ACA vs PHCA: What should Hawaii employers know?

Did you know Hawaii was the first state in the nation to require employers to provide health insurance to employees? We consistently rank among the best states in the nation for health care, truly making us lucky we live Hawaii. But what does this mean for business owners?

What is ACA?

ACA is the Affordable Care Act, also known as Obamacare, which was signed into federal law in 2010. It’s a complicated piece of legislation, basically it requires businesses with 50 or more full-time employees to offer health insurance coverage to their employees or face a tax penalty. For an employee to be eligible for health insurance under ACA, they must work at least 30 hours per week for 4 consecutive weeks.

What is PHCA?

PHCA is the Prepaid Health Care Act, which was passed in Hawaii in 1974. It requires businesses with even one employee to provide medical coverage to employees who work at least 20 hours per week. For an employee to be eligible for health insurance under PHCA, they must work at least 20 hours per week for 4 consecutive weeks.

Under PHCA, the employer can only require the employee to pay up to 1.5% of their gross wages to contribute towards medical insurance. The employer is not required to provide vision, drug or dental coverage.


As you can see, in Hawaii our state regulations are stricter than the national ACA regulations, so business owners need to follow our local PHCA guidelines to be compliant with the law.

Some employees are exempt from PHCA coverage, and other regulations apply for small businesses with less than 50 employees. For more information, check out:

Or if you have questions, give us a call at (808) 354-0498. These laws and regulations can be complicated, but it’s important for business owners to be compliant so you can avoid penalties when tax season comes around.

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