Report Title:

Required Health Care Coverage; Small Business Employers; Alternative Compliance with Prepaid Health Care Law


Deems small business employers in compliance with Prepaid Health Care Law who provide the health care coverage that was in effect on 1/1/1975 to its regular employees. Defines "small business employer" as one with fewer than 15 employees. Gives option of providing coverage as required by Prepaid Health Care Law.


S.B. NO.









relating to provision of health care coverage by small businesses.



SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:



   -A Small business employers; mandatory health care coverage. (a) Each small business employer in the State shall provide health care coverage to its employees in accordance with this chapter.

(b) Any other law to the contrary notwithstanding, each small business employer, if the small business employer fully complies with section    -C, shall be deemed to be otherwise in full compliance with the requirements of sections 393-7 and 393-11.

(c) With the exception of the provision of required health care coverage to regular employees, as provided under section    -C, each small business employer shall be subject to all other requirements of chapter 393.

   -B Definitions. For the purposes of this chapter, unless the context clearly requires otherwise,

"Director" means the director of labor and industrial relations.

"Employment" is as defined in section 393-3(4).

"Prepaid health care plan" is as defined in section 393-3(6).

"Prepaid health care plan contractor" is as defined in section 393-3(7).

"Regular employee" means a person employed in the employment of any one small business employer for at least twenty hours per week but does not include a person employed in seasonal employment. "Seasonal employment", for the purposes of this definition, means employment in a "seasonal pursuit" as defined in section 387-1, by a seasonal employer during a seasonal period or seasonal periods for the employer in the seasonal pursuit or employment by an employer engaged in the cultivating, harvesting, processing, canning, and warehousing of pineapple during its seasonal periods. The director by rule may determine the kind of employment that constitutes seasonal employment.

"Small business employer" means any individual or type of organization, including any partnership, association, trust, estate, joint stock company, insurance company, or corporation, whether domestic or foreign, a debtor in possession or receiver or trustee in bankruptcy, or the legal representative of a deceased person, who employs fewer than fifteen regular employees in the employer's employment. "Small business employer" does not include:

(1) The State, any of its political subdivisions, or any instrumentality of the State or its political subdivisions;

(2) The United States government or any instrumentality of the United States;

(3) Any other state or political subdivision thereof or instrumentality of such state or political subdivision;

(4) Any foreign government or instrumentality wholly owned by a foreign government, if:

(A) The service performed in its employ is of a character similar to that performed in foreign countries by employees of the United States government or of an instrumentality thereof; and

(B) The United States Secretary of State has certified or certifies to the United States Secretary of the Treasury that the foreign government, with respect to whose instrumentality exemption is claimed, grants an equivalent exemption with respect to similar service performed in the foreign country by employees of the United States government and of instrumentalities thereof.

"Wages" is as defined in section 393-3(9).

   -C Coverage of regular employees by small business employers by group prepaid health care plan; option. (a) Each small business employer who pays to a regular employee monthly wages in an amount of at least 86.67 times the minimum hourly wage, specified in chapter 387, as rounded off by rule of the director, shall provide coverage of the regular employee by a prepaid group health care plan qualifying under section 393-7 with a prepaid health care plan contractor; provided that the required health care coverage benefits under this chapter shall be limited to only those benefits that were provided and in effect as of January 1, 1975, when the required coverage by group prepaid health care plans under chapter 393 first commenced.

(b) Nothing in this section shall prohibit any small business employer from the option of providing the required health care benefits to its regular employees in accordance with section 393-7.

   -D Rules. The director shall adopt rules in accordance with chapter 91 to implement this chapter, including determining the precise set of required health care coverage benefits required by chapter 393, effective on January 1, 1975."

SECTION 2. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 4. This Act shall take effect upon its approval.