Bill > S4438

Introduced Session

This bill, designated as the "Public School Employees' Health Benefits Trust Act," establishes, in but not of, the Department of the Treasury the Public School Employees' Health Benefits Trust. The trust will consist of appropriations made by the State, and contributions made by employers and employees. The purpose of the trust shall be to pool the health risks of beneficiaries and to provide affordable medical, pharmacy, dental, and vision benefits to those beneficiaries and, accordingly, the assets of the trust shall be managed in the sole interest of the beneficiaries. Governance of the Trust The trust will be managed by a board of trustees consisting of ten members as follows: (1) three members appointed by the New Jersey Education Association; (2) one member appointed by the American Federation of Teachers New Jersey; (3) one member appointed by the majority representative union of the Community Colleges in this State; (4) one member appointed by the New Jersey School Boards Association; (5) one member appointed by the New Jersey Association of School Business Officials; (6) one member appointed by the New Jersey Association of School Administrators; (7) one member appointed by the New Jersey Principals and Supervisors Association; and (8) one member appointed by the Governor. Each member of the board must possess experience, education, or training in the review, administration, design, or collective negotiation of employer-sponsored group health insurance plans or group health insurance plan coverage, but no member of the board will be employed by, or have a financial interest in, any entity with which the board contracts. The board will have four standing committees: an audit committee, a plan design committee, an investment committee, and a beneficiary appeals committee. The audit committee will be comprised of no fewer than three members. and will be responsible for assisting in the oversight of the financial reporting and audit processes of the board. At least two members of the committee will be members of the board. At least one of member of the committee will have accounting, governmental auditing, or related financial expertise. The committee will assist the board in retaining an independent auditor to conduct annual audits of trust financial statements by making a recommendation to the board after engaging in an auditor selection process. The auditor selection process will be based upon public, competitive bidding principles and will take place no less than once every five years. The plan design committee will be comprised of no fewer than three members, and will be responsible for assisting in the design, establishment, modification, and termination of health insurance plans offered through the trust. At least two members of the committee will be members of the board. At least one member of the committee will have demonstrated experience in group health insurance plan design, administration, or collective negotiation. The committee will also assist the board in contracting a third-party administrator should the board, in its discretion, decide to do so, in which case the third-party administrator selection process will be based upon public, competitive bidding principles, and will take place no less than once every five years. The investment committee will be comprised of no fewer than three members, and will be responsible for assisting in the investment, sale, or purchase of trust assets. At least two members of the committee will be members of the board. At least one member of the committee will have demonstrated experience in institutional investing. The beneficiary appeals committee will be comprised of no fewer than three members, and will be responsible for hearing beneficiary appeals prior to the hearing thereof by the full board. At least two members of the committee will be members of the board. At least one member of the committee will be a physician, other than a member of the medical board. Powers and Authorities of the Trust The board will have the power and authority to: (1) adopt bylaws, including internal board policy and rules regarding the provision of medical, pharmacy, dental and vision benefits, including beneficiary appeal procedures; (2) enter into contracts necessary to effectuate the purposes of the trust; (3) set and revise contribution rates and premium amounts and collect contributions and premiums, including, as the board may deem prudent, the establishment of banded rates to promote equity, and plan stability; (4) manage and invest the assets of the trust; (5) incur indebtedness, borrow money, and authorize and issue negotiable obligations or bonds; (6) design, establish, modify, or terminate health insurance plans offered through the trust; (7) review, adjudicate, and issue final decisions regarding beneficiary appeals; (8) calculate and determine fair allocations for out-of-network charges; (9) at the board's discretion, retain legal counsel with demonstrated expertise in the law governing employer-sponsored group health insurance plans in the public and private sector, to advise and represent the board on matters within said counsel's expertise, including the initiation of litigation to pursue recovery of any money paid in error or as a result of fraud or abuse; (10) at the board's discretion, develop, contract for, and operate a primary care delivery system; and (11) hire administrative and professional staff and appoint an executive director thereof, or contract with a third-party administrator, as the board may deems necessary, to administer the trust and health insurance plans offered through the trust. Duties of the Board The board will have the duties to: (1) meet at least once per calendar month; (2) record minutes for all of its meetings, and maintain records consisted with state record retention requirements; (3) publish an annual report showing the fiscal transactions of the trust for the preceding year, the amount of the accumulated cash and securities held by the trust and detailing the performance of each health insurance plan offered through the trust, including enrollment figures, claims experience, and administrative costs associated therewith which will be reported to the Governor, and to the Legislature; (4) retain an independent auditor, who will conduct an annual audit of the trust's financial records and statements, and, where deemed necessary by the board, the financial records and statements of all vendors, contractors, subcontractors and similar third-party entities providing services to the trust or the board; (5) retain an actuary, who will have demonstrated experience providing actuarial services to employer-sponsored group health insurance plans in the public and private sector, and who will be the technical advisor of the board with respect to questions concerning the operation of the health insurance plans offered through the trust and perform such other necessary duties required in connection therewith, including the preparation of an annual report demonstrating the financial condition of the trust by means of an actuarial valuation of the assets and liabilities thereof; (6) establish, in consultation with the actuary, actuarial funding policies for the trust, subject to the minimum requirement that the trust carry reserves necessary for two months of projected expenditures; (7) designate a medical board comprised of a minimum of three physicians who are not employees or dependents, as those terms are defined under the bill, who will recommend to the board final action to be taken on beneficiary and provider appeals; (8) ensure compliance with applicable federal and state laws, including but not limited to the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. § 1320d et seq., and No Surprises Act of 2022, 26 U.S.C. § 9816; (9) exercise the preceding powers and duties solely in the interest of the beneficiaries and for the exclusive purpose of providing benefits to beneficiaries and defraying reasonable expenses of administering the plan; (10) act with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (11) act in accordance with the rules adopted by the board. Under the bill, appointments to the board will be made within 90 days of the bill's effective date The board will organize at its initial meeting and promptly initiate rulemaking and procurement necessary to implement the bill's provisions. The trust will commence operations and offer health insurance coverage beginning on January 1, 2028, as will be established by board resolution in consultation with participating employers. Under the bill, premiums and other revenues held in the trust will be held in the sole interest of beneficiaries and for the payment of reasonable administrative expenses. Any excess funds collected will remain held in the trust and be used solely in the interest of beneficiaries. Beneficiary Rights to Appeal Under the bill, beneficiaries will have the right to appeal denials of their claims for coverage by the health insurance plan in which they are enrolled through the trust, and non-beneficiaries will have the right to appeal the denial of their status as eligible beneficiaries, pursuant to an internal appeals procedure that the board will establish, which will include consideration of the appeal by the beneficiary appeals committee as the penultimate step and consideration by the board as the ultimate step. If all or part of a beneficiary's claim for benefits, or any non-beneficiary's assertion of eligible beneficiary status, is denied after exhaustion of the internal appeal procedure established by the board, such person may, within 180 days of the denial, institute a civil action against the trust in the Superior Court of New Jersey to recover benefits due under the terms of the health insurance plan in which the beneficiary is enrolled or to enforce rights provided for. Health Coverage Provided by the Trust Under the bill, employers will provide health coverage to their employees through the trust and will not be permitted to provide any other type of insurance to their employees. Enrollment in the SEHBP and Garden State Health Plan will not be offered to employees, and any employees already enrolled in those programs will be transitioned to health insurance coverage provided through the trust in a manner to be prescribed by the board. Under the bill, each employee will contribute annually toward the cost of health care benefits for the employee and dependents if any, under the New Jersey Educators Health Plan offered by the SEHBP or through the Public School Employees' Health Benefits Trust, an amount equal to a percentage of the employee's annual base salary, including any cost of living adjustments to that allowance. The SEHBP will continue to operate for employers and employees outside the scope of this bill and the Division of Pensions and Benefits will cooperate with the board to ensure an orderly transition of covered employees from coverage by the SEHBP to coverage by health insurance plans through the trust, and to share data as authorized by law. All employees enrolled in health insurance coverage provided pursuant to certain existing laws will be transitioned to health insurance coverage provided through the trust, and the former coverage will be terminated upon the expiration of any contract for such insurance coverage or the applicable collective negotiations agreements between their employers and employee organizations. On and after the effective date of the bill, employers participating in the SEHBP will be prohibited from withdrawing from the program.

AI Summary

Committee Categories

Vin Gopal (D)*,  Joe Vitale (D)*,  Renee Burgess (D),  Patrick Diegnan (D),  Linda Greenstein (D),  Joe Lagana (D),  John McKeon (D),  Angela Mcknight (D),  Raj Mukherji (D),  Vince Polistina (R),  Bob Smith (D),  Brian Stack (D),  Britnee Timberlake (D),  Shirley Turner (D),  Andrew Zwicker (D), 

Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee (on 06/08/2026)

Bill Topics

Official Document