Donlon bill would create health trust for New Jersey school workers

A New Jersey proposal would create a separate health benefits trust for public school employees, giving their medical, pharmacy, dental and vision coverage its own governing structure. Assemblywoman Margie Donlon, a Democrat from Monmouth, sponsors the bill with Assemblyman Anthony Angelozzi as cosponsor.

For workers and families, the change could matter because it is not just about where coverage is administered. It would also shape who can get on the plan, who helps run it, and how much control the trust has over contributions, plan design and appeals. The bill says its purpose is to pool health risk and provide affordable benefits to eligible employees and their dependents.

A separate trust inside state government

The bill would place the trust in, but not as part of, the Department of the Treasury. That legal setup means it would still sit within state government, while operating with its own board and budget structure.

The trust would be called the Public School Employees’ Health Benefits Trust. Its money would come from appropriations and contributions made under the bill. The trust would be managed for the sole interest of the people it covers, not as a general state program.

That distinction matters because the proposal is not just a new label for existing coverage. It would give the trust the authority to manage risk for a defined group of public school employees and to offer the kinds of coverage many households rely on day to day.

Who the bill says can be covered

The most direct change for families is the bill’s definition of dependents. It would include a spouse, domestic partner or partner in a civil union couple. It would also include unmarried children who live in a regular parent-child relationship with the employee until the end of the calendar year in which they turn 31.

The bill goes further by spelling out that stepchildren, legally adopted children and children placed by the Division of Child Protection and Permanency could count too, as long as they are reported for coverage and are wholly dependent on the employee for support and maintenance.

There is one limit worth noting. A spouse, partner or child enlisting or being inducted into military service would not be considered a dependent during that service.

Taken together, those rules suggest the proposal is aimed at keeping coverage available for a wider range of family arrangements. It also recognizes that some children remain financially tied to a parent well into early adulthood, even if they are no longer minors. For many households, that can be the difference between staying insured and facing a gap in coverage.

A board with shared control

The trust would be governed by a 10-member board of trustees. The board is designed to split representation between employees and employers, with members appointed by the New Jersey Education Association, the American Federation of Teachers New Jersey, the majority representative union of the community colleges in the state, the New Jersey School Boards Association, the New Jersey Association of School Business Officials, the New Jersey Association of School Administrators, the New Jersey Principals and Supervisors Association, and the governor.

The bill says board members should have experience, education or training in administering, designing or negotiating employer-sponsored group health plans. It also says they cannot work for, or have a financial interest in, any entity the board contracts with.

Members would serve without pay, though they could be reimbursed for expenses. Employees who serve on the board would be granted paid time off by their employers for that service. The board could also choose a chair, vice chair and treasurer each year.

The structure gives the trust a mix of labor, management and public oversight voices. That could help balance the interests that usually come up in health coverage, such as cost, access, plan design and administration.

What the board could do

The board would have wide authority. It could adopt bylaws, set rules for medical, pharmacy, dental and vision benefits, and create appeal procedures for beneficiaries. It could also enter contracts, manage and invest trust assets, and, if it chose, bring in a third-party administrator to help run the plans.

It would also be able to set and revise contribution rates and premium amounts. The bill says the employee contribution structure used for the former New Jersey Educators Health Plan would serve as the default for plans offered through the trust. It also says employee contribution rates would remain a percentage of salary unless changed later under the law.

The board could go further and design, establish, modify or terminate health plans offered through the trust. It could calculate fair allocations for out-of-network charges, hire staff, appoint an executive director and retain legal counsel with expertise in employer-sponsored health insurance.

The bill also creates a separate appeals process. A beneficiary appeals committee would hear disputes before the full board considers them. The board would also designate a medical board made up of physicians to recommend final action on beneficiary and provider appeals.

Oversight, reporting and the road to coverage

The proposal includes several oversight tools. The board would have to meet at least once a month, keep minutes and records, publish an annual report and retain an independent auditor. It would also need an actuary to review the trust’s financial condition and help set funding policies.

The audit committee would oversee financial reporting and the audit process. The plan design committee would help shape or change the plans. The investment committee would handle trust assets. The beneficiary appeals committee would review disputes before the full board. The bill also requires compliance with federal privacy and balance-billing protections, including the Health Insurance Portability and Accountability Act of 1996, known as HIPAA, and the No Surprises Act.

The trust would be expected to carry reserves equal to at least two months of projected spending. That cushion is meant to keep coverage stable and reduce the risk that benefits would be thrown off by short-term budget pressure.

If enacted, the trust would begin offering coverage on January 1, 2028, according to board resolution and in consultation with participating employers. The bill does not just imagine a new administrative setup. It lays out a long list of duties, controls and guardrails meant to shape how New Jersey public school employee health coverage would work in practice.