Steep Insurance Hike Prompts SOMA Schools To Abandon State Health Plan

SOUTH ORANGE-MAPLEWOOD, NJ — The South Orange and Maplewood Board of Education recently approved a plan to change its employee health insurance program due to a steep premium hike.

The district will transition from the New Jersey State Employees Health Benefit Plan (NJ SEHBP) to a self-insured plan. It will be administered by Eagle Rock Management Group/ Fairview Insurance Agency Associates, with Meritain as third-party administrator.

School officials said the move comes in response to a 31 percent premium increase announced by the state, which would have raised the district’s annual costs from roughly $20 million to $27 million in the next fiscal year.

Under the new self-insured model, SOMSD projects a total cost of approximately $23 million: an 11.5 percent increase from current levels – but a savings of about $5 million compared to remaining with the state plan.

According to administrators, other New Jersey school districts have been confronting significant rate increases under the NJ SEHBP, forcing local boards to reconsider how best to manage rising health insurance costs.

In South Orange-Maplewood, a 31 percent hike would have added a level of “financial pressure” that could have impacted staffing and student programs if left unaddressed, administrators said.

“This change gives the district the ability to better manage health care spending while maintaining stability and quality care for employees,” business administrator Imani Moody said.

“It’s a fiscally responsible step toward protecting the classroom from the volatility of state-level cost shifts,” Moody said.

Administrators said that unlike a fully insured plan – where the state collects fixed premiums and assumes the financial risk of claims – a self-insured plan will allow South Orange-Maplewood to pay claims directly as they occur.

The business office conducted a multi-vendor search for competitive alternatives, requesting quotes from Gallagher Insurance, Brown & Brown, Eagle Rock Brokers, and Homestead Insurance. Eagle Rock/Meritain and Homestead were the only firms to submit formal proposals.

SOMA district administrators added:

“The district has contracted with Meritain Health as a third-party administrator to manage claims and provider networks, ensuring smooth operations and continuity of care. A review by the district confirmed that the Eagle Rock/Meritain network offers a 94% overlap with existing providers, meaning employees should see little to no change in access to their current doctors and facilities. To protect against unusually high claims, the district’s plan includes specific and aggregate stop-loss insurance, an industry-standard safeguard that caps potential exposure from catastrophic medical costs. In addition, the district will establish a premium reserve fund to ensure a consistent flow of claim payments during the initial implementation period.”

The appointment of Eagle Rock Management/ Fairview Insurance Agency Associates as broker was completed under the Extraordinary Unspecifiable Services provision of state law, which allows specialized professional services – such as insurance consulting and program design – to be awarded outside of the typical public bidding process, district administrators said.

The district will formally notify the state of its withdrawal from the NJ SEHBP in accordance with state requirements, administrators said.

The new plan is suggested to take effect January 2026.

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