The State of Hawai'i has received a State Innovation Waiver under the Patient Protection and Affordable Care Act (ACA). The State sought the waiver last year in part to be exempt from the ACA requirement that a Small Business Health Options Program (SHOP) operate in Hawai'i. The waiver was granted for the period between January 1, 2017 and December 31, 2021. According to Governor Ige, receipt of this waiver "acknowledges the success of the state's Prepaid Health Care Act in providing insurance to a majority of Hawai'i's residents and the role it plays in the continued health of our citizens."
The State Innovation Waiver approval letter
, issued by the federal Department of Health and Human Services last month, explains that Hawai'i will be entitled to pass-through funding during the waiver period. Funding amounts, which are based on the amount of Small Business Health Care Tax Credits that would have been provided to small employers under ACA absent a waiver, are estimated at $2,795,766 throughout the waiver period. This money will instead be provided to the Prepaid Health Care Act's Premium Supplementation Program, which helps qualified small businesses pay for their portion of employee insurance premiums.
To qualify for premium supplementation funds, an employer must employ less than eight employees entitled to coverage under the Prepaid Health Care law. The employer's share of the cost of coverage must also exceed 1.5 percent of the total wages payable to such employees and the amount of such excess must be greater than five percent of the employer's income before taxes directly attributable to the business. Haw. Rev. Stat. 393-45(a). Small employers interested in applying for the premium supplementation fund should submit Form HC-6
to the Department of Labor and Industrial Relations, Disability Compensation Division.
Small employers who previously received a Certification of Eligibility for participation in Hawai'i's SHOP program will soon receive a notification that no certifications will be granted beginning on or after January 1, 2017 and throughout the period of the waiver. This means that those small employers would not be entitled to the federal Small Business Health Care Tax Credit during that period.