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Bill

S 4507

Permits Director of Division of Pensions and Benefits to initiate temporary transfer of funds in certain circumstances.

2026-2027 Regular Session Introduced by Teresa Ruiz and 1 co-sponsor

Provides a temporary transfer mechanism from retirees' health fund to active employees' fund to prevent gaps when the active fund is projected to be short on payments.

Substituted by A5330
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WeVote Research Nonpartisan
Bill Summary · S 4507

Summary of Bill S. 4507 (Session 222) – New Jersey

Purpose and intent

  • The bill creates a funding mechanism to prevent interruptions in the School Employees' Health Benefits Program by allowing a temporary transfer of funds between related health-benefits funds when the active employees’ fund is projected to be short.
  • Specifically, it authorizes the Director of the Division of Pensions and Benefits to initiate transfers from the health benefits fund for qualified local education retirees and their dependents to the health benefits fund for active education employees and their dependents, if the active fund’s available resources are projected to cover only 10 days of anticipated payments.

Key provisions

  • Section 39 amendments to the School Employees' Health Benefits Program Act (P.L. 2007, c.103):

    • Reiterates employer premium/expense payment responsibilities for active employees and their dependents.
    • Establishes a School Employee Health Benefits Program fund, with subaccounts for active employees and retirees, and governs how contributions and investments are managed.
    • Creates a dedicated subaccount for claims, health services fees, and prescription drug benefits, with restrictions on use of assets to provide benefits and administer the subaccount.
    • Requires a third-party medical claims reviewer to operate in the state’s best interests and to maintain a secure data archive of claims data, with data-sharing provisions to improve care quality and value, while complying with HIPAA and other laws.
    • Provides for investments and interest earnings in the subaccounts, and authorizes the State Treasurer to issue rules and regulations to implement these provisions.

  • New transfer authority (Section 2, new section):

    • If the active funds for health benefits fall to a level insufficient to cover 10 days of anticipated payments (based on six-month historical averages for claims), the Director may initiate a temporary transfer from the retirees’/local education retirees’ health benefits fund to the active employees’ fund.
    • The transfer amount cannot exceed what is needed to cover 30 days of anticipated payments for the active fund (including premiums and claims).
    • Reimbursement of the transferred amount must occur on or before the 120th day after transfer, with possible extension up to an additional 365 days if necessary for continuing claim payments.
    • The Director must notify the School Employees’ Health Benefits Commission within 30 days of the transfer.
    • The Director must provide monthly accounting to the State Treasurer detailing transfers, outstanding balances, repayments, and the current balance of the active fund.

Who is affected

  • Active school employees and their dependents enrolled in the School Employees' Health Benefits Program.
  • Qualified local education retirees and their dependents who participate in the retirees’ health benefits fund.
  • State agencies administering the program, including the Division of Pensions and Benefits, the School Employees' Health Benefits Commission, and the State Treasurer.

Procedural and timeline aspects

  • Immediate effective date upon enactment.
  • Transfers trigger when the active fund is projected to be 10 days short; the transfer can cover up to 30 days of anticipated payments.
  • Reimbursement of transferred funds must occur within 120 days, with potential extension not exceeding 365 additional days.
  • Ongoing monthly reporting to the State Treasurer is required for transparency and oversight.

Overall impact

  • The bill introduces a liquidity mechanism to reduce the risk of disruptions in health benefits for active educators and their dependents.
  • It formalizes coordination between active and retiree health funds and enhances data governance through the third-party claims reviewer.
  • It requires ongoing financial tracking and regulatory implementation by the State Treasurer.

Compiled from official sources — confirm details with the bill’s official record.

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