TRENTON, N.J. — Gov. Phil Murphy and 17 public sector unions have reached an agreement expected to save about $75 million in recurring health benefit costs for state workers during the final six months of Fiscal Year 2026, officials announced Thursday.
The plan includes the first broad changes to state health benefits in nearly 15 years and will be considered later this month by the State Health Benefits Plan Design Committee.
“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 statement. “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.”
Proposed changes include new deductibles for in-network and out-of-network care, revised out-of-pocket maximums, and new co-pays on lab visits, imaging, and a range of prescription drugs. The agreement would also incentivize use of in-network ambulatory surgical centers, limit out-of-network physical therapy visits, and expand a Centers of Excellence pilot program.
The Governor’s Office said it will also support legislation repealing a provision in the Fiscal Year 2026 budget that had sought to achieve $100 million in health care savings through the plan design process.
State officials said the savings are aimed at curbing health care inflation trends that have driven costs in the State Health Benefits Program and School Employees’ Health Benefits Program at a rate higher than other public employee plans.
The Plan Design Committee is expected to vote on the proposed changes later this month, with implementation targeted for the start of the new plan year on Jan. 1, 2026.
