Hawaii Prepaid Healthcare Law Vs. the ACA

May 29, 2018 Written by Oralie Chapman

Hawaii is a progressive state in many ways, including in its health care laws. Decades before the Affordable Care Act (ACA) became law, Hawaii was the first state to make employers offer and help pay for health insurance for all “regular” employees. As of 2016, 867,000 people in Hawaii were covered through employer-sponsored health plans.

What employers should know about Hawaii’s Prepaid Healthcare Act (HPHCA)

What types of businesses are required to comply with the HPHCA?

All private businesses that employ one or more “regular” employees are required to comply with the HPHCA. The State of Hawaii, the U.S. government, and any foreign government are exempt.


What are the coverage rules for the HPHCA?

Employers must begin providing health insurance coverage as soon as possible after a “regular” employee has worked for the business for four weeks.


What is a “regular” employee under Hawaii’s health care law?

Under the HPHCA a “regular” employee is a person who works at least 20 hours a week and earns a monthly wage of 86.67 times the current minimum wage. 


The following types of employees are not counted as “regular” employees under the law:

  • Agricultural seasonal employees
  • Employees who work less than 20 hours per week
  • People working for a child or spouse
  • Children under the age of 21 working for a parent
  • Government employees
  • Real estate or insurance salespeople who are paid only by commission

Note that the law does not require employers to provide health insurance to their employees’ dependents but many businesses choose to do so.


How did the Affordable Care Act affect Hawaii residents?

The Patient Protection and Affordable Care Act (ACA) - nick-named Obamacare by its critics - was passed by the Federal Government in 2010. The law affects the health insurance marketplace and even the way that health care is delivered.


In 2016, the U.S. Department of Health and Human Services released state-level data showing that the uninsured rate in Hawaii had fallen by 49 percent since the Affordable Care Act (ACA) went into effect in 2010 (a gain of 54,000 Hawaiians). The data also showed that thousands of Hawaii residents who had health insurance before the ACA also benefitted from new protections afforded them under the law.


Hawaii resident benefits by the numbers:

  • 9,000 young adults gained coverage under their parents plan until the age of 26.
  • Free preventive care for 631,152 people in Hawaii including birth control, cancer screenings and elimination of co-pays for well-check visits.
  • An end to annual and lifetime limits for 462,000 Hawaiians with employer or individual health plans.
  • Slower health premium growth. Across the country, the average cost of healthcare premiums for families with employer coverage grew five percent per year 2010-2016, compared with eight percent over the 10 prior years. As of 2016, family premiums are $3,600 lower than they would have been without the ACA.
  • Between 2012 and 2016, Hawaiians with employer coverage have received a combined $8,993,411 in insurance refunds because of the 80/20 rule that says that insurance companies must spend at least 80 cents of each premium dollar on health care or care improvements, instead of administrative costs.
  • 33,000 low-income residents, children, people with disabilities and senior Hawaiians have gained Medicaid coverage that didn’t qualify before the ACA. This coverage has meant 40 deaths being avoided each year.
  • 13,313 residents of Hawaii now have coverage through the individual marketplace than had it before and individual plans offer much broader coverage than they did before the ACA.
  • 3,000 Hawaii residents who previously suffered from depression are symptom free today because of improved access to care for mental illness or substance use disorders.
  • 560,494 people in Hawaii with a pre-existing health condition gained access to health insurance because of the ACA’s rule that does not allow health insurers to discriminate based on a pre-existing condition.
  • Women are now guaranteed the same health insurance rates as men.
  • The ACA closed the prescription drug “donut hole” which has 23,762 Hawaii seniors save an average of $1,264 in annual prescription drug costs. 


Makai HR helps companies retain employees through access to better healthcare plans

As a PEO, we are able to offer small businesses access to health plans at rates they could not obtain on their own. Employees benefit with better health insurance and employers benefit with better employee retention.


Companies who partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to learn about which of our tailored service plans is right for you!