AON, the actuary responsible for New Jersey’s state health benefits plans, has recommended significant premium increases for the 2026 plan year. The recommendations were presented to both the State Health Benefits Commission (SHBC) and the School Employees’ Health Benefits Commission (SEHBC).
According to AON’s analysis, the Local Government plan (SHBP-LG) would see a 36.5 percent increase in premiums. The School Employees’ Health Benefits Program (SEHBP) is recommended for a 29.7 percent increase, while the State Health Benefits Program (SHBP-State) could face a 21.0 percent rise.
The analysis used medical and prescription drug claims data from January 1, 2024 through December 31, 2024, with payments tracked through March 31, 2025. These figures were used to project future costs and set necessary premium adjustments.
Both healthcare and prescription drug costs have risen sharply across all three plans. Over the past five years, SHBP-LG premiums have increased by 115 percent; SEHPB premiums rose by nearly 74 percent; and SHBP-State premiums are up more than 67 percent.
AON identified several key factors behind these increases. Inflation in healthcare is an ongoing issue nationwide but has been especially acute in New Jersey’s public employee plans compared to other employer group peers. A study posted by the Division of Pensions and Benefits in 2023 found that New Jersey’s public plans have relatively rich benefit designs and fewer requirements for utilization management—factors that contribute to higher costs.
In May, the Treasury released a report titled “Structural and Financial Challenges in the State Health Benefits Program for Local Government,” which outlined reasons for rising SHBP-LG premiums such as high actuarial values, static plan design and governance structure, adverse selection, declining participation rates, escalating costs, and possible solutions.
“These rates remain recommendations until they are adopted by the SHBC and SEHBC,” according to AON.
