Workers’ Comp Insurance in Hawaii

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Hawaii Workers’ Compensation State Law

Hawaii enacted its workers’ compensation insurance law in 1915. The state expanded coverage in 1969 to add disability compensation, and 1974 to include health insurance. The Hawaii law made a balance between employer duties and employee rights. Employers must cover medical costs and lost wages for work-related injuries and illnesses.

What is Workers Comp in Hawaii?

The system protects employers by limiting liability and protected workers by offering a quick source of funds for medical care and lost wages. Employees give up the right to sue if they receive the agreed benefits. Hawaii workers’ compensation insurance benefits all sides in the employment relationship including families and dependents of injured, ill, or deceased workers.

  • State Regulator: The Hawaii government regulates through the Workers’ Compensation Insurance Section (808) 586-9166.
  • Hawaii Rating Bureau: NCCI (National Council on Compensation Insurance)
  • Hawaii assigned risk pool managed by Hawaii’s Employers Mutual Insurance Company (HEMIC).

Why You Need Worker’s Comp?

Every Hawaii employer with one or more employees, whether full-time or part-time, permanent or temporary, must provide Worker’s Compensation Insurance coverage for its employees. This rule applies to every employer not exempt under section 386-1 of the Workers Compensation Law.

Buying Workers’ Compensation in Hawaii

Hawaii employers can get insurance coverage in four ways. They can buy private insurance, they can buy insurance on the assigned risk pool, and they can participate in self-insurance.

  • 1

    Private market insurance is the preferred method for most employers. They can shop for price quotes and coverage options directly or through authorized and licensed insurance brokers.

  • 2

    The Assigned Risk pool operated by the Hawaii (Hemic) insures all applicants.

  • 3

    Self-insurance

  • 4

    Group Self-Insurance

Instructions for Buying Coverage

The first step might be to contact the Hawaii government to get information on the requirements for coverage. Then an employer would seek quotes on the private market.

Employers that cannot get coverage from private insurers must get acceptance at the assigned risk pool managed by HEMIC. Self-insurance requires an application to the Director of Workers Compensation Programs and demonstration of financial capacity to carry out a plan for protecting workers.

What You Should Know about Worker’s Comp in Hawaii

Worker compensation is the exclusive remedy under Hawaii law for workplace injuries, accidents, illnesses or diseases that arise out of employment. Employees participate in the employer paid program and give up their right to sue for civil damages.

Temporary Disability Insurance

Hawaii has a Temporary Disability Insurance law. Employers must offer qualified employees coverage for wage or salary continuation in the event of NON-WORK RELATED injury or illness. Injured workers can use TDI for wages, but it does not cover medical expenses.

Prepaid Health Insurance

Hawaii employers must provide health insurance that meets minimum standards for essential coverage. Eligibility goes with tenure, and the employer must pay at least 50 percent of the costs.

Is Your Business Required to Carry Hawaii Workers Comp?

Every employer with one or more full or part-time employees must have adequate worker’s compensation coverage. You have a burden to prove that the law does not apply to you and your business. You have the burden to prove that illness, injury, or other condition did not arise from employment. The law presumes that an employee’s claim of work connection is factual.

Exemptions from Workers Comp insurance

Sole proprietors can opt in or out of the coverage requirements as employees. Essentially, they choose to proceed as covered employees or as owners. Owners and officers of corporations are not covered but may opt in voluntarily to get coverage.

The Hawaii workers compensation insurance law excludes unpaid volunteers for non-profit and charitable organizations, students working at their school for tuition, room and board, and licensed religious officials. Stockholders at 25 percent or higher and real estate persons paid by commission. The law also excludes domestic workers that get less than $225 per quarter or who work for welfare recipients.

Where to Buy Insurance?

  • 1

    Open Market insurance from licensed and authorized private insurance providers.

  • 2

    Assigned Risk Pool managed by HEMIC

  • 3

    Self-insurance for an individual employer.

  • 4

    Group Self-insurance section Part VI of the Workers Comp law (386-191 et seq) describes group self-insurance in Hawaii. The employers must get and maintain approval based on demonstrated financial capacity and a combined net worth of all members in excess of $1,000,000.

How Much Does Worker’s Comp Insurance Cost?

In 2012, the average cost of workers comp insurance in Hawaii was $1.43 per $100 of wages. Hawaii rates rely upon the National Council on Compensation Insurance (NCCI) statistical base. The costs will vary depending on the number of high-risk occupation codes in the employer’s workforce.

What Is the Cost of Not Getting Worker’s Comp Insurance?

The state can levy a substantial fine in any employer without required worker’s compensation insurance. The current fine and penalty can be as high as $100 per day per employee. The other side of the risk equation is that employees may be free to sue an employer for damages in civil court for injuries or for the compensation that was due under the worker compensation law. The worker’s compensation law requires a hearing on issues, and either party may appeal from the administrative hearing. After using the worker’s comp system, the worker may be free to sue for liability.

List of places you can get worker’s comp or more info

  • Hawaii Department of Labor and Industrial Relations, Workers Compensation Division
  • Hawaii Employers Mutual Insurance Company

Factors that Impact Coverage

In the past three years, employee benefits in Hawaii have increased. During that same period, the average costs to employers have also decreased. The gain on both sides is a positive trend for employers and employees.

Legal

In 2016, Hawaii increased penalties for uninsured employers from $10 per day to $100 per day per employee. The state can issue stop orders and administrative penalties.

Liability

Experience modifications allow private insurers to raise rates for employers with significant histories of accident, illnesses, and injuries. It is similar to underwriting in health insurance, and insurers can set rates that reflect their assumptions about risk based on the employer’s employment history.

Rates

Hawaii uses the National Council on Insurance Compensation (NCIC) to set rates by occupational classification. The codes determine the costs of worker’s comp for a given employers since the rates depend on the assigned risk level for each job code.

Helpful Tips

The Hawaii Employers Mutual Insurance Corporation (HEMIC) is the legislatively inspired private corporation that provides insurance coverage for Hawaii employers. HEMIC is a privately owned corporation that in recent years has returned profits to investors. HEMIC offers additional types of coverage through a subsidiary called HIMI.

Resources for Information and Requirements

Conclusion

Workers compensation coverage is a necessity for Hawaii employers. The state can levy stiff fines and penalties for uninsured businesses that experience injuries or claims. Using the private sector insurance providers or the HEMIC, every employer can purchase coverage. For companies with significant assets, they may realize savings and greater control by self-insurance or participation in an employer self-insurance group.

Sources:

  • Univ of Hawaii. Employee Rights PDF
    https://www.hawaii.edu/riskmanagement/forms/WC%20Highlights.pdf

  • State of Hawaii, Department of Labor and Industrial Relations, Workers Compensation Division
    http://labor.hawaii.gov/dcd/home/aboutwc/

  • The National Academy for Social Insurance
    https://www.nasi.org/