nj pers and shbp 2011 reform summary

Health Professionals and Allied Employees

Updated: June 30, 2011

Summary of the New Pension and Health Benefits Law On June 28, 2011, Governor Christie signed into law the health and pension benefits legislation just passed by the State Assembly and Senate. Below is a summary of how the changes will affect HPAE members at UMDNJ and Runnells Specialized Hospital.

Pension Changes (for Employees in PERS)

• The PERS employee pension contribution rate will increase from 5.5% to 6.5% of salary. An additional increase to be phased in over the next 7 years will bring the total pension contribution rate to 7.5% of salary. Changes do not apply to members enrolled in the Alternate Benefits Plan (ABP). The initial increase will be effective with the first payroll check to be paid on or after October 1, 2011.

• Cost-of-living adjustments (COLAs) for all current and future retirees will be suspended until the pension fund reaches 80% of the full funding level (which could take an estimated 30 years).

• The normal retirement age for new members of the pension system will be age 65 (vs. 60 or 62 currently). New members will be able to retire early if they have 30 years of credited service (vs. 25 currently). Current employees will remain subject to the retirement age and years-of-service requirements that previously applied to them.

• There will be no change in the formula for calculating retirement benefits.

• Once the fund reaches a funded ratio of 80%, a joint employer-employee committee will decide on future changes to the benefit and contribution levels.

• If the state or any other employer fails to make its required contribution, employees may sue to enforce their contractual right to have contributions made. Nonetheless, the state will be allowed to continue underfunding the system for the next seven years while the full contribution level is phased in.

For more details visit the New Jersey Division of Pensions and Benefits website: http://www.state.nj.us/treasury/pensions/reform-2011.shtml



Health Benefit Changes

• All active employees will be required to pay a contribution toward their health benefit costs, based on a percentage of the premium. The rate will depend on each employeeʼs base salary and coverage tier (single, member with child or spouse, and family). Contributions will be made by payroll deduction on a pre-tax basis. See attached charts to find out what percent you will be required to pay based on your salary.

• If a union contract is in force when the law goes into effect, covered employees will begin the new premium-sharing the first year after the contract expires. All others will begin right away.

• Employees who are already on the payroll when the new premium-sharing begins will gradually increase their contribution rates over a four-year period. In Year 4 they will pay the full rate, ranging from 3% of the premium for the lowest-paid employees to 35% for the highest-paid employees (see chart). Employees who are hired after the premium-sharing has begun will pay the full contribution rates for Year 4 right away.

• Notwithstanding the above rates, no employee will pay less than 1.5% of base salary.

• For State employees and employees of State colleges and universities, it is expected that the new contribution scenario will be implemented effective October 1, 2011 for employees whose current contract has expired and employees not covered by a union contract.

• On June 28, 2015 the premium-sharing provisions will sunset. Despite this, employees must continue to pay the contributions until the full Year 4 rates are in effect for the affected group.

• Negotiations over premium-sharing will be pre-empted until the full Year 4 rates are implemented, at which point these rates will constitute the status quo for future negotiations.

For more details visit the New Jersey Division of Pensions and Benefits website: http://www.state.nj.us/treasury/pensions/reform-2011.shtml



Changes to Cost of Health Insurance

Family Coverage

Salary

2011 Percent of Premium




< $25,000 0.75% 1.50% 2.25% 3%

$25,000 1.00% 2.00% 3.00% 4%

$30,000 1.25% 2.50% 3.75% 5%

$35,000 1.50% 3.00% 4.50% 6%

$40,000 1.75% 3.50% 5.25% 7%

$45,000 2.25% 4.50% 6.75% 9%

$50,000 3.00% 6.00% 9.00% 12%

$55,000 3.50% 7.00% 10.50% 14%

$60,000 4.25% 8.50% 12.75% 17%

$65,000 4.75% 9.50% 14.25% 19%

$70,000 5.50% 11.00% 16.50% 22%

$75,000 5.75% 11.50% 17.25% 23%

$80,000 6.00% 12.00% 18.00% 24%

$85,000 6.50% 13.00% 19.50% 26%

$90,000 7.00% 14.00% 21.00% 28%

$95,000 7.25% 14.50% 21.75% 29%

$100,000 8.00% 16.00% 24.00% 32%

$110,000 8.75% 17.50% 26.25% 35%

Employee pays percent of premium listed above or 1.5% of salary, whichever is greater. The 2011 NJDirect15 Family Coverage premium is $19,000. Premium can be expected to increase by at least 6% annually.




Individual Coverage

Salary





< $20,000 1.13% 2.25% 3.38% 4.5%

$20,000 1.38% 2.75% 4.13% 5.5%

$25,000 1.88% 3.75% 5.63% 7.5%

$30,000 2.50% 5.00% 7.50% 10.0%

$35,000 2.75% 5.50% 8.25% 11.0%

$40,000 3.00% 6.00% 9.00% 12.0%

$45,000 3.50% 7.00% 10.50% 14.0%

$50,000 5.00% 10.00% 15.00% 20.0%

$55,000 5.75% 11.50% 17.25% 23.0%

$60,000 6.75% 13.50% 20.25% 27.0%

$65,000 7.25% 14.50% 21.75% 29.0%

$70,000 8.00% 16.00% 24.00% 32.0%

$75,000 8.25% 16.50% 24.75% 33.0%

$80,000 8.50% 17.00% 25.50% 34.0%

$85,000 8.50% 17.00% 25.50% 34.0%

$90,000 8.50% 17.00% 25.50% 34.0%

$95,000 8.75% 17.50% 26.25% 35.0%

Employee pays percent of premium listed above or 1.5% of salary, whichever is greater. The 2011 NJDirect15 Individual Coverage premium is $7,600. Premium can be expected to increase by at least 6% annually.




Individual and spouse or Individual and dependent coverage

Salary





< $25,000 0.88% 1.75% 2.63% 3.50%

$25,000 1.13% 2.25% 3.38% 4.50%

$30,000 1.50% 3.00% 4.50% 6.00%

$35,000 1.75% 3.50% 5.25% 7.00%

$40,000 2.00% 4.00% 6.00% 8.00%

$45,000 2.50% 5.00% 7.50% 10.00%

$50,000 3.75% 7.50% 11.25% 15.00%

$55,000 4.25% 8.50% 12.75% 17.00%

$60,000 5.25% 10.50% 15.75% 21.00%

$65,000 5.75% 11.50% 17.25% 23.00%

$70,000 6.50% 13.00% 19.50% 26.00%

$75,000 6.75% 13.50% 20.25% 27.00%

$80,000 7.00% 14.00% 21.00% 28.00%

$85,000 7.50% 15.00% 22.50% 30.00%

$90,000 7.50% 15.00% 22.50% 30.00%

$95,000 7.50% 15.00% 22.50% 30.00%

$100,000 8.75% 17.50% 26.25% 35.00%

Employee pays percent of premium listed above or 1.5% of salary, whichever is greater. The 2011 NJDirect15 Individual+Dependent Premium is $10,600. The 2011 NJDirect15 Individual+Partner Premium is $17,100. Premiums can be expected to increase by at least 6% annually.

nj pers and shbp 2011 reform summary

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