SENATE BUDGET AND APPROPRIATIONS COMMITTEE

STATEMENT TO

[First Reprint]

ASSEMBLY, No. 5118

with committee amendments

STATE OF NEW JERSEY

DATED:  JANUARY 8, 2026

      The Senate Budget and Appropriations Committee reports favorably and with committee amendments Assembly Bill No. 5118 (1R).

      As amended by the committee, the bill provides health care benefits to disabled members of the Teachers’ Pension and Annuity Fund (TPAF) and Public Employees’ Retirement System (PERS).

      Under the bill a person who is disabled and receiving certain disability insurance benefits before January 1, 2027, and who became a member of TPAF or PERS on or after the effective date of P.L.2010, c.3, and is an employee of a board of education or county college, will be eligible to enroll in health care benefits coverage under the School Employees’ Health Benefits Program (SEHBP) in the same manner as such coverage is provided by the State to retirees, except the benefit will be free and there will be no employee contributions.  The program will refund to members eligible to enroll in health care benefits coverage the amount actually paid by the member for premiums for health benefits coverage under the SEHBP on or after January 1, 2024, but prior to the effective date of this bill while the member was disabled and receiving disability benefits.

      Additionally, an employee of the State who is disabled and receiving certain disability insurance benefits before January 1, 2027, and who became a member of PERS on or after the effective date of P.L.2010, c.3, will be eligible to enroll in health care benefits coverage under the State Health Benefits Program (SHBP) in the same manner as such coverage is provided by the State to retirees, except the benefit will be free and there will be no employee contribution requirement.  The program will refund to members eligible to enroll in health care benefits the amount the member actually paid for premiums for health benefits coverage under the SHBP on or after January 1, 2024, but prior to the effective date of the bill while the member was disabled and receiving disability benefits.

      Under the bill, PERS members employed by employers other than the State who are disabled and receiving disability insurance benefits will remain eligible for employer-provided health care benefits coverage in the same manner as such coverage is provided by the employer to retirees of the retirement system.  The premium contributions of members who are employees of an employer other than the State that participate in the SHBP will be determined by and subject to a resolution by the employer filed with the Division of Pensions and Benefits.   

      Under the bill, a member of TPAF who is disabled and begins receiving disability insurance benefits on or after January 1, 2027, will be eligible to enroll in health care benefits coverage under the SEHBP.  A member of PERS who is disabled and begins receiving disability insurance coverage on or after January 1, 2027, and who is an employee of the State, will be eligible to enroll in health care benefits coverage under the SHBP.  A member of PERS who is disabled and receiving disability benefits, and who is an employee of an employer other than the State, will remain eligible for employer provided health benefits in the same manner as such coverage is provided by the employer to retirees of the retirement system.  However, a member who is disabled and begins receiving disability benefits on or after January 1, 2027, and who is an employee of a board of education or county college, will be eligible to enroll in health care coverage under the SEHBP.

      Under the bill, the State Treasurer will be required to establish appeals processes to be used when an employer or employee disagrees with the administration of disability insurance coverage.

      Under the bill, a member of TPAF who is disabled and begins receiving disability insurance benefits on or after January 1, 2027, and who is not Medicare-eligible, may enroll in health benefits coverage under the New Jersey Educators Health Plan or the Garden State Health Plan as offered to retirees.  For the purpose of determining the contributions required from a member receiving such benefits, that person’s “base salary” will mean the disability benefit provided.  This will also apply to the eligible PERS members who are employees of a board of education or county college.  

      A member of TPAF who is disabled and begins receiving disability insurance benefits on or after January 1, 2027 and who is or becomes Medicare-eligible while receiving such benefits will no longer be eligible for enrollment in the New Jersey Educators Health Plan or the Garden State Health Plan as offered to retirees, except that any dependent of such members who are not Medicare-eligible may remain eligible for those plans.  A Medicare-eligible enrollee will pay monthly contributions to the State for such health benefits coverage in accordance with the percentage of salary that is applicable to retirees enrolled in the New Jersey Educators Health Plan.  This will also apply to the eligible PERS members who are employees of a board of education or county college.

      Under the bill, a member of PERS who is an employee of the State, who is disabled, and begins receiving disability insurance benefits on or after January 1, 2027, and is not Medicare-eligible may enroll in health benefits coverage under a PPO plan or Tiered Network plan that is offered to State retirees under the program.  An enrollee will pay monthly contributions to the State for such health benefits coverage in accordance with the percentage of salary or the cost of coverage that is applicable to State retirees who retire with 25 years of service credit as of the date the enrollee begins receiving disability insurance benefits and who enroll in such plans.  For the purpose of determining the contributions required from a member receiving health benefits coverage, the term “base salary” will mean the disability benefit provided.

      A member of PERS who is an employee of the State, who is disabled and begins receiving disability insurance benefits on or after January 1, 2027, and who is or becomes Medicare-eligible while receiving a benefit will be required to enroll in the SHBP in the same manner as a retiree upon enrollment in the federal Medicare program consistent with the laws and regulations governing the participation of Medicare-eligible retirees under the program.  An enrollee will pay monthly contributions to the State for such health benefits coverage in accordance with the percentage of salary or the cost of coverage that is applicable to State retirees who retire with 25 years of service credit as of the date the enrollee begins receiving a benefit.  For the purpose of determining the contributions required from a member receiving health benefits coverage the term “base salary” will mean the disability benefit provided.

      Under the bill, if a member fails to remit any contributions required to be remitted to the State for health benefits coverage, the Division of Pensions and Benefits will notify the member that the right to continue coverage will be suspended if payment in full is not made within 30 days of the notice.  If no payment is made, the division will generate a notice of termination to the member indicating the termination date and restating the amounts due to reinstate coverage.  Termination will be effective on the last day of the month for which premiums were paid by the member.

      As amended and reported by the committee, Assembly Bill No. 5118 (1R) is identical to Senate Bill No. 4223, which was substituted and also reported by the committee on this date.

COMMITTEE AMENDMENTS:

      The committee amended the bill to provide that:

      (1) a person who is disabled and receiving certain disability insurance benefits before January 1, 2027, and who became a member of TPAF or PERS on or after the effective date of P.L.2010, c.3, and is an employee of a board of education or county college, will be eligible to enroll in health care benefits coverage under the School Employees’ Health Benefits Program (SEHBP) in the same manner as such coverage is provided by the State to retirees, except the benefit will be free and there will be no employee contributions;

      (2) an employee of the State who is disabled and receiving certain disability insurance benefits before January 1, 2027, and who became a member of PERS on or after the effective date of P.L.2010, c.3, will be eligible to enroll in health care benefits coverage under the State Health Benefits Program (SHBP) in the same manner as such coverage is provided by the State to retirees, except the benefit will be free and there will be no employee contribution requirement;

      (3) PERS members employed by local government employers who are disabled and receiving disability insurance benefits will remain eligible for employer-provided health care benefits coverage in the same manner as such coverage is provided by the employer to retirees of the retirement system;

      (4) a member of TPAF who is disabled and begins receiving disability insurance benefits on or after January 1, 2027, will be eligible to enroll in health care benefits coverage under the SEHBP; 

      (5) a member of PERS who is disabled and begins receiving disability insurance coverage on or after January 1, 2027, and who is an employee of the State, will be eligible to enroll in health care benefits coverage under the SHBP.  A member of PERS who is disabled and receiving disability benefits, and who is an employee of a local government employer, will remain eligible for employer provided health benefits in the same manner as such coverage is provided by the employer to retirees of the retirement system.  However, a member who is disabled and begins receiving disability benefits on or after January 1, 2027, and who is an employee of a board of education or county college, will be eligible to enroll in health care coverage under the SEHBP;

      (6) the State Treasurer will be required to establish appeals processes to be used when an employer or employee disagrees with the administration of disability insurance coverage;

      (7) a member of TPAF who is disabled and begins receiving disability insurance benefits on or after January 1, 2027, and who is not Medicare-eligible, will be permitted to enroll in health benefits coverage under the New Jersey Educators Health Plan or the Garden State Health Plan as offered to retirees;

      (8) a member of TPAF who is disabled and begins receiving disability insurance benefits on or after January 1, 2027 and who is or becomes Medicare-eligible while receiving such benefits will no longer be eligible for enrollment in the New Jersey Educators Health Plan or the Garden State Health Plan as offered to retirees, except that any dependent of such members who are not Medicare-eligible may remain eligible for those plans.  A Medicare-eligible enrollee will pay monthly contributions to the State for such health benefits coverage in accordance with the percentage of salary that is applicable to retirees enrolled in the New Jersey Educators Health Plan.  This will also apply to the eligible PERS members who are employees of a board of education or county college;

      (9)  a member of PERS who is an employee of the State, who is disabled, and begins receiving disability insurance benefits on or after January 1, 2027, and is not Medicare-eligible will be permitted to enroll in health benefits coverage under a PPO plan or Tiered Network plan that is offered to State retirees under the program;

      (10) a member of PERS who is an employee of the State, who is disabled and begins receiving disability insurance benefits on or after January 1, 2027, and who is or becomes Medicare-eligible while receiving a benefit will be permitted to enroll in the SHBP in the same manner as a retiree upon enrollment in the federal Medicare program; and

      (11) if a member fails to remit any contributions required to be remitted to the State for health benefits coverage, the Division of Pensions and Benefits will notify the member that the right to continue coverage will be suspended if payment in full is not made within 30 days of the notice.  If no payment is made, the division will generate a notice of termination to the member indicating the termination date and restating the amounts due to reinstate coverage.  Termination will be effective on the last day of the month for which premiums were paid by the member.

FISCAL IMPACT:

      Fiscal information for this bill is currently unavailable.