COURT HOUSE – Middle Township is pulling out of two state health benefit programs for employees in the face of another year of significant increases in their premium costs.
At a special meeting Feb. 26, the Township Committee decided to end Middle’s participation in the State Health Benefits Program and the State Employee Health Benefits Program, including the prescription drug plan and dental plan coverage.
The resolution passed by the committee does not specify what alternative health plan the township will move to. Remarks made by Mayor Chris Leusner at his March 5 State of the Township address indicated that the township may contract with AmeriHealth as a provider.
The two state benefits programs have hit local government units and school districts with major increases in premium costs annually since 2022.
Some Cape May County towns have already terminated participation in the plans. Ocean City took that step in November 2022 for the 2023 plan year. Since then Avalon, Cape May City, Sea Isle City and now Middle Township have followed.
The state health plan maintains two separate funds, one for state employees and the other for local government employees. In the 2023 plan year, active and retired employees of local governments and school districts were hit with an average premium increase of 20%. Plan year 2024 added another 7%, with plan year 2025 now authorized to impose increases in premiums for local government and school employees in the range of 17%.
According to the New Jersey League of Municipalities, the exodus of local government entities from the state plan has left the fund with an “excessive amount of bad risk” in the form of remaining municipalities that cannot find reasonable coverage in the private sector due to high risk levels. The result, according to League analysis, will be “further cost increases.”
In a letter to the Office of Legislative Services in 2023, state Treasurer Elizabeth Maher Muoio said that there were roughly 1,100 local government and educational units participating in the state health plans.
More recent data from the League shows the impact of withdrawals over the last three years. For plan year 2025, the employee enrollment in the Local Government Employee Group has dropped to roughly 76,000 from an employee base of 90,000 in plan year 2022, a 16% decrease in enrollment.
As evidenced by the Middle Township decision, the changes in the program membership across the state may not yet be final for 2025.
In October 2024 Gov. Phil Murphy signed legislation that allows the fund that supports state workers to issue loans as needed to the fund covering local government employees. The local government fund is facing cash-flow issues as municipalities, most with the best risk records, leave the state plan for other health benefit options due to the recent premium increases. The increases have been factors in municipalities changing insurance programs in order to balance budgets.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
