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Impacts Of New Federal Health Care Law On Hawaii Employers

As most people are aware, President Obama has signed landmark legislation in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, which, combined, require employers throughout the country to provide  health insurance for their employees.

Prior to the passage of these two new laws, Hawaii was the only state in the country that required employers to provide health insurance for their full-time employees.  Therefore, this new federal health care law actually has a “carve out” for Hawaii employers, which specifically states that the federal law does not “modify or limit the application of the exemption for Hawaii’s Prepaid Health Care Act” under ERISA.  Senator Dan Inouye and Representative Mazie Hirono have both gone on record to say that the intention of the federal law was to preserve Hawaii’s pre-paid health care laws.

It is possible, however, that this carve out will last only until 2014.  Specifically, in 2014, the federal law will require employees to either have health insurance or pay a tax penalty.  The law also provides for penalties against large employers if the government has to subsidize the workers’ health insurance costs.  Such changes could trigger a repeal of the Hawaii state law, which contains a “sunset” provision upon federal legislation that provides for “mandatory prepaid healthcare for the people of Hawaii.”

Additionally, despite the carve out, there are some provisions that will still affect Hawaii employers, such as tax credits for small employers, early retiree subsidies, and reporting requirements for tax forms.

Finally, as I mentioned in an earlier post, Hawaii employers will be required to provide mandatory break times for nursing mothers, as well as a location to do so.  You can view that post here.