SENATE, No. 1392

 

STATE OF NEW JERSEY

 

INTRODUCED JUNE 27, 1996

 

 

By Senator EWING

 

 

An Act concerning the State Health Benefits Program and certain other benefits for public employees, amending and supplementing P.L.1964, c.125 and supplementing Title 52 of the Revised Statutes.

 

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

 

    1. (New section) Notwithstanding the provisions of any other law to the contrary, the obligations of any employer other than the State, as defined in section 4 of P.L.1964, c.125 (C.52:14-17.35), except for 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), 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. , c. (now pending before the Legislature as this bill). With respect to employees of an employer other than the State 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.1964, c.125 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 modification shall be in a manner consistent with the terms of any such collective negotiations agreement applicable to the collective negotiations unit. A modification of the respective payment obligations of the employer and employees shall not take effect until the employees have the opportunity to change the coverage for themselves and their dependents and their enrollment in the health care plans available under the program during the annual enrollment period or a special enrollment period established by the commission.

 

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

    7. a. 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.

    b. From funds allocated therefor, the employer other than the State, upon 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 [such] the employee retired from a State or locally-administered retirement system on a benefit based on 25 years or more of service credited in [such] the retirement system, excepting the employee who elected deferred retirement, but including the employee who retired on a disability pension based on fewer years of service credited in [such] the retirement system, and may also reimburse [such] the retired employee for the employee's premium charges under Part B of Medicare covering the retired employee and the employee's spouse. ["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 a State or locally-administered retirement system prior to the date that the employer became a participating employer in the New Jersey State Health Benefits Program. The term may also, upon adoption of an appropriate resolution therefor by the participating employer, include otherwise eligible employees, and their dependents, 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.] The payment of premiums and periodic charges and reimbursements for Part B Medicare premiums for qualified retirees may be provided as follows:

    (1) for all present and future retirees participating in the program on the date of adoption of the resolution;

    (2) for all retirees eligible to participate in the program on the date of retirement who retire on or after the date set forth in the resolution;

    (3) for present retirees not participating in the program on the date of adoption of the resolution because they retired from a State or locally administered retirement system prior to the date the employer became a participating employer;

    (4) for present retirees not participating in the program on the date of adoption of the resolution because they retired from a State or locally administered retirement system after the date the employer became a participating employer but elected not to continue coverage because the employer had not elected to pay the premiums or periodic charges for qualified retirees;

    (5) for the surviving spouses and dependents of retirees covered under the program;

    (6) for all or some of the premium or periodic charges for benefits provided to retirees and dependents; or,

    (7) for all, some or none of Part B Medicare premiums.

    An employer other than the State which has elected to pay for retired coverage may limit its obligation to pay for this coverage as authorized under this subsection, or terminate its obligation to pay for this coverage, upon adoption and submission to the division of an appropriate resolution prescribed by the commission, for employees who have not met the eligibility requirements for employer payment for retired coverage on the effective date of the resolution. 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.]

(cf: P.L.1996, c.8, s.4)

 

    3. (New section) Notwithstanding any provision to the contrary of section 5 of P.L.1964, c.125 (C.52:14-17.36) or any other law, or of any rule or regulation, for the purposes of determining eligibility for coverage under the health benefits program established pursuant to section 3 of P.L.1961, c.49 (C.52:14-17.27), a person who, on December 17, 1995, was covered by the program shall, if the employer continued to be a participating employer and the employee continued to appear on the regular payroll of the employer and to receive a salary or wages for an average of at least 20 hours per week during the period commencing on December 18, 1995 and ending on the effective date of this act, be eligible for such coverage for so long after that effective date as the employer continues to be a participating employer and the employee continues to so appear on the payroll of that employer and receive compensation for a work week having an average duration of at least 20 hours.

 

    4. (New section) Notwithstanding the provisions of any other law to the contrary, the governing body of a local unit of government, a school district, or an independent local public authority, board, commission, corporation, agency or organization may establish as an employer a cafeteria plan for its employees pursuant to section 125 of the federal Internal Revenue Code, 26 U.S.C. §125. The plan may provide for a reduction in an employee's salary, through payroll deductions or otherwise, in exchange for payment by the employer of medical or dental expenses not covered by a health benefits plan, and dependent care expenses as provided in section 129 of the code, 26 U.S.C. §129, and such other benefits as are consistent with section 125 which are included under the plan. The amount of any reduction in an employee's salary for the purpose of contributing to the plan shall continue to be treated as regular compensation for all other purposes, including the calculation of pension contributions and the amount of any retirement allowance, but, to the extent permitted by the federal Internal Revenue Code, shall not be included in the computation of federal taxes withheld from the employee's salary.

 

    5. This act shall take effect immediately.

 

 

STATEMENT

 

    This bill allows employers other than the State (except for an independent State authority, board, commission, corporation, agency, or organization deemed to be covered by P.L. 1996, c.8) to modify the employer and active employee obligations to pay for health benefits coverage under the State Health Benefits Program (SHBP). SHBP benefits with regard to covered services remain unchanged.

    The bill provides that the obligations of any such employer to pay for health benefits coverage under the SHBP may be determined by means of a binding collective negotiations agreement, including any agreements in force at the time of the adoption this bill. 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 SHBP payment obligations for the employer and such employees, except that if there are collective negotiations agreements binding upon the employer for employees within the same community of interest, the modification shall be in a manner consistent with the terms of those collective negotiations. Employees shall have the opportunity to change their coverage in the available health care plans during the annual open enrollment period or a special open enrollment period established by the State Health Benefits Commission before a modification of the respective employer-employee payment obligations takes effect.

    The bill provides that an employer other than the State (as defined in section 4 of P.L.1994, c.125 (C.52:14-17.35), upon adoption and submission to the Division of Pensions and Benefits in the Department of the Treasury of an appropriate resolution, may limit or terminate prospectively its obligation to pay for health benefits coverage of a defined group of retirees. Currently, an employer other than the State may elect only to pay the full cost of health benefits for qualified retired employees and their dependents. There are no provisions allowing a modification or termination of that obligation once it is elected. This bill allows the employer to determine the extent of its payment obligation for SHBP health benefits for its retirees as well as which qualified retirees and dependents shall be included.

    The bill provides that a local government employee who was covered under the New Jersey State Health Benefits Program (SHBP) on December 17, 1995 shall, if the employer continued to participate in the SHBP and the employee continued to be employed with that employer for an average work week of 20 hours during the period between that date and the date on which this legislation takes effect as law, be eligible for such coverage for so long after that effective date as the employer continues to be a participating employer and the employee continues to work for the employer for an average of at least 20 hours per week.

    On September 21, 1995, the State Health Benefits Commission adopted an amendment to the commission's regulation governing "full-time employment" for purposes of determining a local government employee's eligibility for SHBP coverage; the amended version of the regulation became effective upon its official publication on December 18, 1995. Prior to the amendment, "full-time" status was accorded any such employee who worked an average of at least 20 hours per week. Under the regulation as amended, local employers are permitted to establish a higher standard for full-time status. Thus this legislation would, in effect, retroactively "grandfather" application of the prior regulation for employees covered under that regulation who have been and remain continuously employed with the same employer for a minimum average work week of 20 hours.

     The bill also allows local public employers to establish a cafeteria plan for their employees pursuant to section 125 of the Internal Revenue Code to provide for a reduction in an employee's salary in exchange for payment by the employer of any required employee contribution for SHBP coverage, medical or dental expenses not covered by SHBP, or dependent care expenses. The amount of any reduction in an employee's salary for the purpose of contributing to the plan shall continue to be treated as regular compensation for all other purposes, including the calculation of pension contributions and the amount of any retirement allowance, but, to the extent permitted by the Internal Revenue Code, shall not be included in the computation of federal taxes withheld from the employee's salary.

 

                             

Makes certain revisions of SHBP concerning local government employees and retirees; establishes cafeteria plans for such employees under section 125 of the Internal Revenue Code.