New Jersey municipalities and school districts owe nearly $50.5 million in unpaid health plan bills as rising insurance costs put additional pressure on public worker coverage.
WEBDESK – HAJIRA IRFAN – NJNEWSLINE
New Jersey’s public worker health insurance system is facing another financial headache: municipalities and school districts have left tens of millions of dollars in unpaid bills behind.
Nearly $50.5 million in health plan payments was overdue as of April, according to a Treasury tally. The outstanding balances come at a time when state officials are preparing to approve another round of potentially steep premium increases for public employees.
The unpaid money is spread across nearly 50 local governments and school districts. While the arrears are not the primary reason premiums are increasing, officials say they add pressure to health plans already dealing with rising medical expenses and employers leaving the state-run system.
Assemblyman Mike Inganamort, R-Morris, described the unpaid balances as another series of financial setbacks for plans that have already been struggling.
Nearly $50.5 Million in Arrears
According to the April figures, 35 municipalities and other local governments owed about $28.1 million to the State Health Benefits Program.
Another 13 school districts owed roughly $22.3 million to the state’s school employee health plan.
The amounts owed range from just a few dollars to millions.
Paterson had the largest municipal balance at approximately $11.8 million. Newark owed about $11.4 million. Among school districts, the Hudson County Schools of Technology had an outstanding balance of approximately $11.6 million, while the Orange Board of Education owed around $2.4 million.
Under the state’s rules, an account is considered delinquent once a payment is at least 31 days late.
Treasury officials say they are continuing to contact local employers and pursue the money rather than forgive the outstanding balances.
Some Debtors Have Already Left
A significant portion of the unpaid money comes from municipalities and school districts that are no longer enrolled in the state-run health plans.
About $26.9 million of the April arrears was tied to local entities that had already disenrolled.
Newark and the Orange Board of Education both left the state plans in 2023 but still had substantial balances. Newark owed about $11.4 million, while Orange had approximately $2.4 million outstanding.
The Hudson County Schools of Technology also left the public plan in February 2026. It had last made a payment toward its debt the previous October.
Treasury spokesperson Darryl Isherwood said most employers that leave the plans eventually pay their outstanding balances. State officials, he said, continue working with local governments and school districts to collect what is owed.
Rising Costs Make the Situation Worse
The unpaid balances come as New Jersey’s public health plans face increasing financial strain.
Actuaries have warned about the stability of the state-run plans as medical expenses rise and more employers move to private insurance options. Those departures can leave fewer participants in the state plans while costs continue to climb.
The overdue payments are not the main force behind the proposed premium hikes, but they still matter. When the plans collect less in premiums, their financial position becomes weaker.
Dudley Burge, an AFL-CIO representative on the State Health Benefits Commission, said even a relatively small decline in premium collections can have an impact when the plans are already under pressure.
And the debt may have increased since April. Treasury officials later estimated that the plans were owed approximately *$58 million*, although they did not provide a breakdown showing how much each individual municipality or school district owed.
Lawmaker Calls for Tougher Collection
Inganamort wants the state to take a more aggressive approach toward public entities that fail to pay their health plan bills.
He suggested that New Jersey consider withholding or reducing state aid to municipalities and school districts with delinquent health benefit payments.
The proposal could put additional pressure on local governments to clear their balances, but the debts do not all appear to have the same cause.
Paterson, which had the largest municipal balance, attributed its debt to the timing of state transitional aid. City spokesperson Diana Nunez said the city expected the issue to be resolved and explained that some major expenses arrive before significant revenue is received.
Rate Decisions Are Approaching
The timing of the debt debate is significant because New Jersey is preparing to decide how much public workers will pay for health coverage next year.
The School Employees’ Health Benefits Commission is scheduled to vote on Aug. 19, while the State Health Benefits Commission has tentatively scheduled its vote for Aug. 26.
Those decisions will determine the next round of premium costs for thousands of public employees.
The unpaid balances may not be the reason New Jersey’s health insurance rates are rising, but they add another problem to an already strained system. With millions of dollars still outstanding and higher premiums approaching, the state now faces a difficult question: how much more financial pressure can its public health plans absorb before local governments, school districts and taxpayers feel the impact?
