Permits Director of Division of Pensions and Benefits to initiate temporary transfer of funds in certain circumstances, the official text

ASSEMBLY, No. 5330

STATE OF NEW JERSEY

222nd LEGISLATURE

INTRODUCED JUNE 23, 2026

Sponsored by:

Assemblywoman  VERLINA REYNOLDS-JACKSON

District 15 (Hunterdon and Mercer)

Senator  M. TERESA RUIZ

District 29 (Essex and Hudson)

Senator  SHIRLEY K. TURNER

District 15 (Hunterdon and Mercer)

SYNOPSIS

Permits Director of Division of Pensions and Benefits
to initiate temporary transfer of funds in certain circumstances.

CURRENT VERSION OF TEXT

As introduced.

An Act concerning the School Employees’ Health Benefits
Program and amending and supplementing P.L.2007, c.103.

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

1.    Section 39 of P.L.2007,
c.103 (C.52:14-17.46.9) is amended to read as follows:

39. a. For each active covered
employee and for the eligible dependents the employee may have enrolled at the
employee's option, from funds appropriated therefor, the employer shall pay to
the commission the premium or periodic charges for the benefits provided under
the contract in amounts equal to the premium or periodic charges for the
benefits provided under such a contract covering the employee and the
employee's enrolled dependents.

b.    The obligations of any
employer to pay the premium or periodic charges for health benefits coverage
provided under the School Employees' Health Benefits Program Act, sections 31
through 41 of P.L.2007, c.103 (C.52:14-17.46.1 through C.52:14-17.46.11), may
be determined by means of a binding collective negotiations agreement,
including any agreement in force at the time the employer commences
participation in the School Employees' Health Benefits Program. 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 payment obligations set forth in law for the employer and such
employees in a manner consistent with the terms of any collective negotiations
agreement binding on the employer.

Commencing on the effective
date of P.L.2010, c.2 and upon the expiration of any applicable binding
collective negotiations agreement in force on that effective date, employees
shall pay 1.5 percent of base salary, through the withholding of the contribution,
for health benefits coverage provided under P.L.2007, c.103 (C.52:14-17.46.1 et
seq.), notwithstanding any other amount that may be required additionally
pursuant to this subsection by means of a binding collective negotiations
agreement or the modification of payment obligations.

c.    There is hereby
established a School Employee Health Benefits Program fund consisting of all
contributions to premiums and periodic charges remitted to the State treasury
by participating employers for employee coverage. All such contributions shall
be deposited in the fund and the fund shall be used to pay the portion of the
premium and periodic charges attributable to employee and dependent coverage.

d.    The fund shall contain a
dedicated subaccount reserved for payment of claims and other health services
fees for covered health services and prescription drug benefits provided to
covered employees and their enrolled eligible dependents. [No] Except as
permitted pursuant to section 2 of P.L.    , c.    (C.        ) (pending before
the Legislature as this bill), no person shall use or authorize the use of
the assets in the subaccount, or the investment earnings thereon, for any
purpose other than for the provision of benefits in accordance with the terms
of the School Employees' Health Benefits Program and for defraying the
reasonable costs of administering the subaccount.

A third-party medical claims
reviewer, procured pursuant to section 2 of P.L.2019, c.143 (C.52:14-17.30b),
shall, in the performance of services for the program, act in the best
interests of the State, participating employers, and covered employees and their
enrolled eligible dependents. Nothing in this subsection shall be construed as
subjecting the program, its plans, the State, or any participating employer to
the provisions of the "Employee Retirement Income Security Act of
1974" (29 U.S.C. s.1001 et seq.).

The third-party medical claims
reviewer shall collect, store and maintain a secure archive of medical and
prescription drug claims data and other health services payment information and
provide such data and other reports in compliance with applicable State and
federal laws, including the "Health Insurance Portability and
Accountability Act of 1996," Pub.L.104-191, to document the cost and
nature of claims incurred, demographic information on the covered population,
emerging utilization and demographic trends, and such other information as may
be available to assist in the governance of the program and in timely response
to any requests from the Governor, the State Treasurer, the Division of
Pensions and Benefits, the School Employees' Health Benefits Commission, the
School Employees' Health Benefits Plan Design Committee, the President of the
Senate, and the Speaker of the General Assembly. Such claims data shall
include, but not be limited to, for each claim, the claim number, provider
information, amount charged, amount paid, and the Current Procedural
Terminology (CPT) code. The School Employees' Health Benefits Commission, the
School Employees' Health Benefits Plan Design Committee, the State Treasurer,
or the Division of Pensions and Benefits may direct the third-party medical
claims reviewer to provide appropriate medical and prescription drug claims and
other health services payment data to a health care services provider or other
authorized entity, in compliance with applicable State and federal laws,
including the "Health Insurance Portability and Accountability Act of
1996," Pub.L.104-191, for the specific purpose of improving the quality
and value of health care services delivered to program participants.

The State Treasurer shall
deposit into the subaccount the moneys necessary to accomplish the purposes of
this subsection, including moneys paid by employers participating in the
program, and contributed by covered employees and retirees.  Deposits and contributions
to the subaccount shall be applied to the distribution of payments for the
costs of health care services and prescription drug benefits and to fund the
reasonable costs of administering the subaccount. Assets in the subaccount
shall be expended or withdrawn, and deposits and withdrawals shall be
reconciled, in accordance with regulations and procedures adopted pursuant to
this subsection.

Moneys in the subaccount shall
be invested in permitted investments or shall be held in interest-bearing
accounts in such depositories as the State Treasurer may select, and may be
invested and reinvested in permitted investments or invested and reinvested in
the same manner as other accounts in the custody of the State Treasurer as
provided by law. All interest or other income or earnings derived from the
investment or reinvestment of moneys in the subaccount shall be credited
thereto and shall be determined on an aggregate basis for all participating
employers.

The State Treasurer shall
adopt, pursuant to the "Administrative Procedure Act," P.L.1968,
c.410 (C.52:14B-1 et seq.), such rules and regulations as may be necessary to
implement the provisions of this act, P.L.2019, c.143 (C.52:14-17.30a et al.).

e.    Notwithstanding any law
to the contrary and except as provided by amendment by P.L.2010, c.2, and by
P.L.2011, c.78, the payment in full of premium or periodic charges for eligible
retirees and their dependents pursuant to section 3 of P.L.1987, c.384 (C.52:14-17.32f),
section 2 of P.L.1992, c.126 (C.52:14-17.32f1), or section 1 of P.L.1995, c.357
(C.52:14-17.32f2) shall be continued without alteration or interruption and
there shall be no premium sharing or periodic charges for certain school
employees in retirement once they have met the criteria for vesting for pension
benefits, which criteria for purposes of this subsection only shall mean the
criteria for vesting in the Teachers' Pension and Annuity Fund. For purposes of
this subsection, "premium sharing or periodic charges" shall mean
payments by eligible retirees based upon a proportion of the premiums for
health care benefits.

(cf: P.L.2019, c.143, s.6)

2.    (New Section)  a.  If
the available funds in the health benefits fund established pursuant to section
39 of P.L.2007, c.103 (C.52:14-17.46.9) fall to a level that is insufficient to
cover 10 days of anticipated payments from the fund, including, but not limited
to, any portion of premiums, claims, and other periodic charges, provided that
claims for medical, prescription, and dental expenses are based on an average
over the past six months, then the Director of the
Division of Pensions and Benefits may initiate a temporary transfer of
available funds from the health benefits fund established pursuant to section 49
of P.L.2007, c.103 (C.52:14-17.46a) to the health benefits fund established
pursuant to section 39 of P.L.2007, c.103 (C.52:14-17.46.9).  The Director of
the Division of Pensions and Benefits shall notify the commission within 30
days of the transfer.  The amount transferred pursuant to this subsection shall
not exceed the amount necessary to cover 30 days of anticipated payments from
the fund, including, but not limited to, any portion of premiums, claims, and
other periodic charges, provided that claims for medical, prescription, and
dental expenses are based on an average over the past six months and any other
anticipated payment or charge in the next 30 days. The amount transferred
pursuant to this subsection shall be reimbursed from the health benefits fund
established pursuant to section 39 of P.L.2007, c.103 (C.52:14-17.46.9) on or
before the 120th day next following the date of the transfer unless the
Director of the Division of Pensions and Benefits determines that an extension
of the reimbursement date is necessary to ensure that sufficient funding is
available to pay claims incurred by active covered employees and their eligible
dependents; provided, however, in no case shall the reimbursement date be
extended for more than an additional 365 days.

b. The Director of the
Division of Pensions and Benefits shall provide to the State Treasurer a
monthly accounting of any transfers initiated in the prior 30 days pursuant to
subsection a. of this section, the outstanding balances of all transfers initiated
pursuant to subsection a. of this section, any repayments for past transfers
received, and the current balance of the health benefits fund established
pursuant to section 39 of P.L.2007, c.103 (C.52:14-17.46.9).

3. This act shall take effect
immediately.

STATEMENT

This bill establishes a
mechanism to provide necessary funds if the available funds in the health
benefits fund for active education employees and their dependents falls to a
level that is insufficient to cover 10 days of anticipated payments from the
fund.  The bill permits the Director of the Division of Pensions and Benefits
to initiate a temporary transfer of available funds from the health benefits
fund for qualified local education retirees and their dependents to the health
benefits fund for active education employees and their dependents.  The bill
requires the Director of the Division of Pensions and Benefits to notify the School
Employees’ Health Benefits Commission within 30 days of the transfer.

Under the bill, the amount
transferred must not exceed the amount necessary to cover 30 days of
anticipated payments from the fund.  The amount transferred is to be reimbursed
from the active education employee and dependent fund on or before the 120th
day next following the date of the transfer unless the Director of the Division
of Pensions and Benefits determines that an extension of the reimbursement date
is necessary to ensure that sufficient funding is available to pay claims
incurred by employees of local education employers and their dependents;
provided, however, in no case will the reimbursement date be extended for more
than an additional 365 days.

The bill requires the Director
of the Division of Pensions and Benefits to provide to the State Treasurer a
monthly accounting of any transfers initiated in the prior 30 days, the
outstanding balances of all transfers initiated, any repayments for past transfers
received, and the current balance of the active education employee and
dependent health benefits fund.