NJ state workers could see major changes to their health benefits under a tentative deal announced Thursday by Gov. Phil Murphy and 17 public sector unions. The plan could save the state about $75 million in the final six months of Fiscal Year 2026, but it still requires approval from the State Health Benefits Plan Design Committee later this month.
If approved, the proposal would mark the most significant update to state health benefits in more than a decade. It includes higher deductibles and out-of-pocket limits for in-network and out-of-network care, new co-pays for prescriptions, lab work, and imaging, limits on out-of-network physical therapy, and incentives to use in-network surgical centers. Officials say the changes aim to curb costs while maintaining access to care.
The state also agreed to waive premium escalator increases this year, giving employees immediate relief. Union leaders, who have historically clashed with past administrations over health benefits, called the deal a collaborative approach that balances savings with protections for workers.
The agreement includes a plan to produce a transition report for the next governor and legislature, identifying longer-term strategies to manage health care costs. While the projected $75 million in savings falls short of the $100 million target outlined in the current state budget, Murphy’s office said it would support repealing that budget language if the committee approves the new plan.
A vote by the Plan Design Committee is expected later this month. If the proposal passes, the changes would take effect Jan. 1, 2026. Until then, it remains a plan — one that could reshape how tens of thousands of state workers and their families pay for health care.
You can view the full Memorandum of Agreement here.
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