July 10, 2024

SHBC Reviews Plan Year 2025 Rates

Today, the State Health Benefits Commission (SHBC) met to hear a presentation from AON on Plan Year 2025 rate increases for state and local governments that participate in the State Health Benefits Plan (SHBP).  

If the Plan Year 2025 report is adopted as it was presented at this meeting, rate increases for local government active employees would be about 16% and 10% for state government active employees. 

The AON presenters identified three main areas for the proposed cost increase for the active local government rates.  

First is the anti-selection load, which represents a 2.5% increase. Because local governments, typically with good risk, have left the SHBP for comparable coverage at a significantly reduced cost, it has left the plan with fewer participants and employees typically with more risk. that cost more to insure.  

Second is a 3% surcharge for the Claims Stabilization Reserve. For local governments, but not state governments, the fund has a Claims Stabilization Reserve that has cash on hand for two months of claims. This year there is a 3% surcharge to maintain this reserve. The actuary expects that the fund at the end of 2024 will be negative .7 months and at the end of 2025 will be negative .2 months. At this rate, it will take roughly five years of surcharges at this rate to achieve the desired reserve.  

Lastly, AON referenced inflation, increased cost utilization, various legislative mandates, and increased prescription drug costs as reasons that costs are increasing. 

No formal action was taken at this meeting and the AON presentation that was provided to the Commissioners was not shared with the public or projected at the meeting. The SHBC is expected to adopt Plan Year 2025 rates at its July 29 meeting.  

Contact: Paul Penna, Senior Legislative Analyst, ppenna@njlm.org, 609-695-3481, x110.