HB1546 HD1

SECTION 1. The legislature finds recent changes to medicaid eligibility and redetermination processes made at the federal level will cause a significant number of residents of the State to lose their medicaid health insurance coverage. An estimated thirty-five thousand undocumented immigrants who reside in Hawaii will lose medicaid coverage on October 1, 2026. Additionally, after that date, around thirty thousand enrollees will be subject to a new community engagement requirement where residents would need to show eighty hours a month of work, community service, or other eligibility activities at the time their benefit eligibility is redetermined or their benefits will be revoked. Federal changes are now also mandating that redetermination for medicaid be every six months instead of annually, potentially resulting in some eligible residents failing to re-enroll due to a lack of complete paperwork or loss of eligibility.

The legislature also finds that it is important to provide insurance coverage to those who lose medicaid coverage to ensure these individuals can still access health care and to reduce the financial strain on health care providers who might otherwise provide unpaid emergency services. Providing this coverage while also maximizing the health services available to Hawaii residents and minimizing state expenditures will require a multi-pronged approach. The legislature notes that any programs offered must be unrelated to the existing Hawaii Prepaid Health Care Act in order to maintain its existing federal preemption under the Employee Retirement Income Security Act of 1974.

First, barriers to maintaining enrollment in medicaid should be reduced by simplifying the application and reenrollment process, including documentation of eligibility. In addition, residents who are otherwise eligible for medicaid should be connected with opportunities that will enable them to meet work and community engagement requirements.

The second approach is to leverage available federal subsidies in the form of advanced premium tax credits in the federally facilitated marketplace to assist individuals who qualify. These tax credits are only available to people whose household income is less than four hundred per cent of the federal poverty level and for plans that are not categorized as catastrophic plans. Advanced premium tax credits are not available to undocumented immigrants or to those who lose medicaid coverage due to failure to document sufficient work or community engagement hours. The legislature notes that while the federally facilitated marketplace enrollment period is limited to November 1 to January 15 each year, losing medicaid or employer-sponsored health insurance is considered a household change, which qualifies the resident for a special enrollment period for marketplace coverage.

The legislature further finds that the advanced premium tax credits are still unaffordable to low-income residents. As such, the department of human services and med-QUEST can expand the existing state-funded premium assistance program, which currently serves immigrants. The existing subsidies are about $1,328 annually per person and enable beneficiaries to enroll in the federally facilitated marketplace silver level plans, which provide robust health services.

Finally, those who do not qualify for the advanced premium tax credits may enroll in a less expensive high-deductible plan that disincentivizes them from seeking health care services. A state-funded subsidy for preventive services paired with a high-deductible plan may offer an affordable and flexible coverage option.

Accordingly, the purpose of this Act is to establish a three-year health coverage continuity pilot program within the department of human services, in consultation with the department of commerce and consumer affairs, to provide two options for individuals in the State who lose their medicaid insurance coverage and do not qualify for employer-sponsored insurance under the Hawaii Prepaid Health Care Act:

(1) The option to enroll in federally facilitated marketplace silver level plans for persons who qualify for federal advanced premium tax credits; and

(2) An annual subsidy for persons who do not qualify for federal advanced premium tax credits and have acquired a high-deductible health plan to be used to cover the cost of preventive care.

SECTION 2. (a) There is established a three-year health coverage continuity pilot program to be administered by the department of human services in consultation with the department of commerce and consumer affairs. The purpose of the pilot program shall be to assist individuals who have lost their medicaid insurance coverage, and do not qualify for employer-sponsored insurance under the Hawaii Prepaid Health Care Act, through the following two avenues:

(1) For persons who have lost their medicaid coverage but qualify for federal advanced premium tax credits: the ability to enroll in federally facilitated marketplace silver level plans. The assistance shall be in an amount that covers the difference between the cost of the silver level plans and what the individuals are able to afford; and

(2) For persons who have lost their medicaid coverage, do not qualify for federal advanced premium tax credits, and have acquired a high-deductible health plan: an annual state subsidy of $1,000 for preventive care.

(b) The department shall:

(1) Target individuals who have lost medicaid coverage and do not qualify for coverage under the Hawaii prepaid health care act, including but not limited to:

(A) Seasonal or agricultural workers;

(B) Independent contractors and freelancers;

(D) Community college or university students without other health insurance coverage; and

(2) Establish eligibility criteria and an application process for enrollment in the pilot program.

(1) Shall not be considered insurance; and

(2) May be used in combination with coverage offered under the pilot program, to the extent permitted under federal health savings account rules.

(d) The department may contract with a nonprofit health insurer or community-based organization to administer or operate the pilot program; provided that the department shall allow the operator to access state-backed reinsurance or risk stabilization support during the pilot program. The department shall promote collaboration between the operator of the pilot program and local health systems, federally qualified health centers, and safety-net providers in the State to implement the pilot program.

(e) The department may issue premium subsidies or vouchers to eligible individuals enrolled in the pilot program; provided that any subsidy, voucher, or contribution shall be portable and shall follow the individual without imposing compliance or administrative obligations on the State or an employer.

(f) The department shall apply for any federal subsidies, matching funds, or waivers, including but not limited to waivers under section 1332 of the Affordable Care Act, and section 1115 of the Social Security Act of 1935, as applicable, to carry out the pilot program.

(g) The department shall adopt rules pursuant to chapter 91 necessary for the purposes of the pilot program.

(h) The department shall submit a report to the legislature no later than twenty days prior to the convening of the 2027, 2028, and 2029 regular sessions. Each report shall include the following:

(1) Enrollment data;

(2) Health outcomes;

(3) Fiscal impact;

(4) Program sustainability; and

(5) Proposed legislation.

(i) The pilot program shall cease to exist on June 30, 2029.

(j) For the purposes of this Act:

"Affordable Care Act" means the federal Patient Protection and Affordable Care Act of 2010, public law 111-148, as amended.

"Department" means the department of human services.

SECTION 3. This Act shall take effect on July 1, 3000, and shall be repealed on June 30, 2029.

HOUSE OF REPRESENTATIVES	H.B. NO.	1546
THIRTY-THIRD LEGISLATURE, 2026		H.D. 1
STATE OF HAWAII