increase

 

Indeterminate

 

 

Local Expenditure Increase

 

Indeterminate

 

 

 

 

 

 

·       The Office of Legislative Services (OLS) estimates that permitting disabled members of the Public Employees’ Retirement System and the Teachers’ Pension and Annuity Fund to enroll in health insurance coverage under the State Health Benefits Program or the School Employees’ Health Benefits Program without cost sharing will result in annual indeterminate expenditure increases to the State and certain local governments, as the cost of such coverage would shift from the disabled member to the State or to the local government employer participating in the State Health Benefits Program or the School Employees’ Health Benefits Program.

BILL DESCRIPTION

 

      This bill entitles members of the Public Employees’ Retirement System and the Teachers’ Pension and Annuity Fund who are receiving long-term disability insurance benefits pursuant to the laws governing these retirement systems to receive employer-paid health insurance coverage through the State Health Benefits Program and the School Employees’ Health Benefits Program, respectively, in the same manner as coverage is provided to retirees except that there is no employee contribution requirement.

      The bill also provides that there will be no deadline or eligibility requirements for such members to enroll in health care coverage under the State Health Benefits Program or School Employees’ Health Benefits Program, provided that the member is receiving long-term disability insurance benefits under the retirement systems.

      The bill also states that the cost of providing health care coverage to a member may not be used to reduce the monthly disability benefit provided to the member and, for pension purposes, the member is to be considered in active service for the duration of the period the disability benefit is received.

      Under current law, members of the Public Employees’ Retirement System and the Teachers’ Pension and Annuity Fund who are receiving long-term disability insurance benefits and whose employers participate in the State Health Benefits Program or the School Employees’ Health Benefits Program are required to pay the full cost of health care coverage, except that local government employers may reimburse such members through a separate agreement if they so choose.

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

        None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS estimates that permitting members of the Public Employees’ Retirement System and the Teachers’ Pension and Annuity Fund eligible for long-term disability and whose employers participate in the State Employees’ Health Benefits Program and the School Employees’ Health Benefits Program to enroll in health insurance coverage under the programs without cost sharing will result in annual indeterminate expenditure increases to the State and certain local governments, given that current law requires such members to pay the full cost of health care coverage for enrollment in these programs.

      The OLS does not have the information to determine the number of eligible disabled members of the Public Employees’ Retirement System and the Teachers’ Pension and Annuity Fund who would choose to enroll in employer-paid health care coverage through the State Health Benefits Program or the School Employees’ Health Benefits Program, the level of coverage or plan type such enrollees would select, or the distribution of members whose coverage would be paid by the State or by local governments.  Employer costs of the bill will depend on the number of disabled members and the type of coverage chosen. 

 

According to the Plan Year 2025 Rate Renewal Report, 58 percent of the State Health Benefits Program State Employee Group retirees will enroll in PPO 15 plans.

 

 

Sixty percent of retirees in the State Health Benefits Program Local Government Employer Group will enroll in PPO 10 plans.

 

 

Sixty-four percent of retirees in the School Employees’ Health Benefits Program will enroll in Legacy PPO 10 plans.

 

 

 

Section:

State Government

Analyst:

Anna Harris

Associate Fiscal Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).