A tentative contract between the largest union of state workers and Gov. Phil Murphy’s administration includes annual raises and takes aim at out-of-network health care costs.

The Communications Workers of America announced earlier this week it had reached a tentative agreement on a four-year contract, and the administration provided details Thursday morning. The contract, which must be ratified by members, will apply to 2019 through 2023. The union’s current contract is set to expire in June.

As part of the deal, CWA members will get 2 percent raises annually, and the two sides agreed to devise a new health care plan that the administration estimates should save the state at least $70 million a year.

“Our tentative contract agreement provides fair wages, allows for CWA members to enter a new health care plan that generates significant savings for the state of New Jersey and taxpayers, and provides a fair premium share for members,” Murphy said in a statement.

"Together, we’re turning the page from the failed approaches of the past toward a new chapter of mutual respect and dialogue with our workforce.”

CWA New Jersey Director Hetty Rosenstein said the negotiations were long and and difficult and they “butted heads” as they went about creating the new health care plan, but she praised the administration for being open to new ideas.

“They don’t ever say things to you like ‘no, you shouldn’t try that’," Rosenstein said. “We brought innovations to the table and they consider them really seriously.”

The new health insurance plan will reduce reimbursements to out-of-network providers. In addition, the state will conceive a health care ombuds position to help state workers choose in-network providers and offer counseling in selecting a health care plan.

Under the contract, the formula for determining how much state workers enrolled in this new plan contribute to the cost of their health care will change to a percentage of their pay. They have been paying a percentage of premium that’s determined by their salary and plan coverage, equal to at least 1.5 percent of their total pay.

Workers in the new CWA PPO will see a reduction in their premiums of between 1 percent and 3 percent of pay, Rosenstein said, adding that employees enrolled in the Aetna Liberty Plan and the Horizon OMNIA Health Plan should also see lowered costs.

“We did the things that would have the least amount of disruption and the greatest amount of savings to our members,” she said.

The contract also restores job security language and makes changes to the employee disciplinary process.

The CWA represents nearly half of all state employees, including some of the its highest-paid — psychiatrists earning $226,000 a year — and more than 1,000 full-time employees earning less than $40,000.

This deal comes less than a year after Murphy and the CWA closed the books on a long-running contract dispute that spilled over from former Gov. Chris Christie’s administration, with a deal to pay $148.9 million in back pay raises and retroactive longevity bonuses to some 32,000 workers who had been without a contract since 2015.

Murphy, a Democrat, has already accounted for the reduced health care costs in his proposed budget, which he unveiled Tuesday. That budget included about $800 million in reduced spending on employee health care. Much of that is attributed to shifting retired educators to Medicare Advantage, audits and contract rebidding.

But the administration also projected it would save $217 million in reduced costs through labor negotiations.

Samantha Marcus may be reached at smarcus@njadvancemedia.com. Follow her on Twitter @samanthamarcus. Find NJ.com Politics on Facebook.