Gov. Phil Murphy said on Tuesday that he’ll sign a long-awaited bill to overhaul the health plans for tens of thousands of teachers and school employees—a move proponents argue could save the state hundreds of millions of dollars each year.

That comes days after a deal was finally struck between Murphy, legislative leadership and the state’s powerful teacher’s union, and after it passed the state Assembly by a 73-0 vote, and the Senate, in March.

Under the proposal – Senate Bill 2273 – the state would offer cheaper health care plans to new teachers, in part by cutting out-of-network coverage, and in turn offering cheaper premiums.

The often-warring Senate President Stephen Sweeney and the New Jersey’s Education Association announced the deal in March, which they said could save $640 million a year for local school districts, on top of $404 million for teachers and $30 million for the state.

“This reform will produce lasting financial savings for local taxpayers and educators at the same time it maintains quality health care for public workers,” Sweeney said in a Monday statement.

“Both of these achievements are even more important at this time. Local government is experiencing severe fiscal problems because of the shutdown and the need for medical care is vital because of the pandemic.”

The final hurdle for the health care deal was reached on June 26, between Sweeney, Murphy and Assembly Speaker Craig Coughlin, D-19th District.

As part of Coughlin’s agreement to sign onto the bill, the legislation was amended so that in the summer of 2023, an actuarial report would be issued indicating whether the changes yielded $300 million a year.

“By providing new, more affordable health plan options and including a guaranteed floor of savings, this bill is a win-win,” the speaker said on Friday.

Friday’s agreement came as lawmakers, the teacher’s union, and state officials and other lawmakers, try to find how to cut the ballooning costs of public worker retirement and health care, which together are unfunded by at least $100 billion.

As recent as last week, Murphy floated his much softer stance to public unions than Sweeney, saying that he “prefers negotiating in good faith with our workforce and bringing people to the table,” in order to negotiate cheaper health and retirement plans.

That came as he announced that he and the Communications Workers of America New Jersey, the state’s largest public worker union, struck a deal to furlough rather than lay off tens of thousands of members.

Under the bill, the state would create two lower-cost health plans for teachers: the New Jersey Educators Health Plan and the Garden State Health Plan, which would be the only two options for any new NJEA teachers.

Contributions would be pegged to a percentage of their salaries, rather than as a percentage of the total premium.

This would effectively offer “Chapter 78 relief,” a proposal long-backed by the NJEA since the creation of the Christie-era policy in 2011, requiring members to pay anywhere between 3 percent to 35 percent of their health insurance premiums, depending on their salary and plan.

The NJEHP would eventually phase out the existing NJ Direct 10 and NJ Direct 15 health plans offered to workers under the state’s School Employee Health Benefits Program.

Starting Jan. 1, 2021, those two plans, and the NJEHP, would be the three plans available to teachers.

Under the proposal, enrollees would be encouraged to switch to NJEHP, because of the lower cost. Retirees would be enrolled in the NJEHP.

Existing employees can stay on existing plans, but they would pay the higher premiums.

Meanwhile, premiums at the GSHP would be half that of the educators’ plan, but they would be limited to health care providers in New Jersey. That plan will be offered beginning July 1, 2021.

Under the NJEHP, a teacher earning $40,000 on a single plan would pay a 1.7 percent premium while someone earning $100,000 and enrolled in a family plan would pay 7.2 percent.

Someone who made $70,000 a year could save between $2,000 and $4,500 annually, depending on whether they are in a single or family plan. A teacher earning $35,000 annually would pay $577.50 a year, or $1,155 for the family enrollment.