Hawaii employers who are subject to the Prepaid Health Care Act (PHCA)1
should be familiar with Form HC-5
. Employees must sign this form annually if they waive their employer's health insurance coverage. PHCA allows employees to waive coverage for the following reasons:
- Secondary employer. The employer is a "secondary employer" of an employee who already receives coverage from his/her "primary employer."
- Federal plan. The employee is covered by a federally-established health insurance or prepaid health care plan, such as Medicare, Medicaid, or medical benefits provided for military dependents and military retirees and their dependents.
- Dependent. The employee receives health insurance as a dependent under a prepaid health care plan.
- Public assistance. The employee receives health insurance as a recipient of public assistance or is covered by a State-legislated health care plan governing medical assistance.
- Religion. Pursuant to the employee's teachings, faith, or belief in any group, the employee depends upon prayer or other spiritual means for healing.
- Other health insurance that meets minimum requirements. The employee has health insurance that meets the minimum standards required by PHCA (e.g., benefits for hospital, surgery, medical, diagnostic laboratory, and substance abuse).
Box #2 or Box #3 Waiver
When employees waive coverage for any reason other than the last bullet point, they should indicate their waiver by checking box #2 or box #3 on the HC-5 form.
Employers are required to keep signed HC-5 forms that have box #2 or box #3 checked for two (2) years after the date of signature. While they are not required to automatically submit these forms to DLIR, employers should be prepared for submission upon the agency's request.
Box #4 ? Individual Waiver
Different rules apply when employees waive coverage for the reason stated in the last bullet point above ? because they have other health insurance that meets minimum requirements. To waive coverage for this reason, DLIR must review and approve that the employee has other health insurance that meets PHCA's minimum requirements. Thus, when an employee waives employer coverage by checking box #4 on the Form HC-5, s/he must also give her/his employer a copy of the health insurance plan for forwarding to DLIR.
Employers who receive Form HC-5 with box #4 checked are required to immediately forward both a copy of the signed Form HC-5 and the employee's plan to the DLIR for approval. If the DLIR does not approve the employee's plan, it will notify the employer of its finding. This may occur where an employee has a mainland-based health plan that does not provide the benefits required under Hawaii's PHCA.
To comply with PHCA after the DLIR disapproves an employee's box #4 waiver, the employer should enroll the employee in one of its plans or ensure that the employee properly waives coverage by checking another box on Form HC-5 that applies to her/him.
1PHCA does not apply to the State (or any of its political subdivisions) and the Federal government. See Haw. Rev. Stat. § 393-3 (excluding from the definition of "employer" the "State, any of its political subdivisions, or any instrumentality of the State or its political subdivisions" and the "United States government or any instrumentality of the United States.")