SEA ISLE CITY – In response to a proposed 17% increase in premiums, the city is pulling out of the State Health Benefits Plan for its employees, Mayor Len Desiderio said at the Oct. 8 council meeting.
Under the state plan, Horizon Blue Cross Blue Shield is the insurance carrier. The City Council approved a resolution at that meeting to have its own contracted health and prescription insurance, with Horizon Blue Cross Blue Shield as the health carrier and Prime Therapeutics as the prescription drug carrier.
The resolution states that the new private plan with Blue Cross Blue Shield for all Sea Isle active and retired employees represents a significant cost savings compared with the state plan. Coverage under the city’s new plans becomes effective Jan. 1, 2025.
While no details of the new rates were included in the resolution, Desiderio said, “The premium rates we were able to secure directly from Horizon Blue Cross will increase from the current plan by about one-half of 1 percent.”
The resolution states that the city has 84 active employees and 74 retirees under coverage.
The move follows Ocean City’s withdrawal from the state plan to a private insurer in November 2022. That city was reacting to a State Health Benefits commission rate increase that allowed county and municipal employee premiums to rise by as much as 22%.
Most local governments in New Jersey pay up to 70% of the health insurance premiums for their employees. The state health plan increase posed serious budget problems.
At the time, Ocean City was the only county municipality to opt for negotiating its own private insurance policy. In taking the action, the city joined a number of state public school districts, at least one county college, nearby Egg Harbor Township and other municipalities, and even the state’s capital city, Trenton.
Timing becomes a serious consideration given the annual budget cycles for municipalities. Any decision to change plans and have coverage in place for 2025 along with budget support requires early action.
This year state actuaries recommended in July that premiums for local government workers and retirees rise by an average of 17%. State employee premiums were proposed to go up 11%. In 2022 Gov. Phil Murphy made a deal with state employee unions lowering the premiums for their members to 3% while leaving the 22% average for local and county governments.
Given the 22% increase in 2022 for Plan Year 2023 and the 7% increase for Plan Year 2024, the 17% increase for Plan Year 2025 may force more municipalities and school districts to reevaluate their options. Officials admitted in 2022 that if towns and districts make moves to private insurance there will be added upward pressure on rates for the state plan.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
