Hawaii Health Study Guide

Hawaii has the most distinctive health insurance law in the United States, and it comes down to one statute passed in 1974 that everywhere else would have been wiped out by federal preemption. The Prepaid Health Care Act is the only state employer health-coverage mandate to hold an ERISA exemption — which is why no other state has one like it, and why thirty-five scored questions of Hawaii-specific content have somewhere substantial to go.

The Prepaid Health Care Act — two tests, not one

HRS chapter 393 requires Hawaii employers to provide health coverage to regular employees, and the definition is where candidates go wrong.

Test one — hours. A “regular employee” is a person employed “for at least twenty hours per week,” excluding seasonal employment (§ 393-3). Twenty hours, not the ACA’s thirty.

Test two — wages. Section 393-11 adds a monthly wage floor: an employer must cover a regular employee paid “monthly wages in an amount of at least 86.67 times the minimum hourly wage.” For 2026 that figure is $1,387.00 per month.

Both tests apply. And because the hours threshold sits ten hours below the federal full-time definition, Hawaii employers must cover a broader population than the ACA requires.

Who pays — the 1.5% cap and the employer’s half

HRS § 393-13 sets the split, and it is genuinely protective. The employee’s share is capped absolutely: “in no case shall the employee contribute more than 1.5 per cent of the employee’s wages.” And the employer must pay “at least one-half of the premium.”

Notice how those two rules interact. If half the premium exceeds 1.5% of the employee’s wages, the employer does not get to split it down the middle — the employer pays the entire balance above the employee’s capped 1.5%. In practice Hawaii employers frequently pay well over 50%.

The Act is administered by DLIR, the Department of Labor and Industrial Relations — not the Insurance Division, which routes prepaid-healthcare questions to DLIR.

What Hawaii does not have

No general private-sector mini-COBRA. Most states have a continuation statute filling the gap below federal COBRA’s 20-employee threshold; Hawaii does not, because near-universal employer coverage under the PHCA made one largely unnecessary. Federal COBRA governs.

What exists instead is narrower and differently shaped: under § 393-15, an employer continues paying its share of the premium for up to 3 months while an employee is disabled and unable to earn wages.

No state-based exchange either. Hawaii’s own Hawaii Health Connector failed and closed, and the state moved to HealthCare.gov. Medicaid — Med-QUEST, delivered as QUEST Integration — is expanded, with adults covered at 133% of the federal poverty level, or 138% with the 5% disregard.

Prompt pay — 15 and 30, with 15% attached

HRS § 431:13-108 sets two deadlines for uncontested claims: 15 calendar days if filed electronically, 30 calendar days if filed in writing. To contest or deny, the insurer has 7 days electronic or 15 days written.

Late payment carries 15% per year interest — and a detail worth remembering: accrued interest of $2 or more is added to the claim automatically, without the provider having to ask.

External review — the Commissioner runs it

Under Hawaii’s Patients’ Bill of Rights and Responsibilities Act (HRS chapter 432E), “all requests for external review of a health carrier’s adverse action shall be made in writing to the commissioner.” The Insurance Commissioner — not the carrier, not a private body — assigns an approved Independent Review Organization, and its decision binds the carrier.

Internal appeals must normally be exhausted first, with three exceptions: the carrier waives the requirement, an expedited external review runs simultaneously, or the carrier has substantially failed to comply with its own internal process.