Source: https://theabdteam.com/blog/hawaii-health-plan-requirements-for-employers-2/
Timestamp: 2020-07-02 05:18:00
Document Index: 105350285

Matched Legal Cases: ['§393', '§514', 'arts 1', '§1021', '§1131', 'arts 1', '§1021', '§1136', 'arts 1', '§1021']

Hawaii Health Plan Requirements for Employers | | ABD Insurance & Financial Services
Hawaii Health Plan Requirements for Employers
Question: What are the main health plan-related issues for employers to be aware of when they hire employees in Hawaii?
Hawaii has a unique law called the Prepaid Health Care Act (PHCA). It imposes a number of strict requirements on employer-sponsored health plans for employees in Hawaii.
Here’s a summary of the main Hawaii PHCA rules to be aware of:
Employer Must Pay At Least Half of the Premium
The first restriction is that the employer must in all cases pay at least half of the premium for employee-only coverage. This means that in no case would an employer be able to set the employee-share of the premium at an amount greater than 50% of the full premium.
Employee Cannot Be Required to Pay More than 1.5% of Monthly Gross Income
The employer also cannot charge an employee more than 1.5% of the employee’s monthly gross wages for the cost of employee-only coverage. This creates a number of practical/administrative difficulties that often results in employers in Hawaii simply offering employee-only coverage for free or some nominal amount that will clearly be within the 1.5% limit (e.g., $5).
Employee-Share of Premium for Dependent Coverage Depends on Plan Option Offered
The general rule is that the employer can charge any amount for the employee-share of the premium for dependent coverage. However, if the plan option is “Type 7b,” the employer is required to contribute at least one-half of the dependent premium cost. See the far righthand column here for which plans fall into the “7b” category: http://labor.hawaii.gov/dcd/files/2013/10/Approved-Health-Care-Plans.pdf
Coverage Must be Offered at 20+ Hours Per Week
Unlike the ACA employer mandate pay or play standard of 30 hours per week, the PHCA requires that employers offer coverage to employees who work 20 hours or more per week.
Employee Generally Must Enroll in Coverage
Also unlike the ACA employer mandate pay or play rules, the PHCA requires employees to enroll in the employer’s Hawaii-approved plan unless an exception applies. The main exemption would be if the employee is covered under a spouse’s employer-sponsored plan that is also approved in Hawaii. If that is the case, the employee would need to provide a completed Form HC-5 to the employer documenting the exemption. The 2018 Form HC-5 is available here: https://labor.hawaii.gov/dcd/files/2012/11/HC5-2018.pdf
Congress amended ERISA in 1983 to specifically exclude the PHCA from ERISA preemption. It is the only state law relating to employee benefits that is specifically excluded from ERISA preemption. Under ERISA in its current form, no other state could impose requirements similar to the PHCA.
Summary Guidance from the State of Hawaii
Hawaii’s Department of Labor and Industrial Relations provides three good resources:
Overview: http://labor.hawaii.gov/dcd/about-phc/
Highlights: http://labor.hawaii.gov/dcd/files/2013/01/PHC-highlights.pdf
FAQ: http://labor.hawaii.gov/dcd/frequently-asked-questions/phc/
Below are a few relevant FAQs and cites for reference.
FAQs and Cites:
If you work twenty hours or more per week for four consecutive weeks and earn a monthly wage of at least 86.67 times the current Hawaii minimum hourly wage (as of January 1, 2017 $9.25 x 86.67 = $802), you are deemed eligible. You must be provided with health insurance at the earliest enrollment date of your employer’s health care contractor.
– You are covered as a dependent under a qualified health care plan;
– You are a recipient of public assistance or covered by a State-Legislated health care plan governing medical assistance; or
– You are a follower of a religious group that depends upon prayer or other spiritual means for healing.
To claim an exemption, you must complete and submit the Employee Notification to Employer
(Form HC-5) to your employer. The exemption notification is binding for one year and must be renewed
every December 31.
Hawaii Revised Statutes §393-7(b):
(a) A prepaid health care plan shall qualify as a plan providing the mandatory health care benefits required under this chapter if it provides for health care benefits equal to, or medically reasonably substitutable for, the benefits provided by prepaid health plans of the same type, as specified in section 393-12(a)(1) or (2), which have the largest numbers of subscribers in the State. This applies to the types and quantity of benefits as well as to limitations on reimbursability, including deductibles, and to required amounts of co-insurance.
ERISA §514(b)(5):
(C) Notwithstanding subparagraph (A), parts 1 and 4 of this subtitle [29 USC §§1021 et seq., 1101 et seq.], and the preceding sections of this part [29 USC §§1131 et seq.] to the extent they govern matters which are governed by the provisions of such parts 1 and 4 [29 USC §§1021 et seq., 1101 et seq.], shall supersede the Hawaii Prepaid Health Care Act (as in effect on or after the date of the enactment of this paragraph [enacted Jan. 14, 1983]), but the Secretary may enter into cooperative arrangements under this paragraph and section 506 [29 USC §1136] with officials of the State of Hawaii to assist them in effectuating the policies of provisions of such Act which are superseded by such parts 1 and 4 [29 USC §§1021 et seq., 1101 et seq.] and the preceding sections of this part.