NJ Retiree Healthcare Costs Expected To Double In The Next Decade

STATE – According to a report delivered to the New Jersey Division of Pension and Benefits, healthcare benefit costs for retired teachers and state government workers are expected to double over the next nine years.

Aon Consulting projected that healthcare costs for retirees under age 65 will grow between 8.5 and 9.5 percent per year for medical coverage, and 10.5 percent for prescription benefits. Costs for retirees over the age of 65, who are covered under the Medicare Part B program, are expected to increase five percent annually.


In the current budget, New Jersey taxpayers are spending $1.27 billion to fund the healthcare benefits. That figure is expected to reach $2.75 billion by 2019. Because the healthcare benefits are funded on a “pay-as-you-go” basis, the state has no option to defer payments as it has done with the pension system.

Gov. Chris Christie is expected to seek higher co-pays for healthcare benefits when current union contracts expire next year, but legal precedent likely precludes any reductions in benefits for already-vested employees.

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