State Healthcare Insurance Spike Challenged By Chatham Council

CHATHAM, NJ — The state surprised New Jersey municipalities, including Chatham Borough, with a 20 percent increase in healthcare insurance rates earlier this fall, but Council members passed a resolution to fight back.

Under the new healthcare proposals, hundreds of thousands of public employees, early retirees, and school employees in New Jersey could face rate increases of up to 20 percent for health benefits.

According to Chatham Borough Mayor Thaddeus Kobylarz, the "bombshell" vote occurred in September, but the new rates were not announced until mid-October.

"There really wasn't too much transparency with it and so a lot of municipalities now are in this position where we're in open enrollment and we weren't even actually sure what the rates would be, but they truly are 20 percent premium increase," Karen Fornaro, chief financial officer for the borough, said.

Fornaro noted that the Borough did not have time to look at other options or move to a private plan, due to the lack of transparency within the process. "We are kind of stuck where we're at."

The new healthcare hike will add $150,000 to the borough budget. To help offset the additional funds that would be added to the borough budget, the council unanimously passed a resolution to provide employees with a 40 percent cash incentive for two years for choosing lower-cost plans.

"So the net savings that the borough sees, which would be the premium cost minus the contribution of the employee, we would split with the employee. We would give them a 40 percent cash incentive, potentially for two years if they stuck with a lower cost plan," Fornaro said.

The hope of the lower-cost plans is that employees will stay away from NJ Direct 10 and NJ Direct 15. "This will not eliminate our overall cost increase, but we are trying to mitigate this enormous cost increase we would see if nobody changed," Fornaro said.

Mayor Kobylarz, a member of the state mayors' conference, stated that officials in Trenton have not yet responded to the mayors' request for some sort of relief.

Employees are being informed of the other available options, as well as the cost calculations, according to Fornaro.

"There is no reason or rationale that has been offered as to why all of the sudden this was hoisted upon us. It's quite clearly an impossibly short amount of time for municipalities to really find a long-term solution," Kobylarz said.

Officials stated that they are looking into better long-term solutions, such as a plan offered by Morris County, but that Chatham would have to give a 60-day notice before switching to a different healthcare provider.