Insights · Rules · Published 2026-09-15

Hawaiʻi Prepaid Health Care Act: what employers owe

Employees working 20 or more hours a week for four straight weeks must get an approved health plan, and their share is capped at 1.5% of wages.

If you employ one person in Hawaiʻi who works 20 or more hours a week for four consecutive weeks and earns at least 86.67 times the hourly minimum wage in a month, you must cover that person under a state-approved health plan. You pay at least half the premium. The employee never pays more than 1.5% of wages.

Who qualifies

A "regular employee" is a person employed by one employer for at least twenty hours per week. The definition does not include a person in seasonal employment, such as a seasonal pursuit defined in HRS 387-1 or seasonal pineapple work (HRS 393-3).

Two more tests apply:

The Act covers any employer with one or more regular employees (HRS 393-3).

What you must provide

You have three ways to meet the mandate, per DLIR:

Approved plans are designated 7(a) or 7(b). A 7(a) plan matches or beats the plan with the most subscribers in the state. A 7(b) plan meets basic standards with thinner benefits, and the employer pays half the cost of dependent coverage (DLIR About PHC).

The premium split

Unless a union contract says otherwise, the employer pays at least one-half of the premium for the employee's own coverage. The employee pays the balance, but never more than 1.5% of their wages. If 1.5% of wages comes to less than half the premium, the employer picks up the whole remainder (HRS 393-13).

Worked example, our arithmetic: an employee earning $3,000 a month can be charged at most $45 (1.5% × $3,000). If the single premium is $600, the employee pays $45 and you pay $555.

Who is excluded

The statute leaves out certain people and work (HRS 393-3; HRS 393-5). The exclusions include:

Separately, an eligible employee may waive your plan if covered by a federal program such as Medicare or Medicaid, covered as a dependent under another qualified plan, receiving public assistance under a state medical plan, or a member of a religious group that relies on prayer for healing. They complete Form HC-5, Employee Notification to Employer, every calendar year to keep the exemption (DLIR About PHC). Keep every HC-5 on file; it is what relieves you of the obligation.

Part-time staff and the 20-hour line

The law counts hours per week, employer by employer. Under twenty hours a week with you is not a regular employee. At or above twenty for four consecutive weeks is, whatever you call the job. Weekly hours are a compliance record.

If an employee holds two jobs, the employer paying the most wages is the principal employer and owes the coverage. If the lower-paying employer schedules them for at least 35 hours a week, the employee chooses. The choice binds for a year, and no employer may pressure it (HRS 393-6).

Sick employees and small-employer relief

If a covered employee is too sick to work, you keep paying your share of the premium for up to three months after the month the sickness began, or as long as you keep paying regular wages, whichever is longer (HRS 393-15).

Employers with fewer than eight covered employees who provide coverage under a 7(a) plan may claim premium supplementation from a state fund. The test has two parts: the employer's premium share must exceed 1.5% of total wages, and the amount of that excess must be greater than 5% of the employer's income before taxes from that business (HRS 393-45).

Where to file, and what non-compliance costs

The Disability Compensation Division, 830 Punchbowl Street, Honolulu, holds the forms: HC-5 (employee waiver, new version each year), HC-4 (coverage questionnaire), HC-6 (premium supplementation), HC-7 (plan application), and HC-61 (self-insurance) (DLIR DCD Forms). The Division's phone is (808) 586-9151 (DLIR DCD Forms). Employees who believe they were left uncovered file Form DC-54 with the Investigation Section or nearest DLIR district office (DLIR About PHC).

An employer who fails to provide coverage or the required premium share pays a penalty of not less than $25, or $1 per employee for every day the failure continues, whichever is greater. Other wilful violations carry fines up to $200 each, and a court can bar a non-compliant employer from doing business in the state (HRS 393-33).

Health coverage sits inside the five systems every Hawaiʻi business runs on. To see how yours measure, the ten-second reading is free.

Questions owners ask

Can I keep everyone under 20 hours to avoid the mandate?

The law measures actual hours, not job titles. Anyone at or above twenty hours a week for four consecutive weeks qualifies, and coverage is owed from the next enrollment date. Talk with an employment attorney before building a staffing plan around the threshold.

Do I have to cover an employee who already has insurance through a spouse?

Not if they waive in writing on Form HC-5, stating they are covered as a dependent under a qualified plan. Keep the form and get a fresh one each calendar year, as DLIR requires.

Do I owe dependent coverage?

It depends on the plan. Under a 7(b) plan the employer pays half the cost of dependent coverage. Under a 7(a) plan the contractor tells you what you owe. Ask for the designation in writing.

What if my business is on the mainland and staff only work in Hawaiʻi sometimes?

Call the Disability Compensation Division at (808) 586-9151 before the fourth week.

Sources

Information, not legal, tax, insurance, or financial advice.

Read your own business in ten seconds, free, from public records: hawaiiintelligence.com/reading. Information, not legal, tax, insurance, or financial advice.
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