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October 28, 2011

RE: Federal Health Care Reform and New Jersey Municipalities

Dear Mayor:

A number of local officials have questions regarding the impact of the Federal Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act on local budgets and programs. The best source of information on this remains the article, written by Division of Pensions and Benefits Acting Director Florence Sheppard, which appeared in the April issue of our magazine, New Jersey Municipalities. That article, “New Jersey’s Health Benefit Programs and Health Care Reform,” can be accessed at

The Federal reforms affect both insured and self-insured employer provided health benefit plans. The article, which focuses on the implications for those enrolled in the State Health Benefits Program (SHBP) and the School Employees’ Health Benefits Program (SEHBP), discusses plan ‘grandfathering’, dependant eligibility, pre-existing conditions, annual and lifetime coverage limits, changes to Medicare Part D prescription drug coverage and the Early Retiree Reinsurance Program (ERRP).

Beyond the information that appears in the article, Acting Director Sheppard reports that the State’s prompt action on the new Early Retiree Reinsurance Program will result in $16 million in premium payment savings in 2012, for municipalities that provide post-retirement health care benefits for their retirees through the SHBP.

We will keep you posted, as further information becomes available regarding the phased-in implementation of the Federal reforms.

Very truly yours,


William G. Dressel, Jr.
Executive Director



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