A six-month premium cut precedes a looming 15.1% hike. Workers pay more at the point of service, the local pool keeps shrinking, and Horizon still administers the plan.

State employees saw their health insurance premiums drop in July. Medical premiums fell 2.0 percent and prescription premiums fell 6.9 percent, but deductibles climbed. Aon actuaries have recommended a 15.1 percent premium hike for January 2027.

The State Health Benefits Plan Design Committee approved Resolutions 2025-9 through 2025-13 on September 24, 2025; they took effect July 1, 2026. Those resolutions raised deductibles, out-of-pocket maximums, copays and coinsurance. Hospital procedures that could be performed at outpatient surgical centers now carry 50 percent coinsurance at hospitals. Maintenance medications must be filled through mail order, while workers seeking care end up paying more at the point of service. The Treasury describes them as plan design changes.

A $45 copay tier for non-diabetic GLP-1 drugs took effect January 1, 2026. Baseline calculations did not reflect that tier.

State employees cannot keep their old plans. The new designs automatically replace current coverage. Local government workers may choose the new plans, but their employers decide whether to offer them.

The rate filing incorporates $2.5 million in one-time implementation fees and $900,000 in ongoing annual operational fees. Meanwhile, the projected 2027 increases would add roughly $392 million annually to the $2.6 billion state active premium pool, calculations based on Treasury data show. The proposed 15.1 percent state hike and 17.3 percent local government hike arrived in actuarial recommendations reported July 8 and July 9. Those figures are roughly ten times the six-month premium reduction of approximately $39 million.

Projected aggregate costs for the State Group in Plan Year 2026 hit $3.53 billion, with active state employees accounting for $2.6 billion and retirees for $900 million. After losing $154.3 million in 2024 and $231.9 million in 2025, officials projected approximately no gain or loss for 2026.

Compared to 2025, premiums for the State Group rose 19.7 percent for state employees in Plan Year 2026. Early retirees absorbed a 21.3 percent jump, while Medicare retirees faced a 24.8 percent increase. The July 2026 reductions barely dented those full-year hikes.

Local government premiums within the State Health Benefits Program (SHBP-LG) have climbed 59 percent over the past four years, a Treasury report from May 2025 confirms. Since the hikes began, the headcount in the local government plan fell by 25 percent going into 2026, actuaries told the State Health Benefits Commission. The departures threaten what the actuaries call a "death spiral": Shrinking pools force higher premiums, driving further exits. Younger and healthier workers leave first, leaving older and sicker members. This increases risk and raises costs.

Horizon Blue Cross Blue Shield still administers the SHBP plan. The company collects more than $126 million a year in fees for running the system, according to STAT News. In 2021, Chris Deacon, then a Treasury official, found that Horizon was overcharging the state health plan. She resigned after being told to "get on board with Horizon" and brought a false claims action alongside other plaintiffs. Four years later, Horizon paid $100 million to settle. Officials then "cut Deacon out of the whistleblower reward" because she had discovered the fraud while serving as a state official.

Major Unions Comment on Hikes as Legislators Weigh Legal Reforms

The Communications Workers of America, New Jersey's biggest union of public workers, warned in a March 31 statement that workers had made prior concessions to keep premiums in check. The organization added that further cost-shifting was "not a viable solution."

The New Jersey Education Association represents school employees under the separate School Employees' Health Benefits Program (SEHBP) and not the State Health Benefits Program. Most members contribute a percentage of salary for coverage under Chapter 44, a 2020 law. That protection expires at the end of 2027. Once the law sunsets, districts will likely push to restore premium-based contributions, according to the union.

That union has said that the plan design changes shift costs to workers without addressing the structural flaws. In a June 8 statement, the day the bill was introduced, President Steve Beatty, Vice President Petal Robertson and Secretary-Treasurer Tina Dare said the system was "not working" and that the instinct had been to make educators pay more "while leaving the root causes of that inflation untouched." 

The union backs S4438, pending legislation sponsored by Senator Vin Gopal and six other Democrats. The bill, which has been certified for a fiscal note by the Office of Legislative Services but has not yet had a committee hearing. It would pool school employees into a statewide trust with labor and management representatives on the governing board.

Assembly Speaker Craig Coughlin said the week before the July 8 rate recommendations that "real meaningful changes" are needed because "we've reached the point where it's just so damn expensive that it necessitates that we get something done." The legislature has not yet acted on S4438 or the Assembly companion A5285, beyond their introduction in the chambers.

State workers saved roughly $39 million in the July premium cut, but the proposed 2027 hikes would add ten times that amount. The plan design changes remain in effect, the local government pool keeps shrinking, and the company that paid $100 million to settle overcharging allegations still administers the plan.

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Sources

• CWA District 1, "Statement on State Health Benefits Commission meeting" (March 31, 2026, via Insider NJ)

• LegiScan, NJ S4438 (2026–2027)

• New Jersey Attorney General's Office, "Attorney General Platkin Announces $100 Million Settlement with Horizon Blue Cross Blue Shield of New Jersey" (November 14, 2025)

• New Jersey Department of the Treasury, "Structural and Financial Challenges in the State Health Benefits Program for Local Government" (May 19, 2025)

• New Jersey Department of the Treasury, Division of Pensions and Benefits, "Plan Year 2026 Rate Setting Recommendation Analysis — State Employee Group" (approved September 3, 2025)

• New Jersey Department of the Treasury, Division of Pensions and Benefits, "State Health Benefits Program: July 2026 Premium Rate Update" (approved February 11, 2026)

• New Jersey Monitor, "Public worker health plans poised for another year of premium hikes" (July 8, 2026)

• NJ1015, "State workers hammered with massive spike in health insurance premiums" (July 9, 2026)

• NJEA, "New Jersey's Growing Health Insurance Crisis" (June 19, 2026)

• NJEA, "NJEA supports legislation to fix broken health insurance system" (June 8, 2026)

• NJEA, "Solutions to rising health insurance costs" (June 3, 2026)

• STAT News, "Insurance whistleblower says employers are not helpless bystanders" (July 7, 2026)