State officials and public sector unions announced an agreement on Thursday to achieve about $75 million in cuts to health benefits for public workers, the governor announced.
Many of the savings will be found in adjustments to the structure of the health plan. Union members will now, at a minimum, pay a $110 in-network deductible for individuals & a $220 in-network deductible for families. The structure includes new co-pays on GLP-1 weight loss drugs, specialty medications, and lab visits and imaging.
The Legislature required the cut as state health plans face increases in premiums, inflation, and uncertainty. This year’s state budget requires a $100 million cut in the first six months of 2026; state government and labor officials submitted their proposals for cuts at the end of last month. Gov. Phil Murphy signaled he would sign a bill to lower the required cut from $100 million to $75 million, according to NJ.com.
“Today we are making responsible and reasonable changes to the State’s health plans – broad changes which have not been made in nearly 15 years,” Murphy said in a release. “I am committed to working with the unions until the end of my Administration to provide solid recommendations to future State leaders on how the State can adopt best practices and get the best deals in the health care market on medical care and drug pricing.”
The cuts, which came as a surprise to the public sector unions, threatened to open a rift between state employees and Democrats in an election year.
“We have always believed that the best way to make public health benefits affordable for taxpayers and public employees is by working collaboratively with workers and their unions,” Coughlin said. “We are pleased that the agreement includes ideas which have been advanced legislatively. We look forward to reviewing the agreement and continuing our efforts to protect taxpayers from rising costs while providing affordable healthcare options to public workers.”
The Plan Design Committee, split evenly between state and union officials, will vote on the agreement; it’s expected to approve the agreement. The governor’s office said it will continue working with the unions to find long-term, sustainable cost-saving measures.
