AON Releases Recommended Rate Increases for State Health Benefits Plans for Plan Year 2026
Actuary Recommends Double-Digit Increases for All Plans - 36.5% Increase for SHBP-LG, 29.7% Increase for SEHBP, and a 21.0% Increase for SHBP-State
(TRENTON) – AON, the actuary that services the various state health benefits plans, today released to the State Health Benefits Commission (SHBC) and the School Employees' Health Benefits Commission (SEHBC) recommended rate increases for the three state-administered plans, recommending double-digit percentage increases for all three.
The largest recommended increase is in the Local Government (SHBP-LG) plan, where AON has called for a 36.5 percent increase in premiums. In the School Employees' Health Benefits Program (SEHBP), AON has recommended a 29.7 percent increase. And in the State Health Benefits Program (SHBP-State), the recommended increase is 21.0 percent.
The recommended increases are driven by both prescription drug benefits costs and health care costs. Both have risen dramatically for all three plans:
Plan Year 2026 Recommended Premium Rate Increases
SHBP - State | SHBP - LG | SEHBP | |||||||
---|---|---|---|---|---|---|---|---|---|
Active Early Retirees Medicare Retirees |
Medical 15.3% 18.1% 44.5% |
RX 39.8% 34.7% 23.1% |
Total 19.7% 21.3% 29.7% |
Medical 32.7% 31.6% 48.7% |
RX 62.7% 53.0% 30.8% |
Total 36.9% 35.4% 37.2% |
Medical 27.9% 26.3% 36.9% |
RX 58.6% 34.3% 20.1% |
Total 31.9% 28.1% 25.8% |
Total | 17.3% | 34.5% | 21.0% | 33.2% | 52.4% | 36.5% | 28.9% | 33.8% | 29.7% |
Data Source: Aon Plan Year 2026 Rate Setting Recommendation Analysis
AON's analysis used medical and prescription drug claims data from January 1, 2024 through December 31, 2024, paid through March 31, 2025, to project future costs and necessary premium adjustments.
While this year's recommended increases are larger than in years past, the rise in benefits costs follows a trend seen over the past five years. Over that time period, premiums for the SHBP-LG have risen 115 percent, while the SEHPB has seen a 73.9 percent increase. The SHBP-State has seen premiums rise 67.3 percent during that time.
According to the analysis, the main drivers of the increases include
While inflationary trends in health care are persistent nationwide and have presented challenges in New Jersey and across the nation over the past several years, the annual cost increases experienced by the SHBP and SEHBP far outpace those seen in other public employee plans.
In 2023, the Division of Pensions and Benefits posted a study by AON comparing New Jersey public plans with employer group peers and identifying distinguishing cost drivers, notably the relative richness of the SHBP and SEHBP plan designs and few utilization management requirements that would incentivize more cost-effective, while still high-quality, healthcare decisions by members.
This May, Treasury released a report entitled "Structural and Financial Challenges in the State Health Benefits Program for Local Government" outlining the key factors responsible for the steep rise in premiums under the SHBP-LG, including the plan's very high actuarial values, static plan design and governance structure, adverse selection, diminished participation, cost escalation, and potential solutions.
These rates remain recommendations until they are adopted by the SHBC and SEHBC.