In 1974, Hawaii became the first (and only) state in the United States to initiate an employer-based health insurance program. Since it’s inception, the Prepaid Health Care Act is the only plan of its kind in our nation’s history. By law, this plan requires nearly all employers to provide health insurance to all employees who work 20 hours or more a week for four consecutive weeks. Employees must maintain a minimum of at least 20 hours per week to remain eligible for the plan.
The act also regulates the benefits provided by the employer. According to the plan, the health insurance benefits offered by each company must be equal to those provided by the plan with the largest number of subscribers in the state. This creates a system of equality across Hawaii employers and the Hawaii health insurance network.
The employer may choose to either cover the full cost of the health insurance premium, or share the cost with their employees. The plan mandates a strict formula to determine the employer’s share. The law requires employers to contribute at least 50 percent of the premium cost for individual coverage. while the employee contributes the remaining 50 percent. However, the employee’s share should never exceed 1.5 percent of his or her wages. Here’s an example:
A Complex Calculation for Business
A person who works 40 hours per week at a salary of $10 per hour would earn $1,733 per month. If the cost of insurance (single coverage) is $150 per month, half that amount is $75, and 1.5 percent of the worker’s salary is $26. As stipulated by the Act, the worker would pay the lesser of the two amounts ($26) and the employer would pay the rest ($124).
If an employee becomes disabled and is unable to work, the employer must pay it’s share of 98.5 percent of the employee’s health insurance premium for the three months following the onset of disability. The employee remains responsible for their share, 1.5 percent of the insurance premium.
There are a few exceptions to the Prepaid Health Care Act. These categories of employment are excluded from coverage under the act:
- Government services
- Seasonal employment approved by the State Department of Labor & Industrial Relations
- Insurance agents and Real Estate salespersons paid solely by commission
- Sole proprietors with no employees
The Results
The Prepaid Health Care Act was an act of tremendous health insurance reform for Hawaii. In the early 1970s, Hawaii had an uninsured rate of 30 percent. After the Prepaid Health Care Act went into effect in 1974, the uninsured rate dropped to 5 percent. At one point, Hawaii held the record for the fewest uninsured residents of any state. Unfortunately, the success has started to diminish over the years. Hawaii is currently battling uninsured rates of nearly 10 percent of the state’s population.
The state has assembled a committee of community leaders to assess the impact of the Prepaid Health Care Act on consumers, providers, insurers, and businesses. Hopefully, with time, they will be able to reform the Act where needed and continue to grow the program.
Get free online quotes for Hawaii Health Insurance at RXHealthQuotes.com.
Visit the Hawaii Department of Health Insurance.
Question???
At this time… Why the Hawaii Health Insurance Reform-Prepaid Care Act has been change that employers no longer provide as a mandatory benefits rather than become an employee responsibility to purchased his/her medical insurance?
Mel – I apologize, but I’m not quite sure what you are asking. Will you please restate the question? From our knowledge, the Hawaii Prepaid Health Care Act has not changed recently. If you have additional information on changes to the Act, we would love to hear about them. Thanks, and we look forward to hearing back from you soon!
I am interested in Hawaii’s health care system. Could you give me some more information on this topic and on Hawaii’s system in general. Pros and cons.
Thanks.
I used to live and work in Hawaii. Here’s a con. It’s harder for low-wage workers to find a full-time job. Many minimum-wage employers only hire workers for 19 hours per week. Coordinating two 19-hour-per-week jobs can be difficult, especially for “flexible hours” jobs that have a different schedule from one week to the next.
For young, healthy workers, given a choice between being able to afford a roof over your head and having health insurance, the roof takes priority. Unfortunately, the 20 hour rule makes the roof more difficult to afford.
Besides the vulnerability of minimum wage earners I understand there is no health care for children in Hawaii. Anyone have additional information on that?