Obamacare for Hawaii Small Businesses

When it comes to Obamacare, Hawaii business owners are in a unique position. That’s because an existing state law, the Hawaii Prepaid Health Care Act, already requires most employers to provide health coverage to employees who work at least 20 hours per week.

Hawaii’s law goes well beyond Obamacare’s employer mandate, which requires employers to offer health insurance only if they have 50 or more full-time equivalent employees. (For a definition of FTE, see the end of this article.)

Here’s a summary of key points about Obamacare for Hawaii small business owners:

You must comply with Hawaii’s more stringent health insurance rules. As mentioned above, Hawaii law requires you to offer health insurance to most employees who work at least 20 hours per week. You must meet these requirements, even though the federal law is not as strict.

Under Hawaii law, employers may refuse health care coverage to only the following types of employees:

• those who work less than 20 hours per week
• federal, state, and county employees
• agricultural seasonal workers
• insurance or real estate salespeople paid only by commission
• people working for a spouse or child, and
• people under the age of 21 working for their parents.
  

In addition, employees can reject employer coverage only if:

• the employee is covered by a federal plan such as Medicare, Medicaid, or health care for military personnel
• the employee is a dependent covered by someone else’s qualified health insurance plan
• the employee receives state assistance for medical care, or
• the employee is a member of a religious community that relies on spiritual practices for healing.

For more information, see the website of the Hawaii Department of Labor and Industrial Relations.

You may be legally required to notify your employees about Obamacare. Even if you already provide affordable insurance to your employees under the Hawaii Prepaid Health Care Act, if your business is covered by the Fair Labor Standards Act, you must notify all your employees about Obamacare’s basic provisions. The U.S. Department of Labor has published sample notices you can use. There’s no penalty under the law for failing to provide notice.

To learn whether the FLSA applies to your business, see this helpful article from Nolo.com.

You can purchase health insurance for your employees using Hawaii’s small business marketplace. The small business marketplace is often called the SHOP, shorthand for the Small Business Health Options Program. You can find Hawaii’s SHOP at Healthcare.gov.

You can use the marketplace to compare health plan prices and features, find out whether your business qualifies for a cost-saving tax credit (see below), and purchase a new plan. For now, the small business marketplace is available only to businesses with 50 or fewer employees. For coverage year 2016, however, the marketplace will be open to employers with up to 100 FTEs.

Your business may qualify for a new tax credit. Under Obamacare, if you have fewer than 25 FTEs and purchase employee insurance through the marketplace, you may qualify for the “small business health care tax credit.” The credit is available to businesses with employees whose average annual wages are less than about $50,000. You must also pay at least 50% of your employee’s health insurance premiums. If your business qualifies, the credit could cover up to 50% of your contribution toward your employee’s insurance -- 35% for nonprofits.

Meeting the Obamacare coverage requirements shouldn’t be a stretch for Hawaii business owners, who are already required by state law to provide insurance that costs no more than 1.5% of an employee’s income, even if the total employer contribution is more than 50% of the premium costs.

Small Business Majority offers a calculator that can help you determine your credit amount.

You have new rights under the law. No matter where you purchase your employee health plan, insurance providers can’t turn down your company based on your employees’ health status, including pre-existing conditions. Nor can they charge higher premiums for women or employees with high medical costs. (These protections don’t apply to grandfathered plans -- those created before March 23, 2010 that meet certain additional requirements.)

For more information about your rights, contact the Department of Commerce & Consumer Affairs/ Insurance.

What Does "Full-Time Equivalent" Mean?

Under Obamacare, a full-time employee is defined as one who works an average of 30 hours per week, or at least 130 hours per month. To figure out your business’s number of FTE’s, you need to add together the hours of full- and part-time employees. For instance, if you have two employees who work 15 hours per week, that equals one full-time worker.

Where to Get Help

Visit the small business health insurance exchange at Healthcare.gov. You can lean about available plans, compare options, and enroll in the plan you choose. Or call the marketplace at 877-628-5076.

Talk to a broker. You’re welcome to use a licensed insurance agent or broker to set up a marketplace plan. If you already work with a licensed broker, you’ll probably want to contact him or her to discuss your options. You won’t pay anything extra if you use an agent or broker to help you with a marketplace plan. Agents or brokers are typically paid by the insurance companies whose plans they sell.

Find an insurer who sells small business plans. You can sign up for a plan directly with a qualified insurance provider.

Get more information about the Hawaii Prepaid Health Care Act or the Affordable Care Act. If you have questions about how to comply with health coverage laws that apply to business owners in Hawaii, contact the Hawaii Department of Labor and Industrial Relations (DLIR) at (808) 587-8776.