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By Suzanne Blake
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New York City municipal workers could face $1,500 in annual premium charges for health care plans that have historically been free.
This potential price hike comes after a crucial health benefits fund ran out of money in October, according to meeting minutes obtained by The City and New York Focus.
Why It Matters
The Health Insurance Stabilization Fund (HISF), which has helped cover the costs of city workers' health benefits since its creation in the 1980s, is on track to be depleted within the year.
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The fund—jointly managed by the city and municipal labor unions—currently supports premium-free coverage for roughly 960,000 active and retired workers and their dependents, according to The City and New York Focus.
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What To Know
The collapse of the HISF could upend a decades-long arrangement in which New York City workers receive premium-free health insurance. HISF has been paying the premiums for employees' health care and New York City started picking up the tab for the costs after the fund was depleted in October.
The HISF cost New York City $612 million in fiscal year 2025, according to the New York City Comptroller. The comptroller's office noted in March that New York is considering lengthening the time it would take for pensions to reach the status of fully funded so the city could save $4.2 billion. The comptroller said those changes to the City's long-term liabilities should only be made "in the context of dedicating resources" to the "significant long-term obligations for health care" for city workers and retirees.
Along with potentially pulling money from elsewhere, city officials are exploring other ways to make up that hole in the budget.
One option being discussed is a $1,500 annual payment for all city employees who choose an insurance plan that isn't the most basic one that's offered, according to meeting minutes obtained by The City. Insurance premiums, which city employees don't pay for, range from $998 to $2,818 each month, according to the Comptroller's office.
The shift would represent a significant cost burden for municipal employees and have to be agreed upon by the Municipal Labor Committee (MLC), which represents over 100 city unions.
The HISF was created in 1984 and designed to stabilize costs between the two most-used health plans: the GHI CBP plan for active workers and HIP HMO for retirees. The fund is jointly overseen by the city's Office of Labor Relations and the MLC.
In 2021, New York City tried to save billions of dollars by switching retired workers to Medicare Advantage plans instead of traditional Medicare. While it's often cheaper, people with Medicare Advantage have complained about having fewer doctors to choose from and issues with prior authorizations creating barriers to getting care. Lawsuits ended up stalling that switch over, negating any savings the city might have had.
What People Are Saying
Liz Garcia, the first deputy press secretary for Office of New York City Mayor Eric Adams, told Newsweek: "We continue to discuss matters related to healthcare for city employees with the Municipal Labor Committee and will not comment on ongoing discussions. We remain confident that we will prevail on our Medicare Advantage appeal. Pension amortization is an unrelated issue."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "While moves like this are common, the high potential increase paired with inflationary pressures employers are already experiencing could lead to financial headaches for both themselves and a city that may have to replace some workers if this move triggers some to quit."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "With the fund depleted—or near depletion—they'll need to start requiring annual payments from workers just to keep the plan running. If they don't, they risk pulling money from other budget areas or cutting back coverage altogether."
What Happens Next
New York City is still fighting in court to switch people to Medicare Advantage and if they're victorious, it could help with the funding shortfall. The city and MLC continue to negotiate on health care costs.
Martin Scheinman, the arbitrator for the current negotiations, told The City that the MLC is against financial costs being put on the people they represent. But, the city wants a solution to the shortfall in funding.
His job, he said, is to "find the right answer."
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