SB2088

SECTION 1. The legislature finds that Act 210, Session Laws of Hawaii 1974, also known as the Prepaid Health Care Act (PHCA), was the first law in the nation to establish minimum standards for employer-sponsored health care benefits for workers. The PHCA continues to support health and economic prosperity in the State by offering regular employees access to adequate, affordable health insurance through their employers. However, nontraditional workers, including certain part-time employees, independent contractors, and self-employed individuals that constitute a growing portion of the workforce in the State are not covered by the PHCA. According to a 2021 department of business, economic development, and tourism report, from 2015 to 2019, 21.4 per cent of workers in the State had part-time jobs. The "gig economy", or independent contractor workforce, is also expanding. As of 2022, approximately thirty per cent of the State's small business workforce labored as independent workers in the gig economy. These significant segments of the State's workforce are not eligible for employer-sponsored prepaid health care plans under the PHCA and therefore rely on private or federally-subsidized health insurance.

The legislature further finds that the passage of the One Big Beautiful Bill Act of 2025 may jeopardize the health care of these nontraditional workers by reducing access to affordable health insurance provided through federal programs such as medicaid. The resulting increase in the local uninsured population would threaten the well-being and economic stability of much of the State's workforce. Therefore, the legislature believes it is necessary to establish a health insurance framework for nontraditional workers in the State to safeguard their affordable access to essential medical services.

Accordingly, the purpose of this Act is to require the department of labor and industrial relations, in consultation with the insurance commissioner, to:

(1) Establish a voluntary portable health care benefit plan pilot program to offer high deductible health plans or catastrophic health plans to workers not covered by the Hawaii Employer-Union Health Benefits Trust Fund or the PHCA; and

(2) Submit annual reports to the legislature on the pilot program.

SECTION 2. (a) The department of labor and industrial relations, in consultation with the insurance commissioner, shall establish and implement a five-year voluntary nontraditional workforce portable health care benefit plan pilot program to expand access to basic affordable health insurance for nontraditional workers not eligible for health benefits provided pursuant to chapter 87A, Hawaii Revised Statutes, or a prepaid health care plan pursuant to chapter 393, Hawaii Revised Statutes. The pilot program shall offer portable health care benefit plans to nontraditional workers pursuant to the conditions outlined in subsection (b). Any employee or worker eligible for health benefits provided pursuant to chapter 87A, Hawaii Revised Statutes, or a prepaid health care plan pursuant to chapter 393, Hawaii Revised Statutes, shall not be eligible to participate in the pilot program. The department may contract with a private entity to administer the pilot program.

(b) The department shall develop standards and qualifications for the administration of and participation in the pilot program, which shall at a minimum meet the following requirements:

(1) A government entity or private entity may offer a portable health care benefit plan;

(2) Participation by employers and nontraditional workers shall be voluntary;

(3) The department, in consultation with the insurance commissioner, shall:

(A) Establish standards of minimum essential benefit coverage for portable health care benefit plans to be provided under the pilot program; provided that coverage for preventative care, telehealth services, and mental health access shall be core benefits; provided further that the standards shall emphasize coverage for emergency or catastrophe protections;

(B) Determine optimal income thresholds and the levels of cost-sharing reductions on out‑of‑pocket expenses to be allowed under the portable health care plans; and

(C) Ensure the pilot program and all health care benefit plans offered under the pilot program are in compliance with applicable federal laws;

(4) The department may issue premium subsidies and vouchers to eligible individuals enrolled in the pilot program. Any moneys contributed by the State to a portable health care benefit plan and not expended shall return to the general fund of the State and become general realizations of the State should the individual beneficiary exit the pilot program;

(5) Contributions to a portable health care benefit plan:

(A) Shall be voluntary; and

(B) Shall not be used as a criterion for determining a person's employment classification, including for determining eligibility for prepaid health care pursuant to chapter 393, Hawaii Revised Statutes; and

(6) If an internet or application-based company contributes to a portable health care benefit plan for the benefit of an individual beneficiary:

(A) The contribution shall not be evidence of employer liability; and

(B) A court shall not construe the contribution as an element of an employment relationship for the purposes of:

(i) Employment security benefits pursuant to chapter 383, Hawaii Revised Statutes;

(ii) Workers' compensation pursuant to chapter 386, Hawaii Revised Statutes; or

(iii) Temporary disability insurance pursuant to chapter 392, Hawaii Revised Statutes.

(c) The department may adopt rules pursuant to chapter 91, Hawaii Revised Statutes, to carry out the purposes of this Act.

(d) The department, in consultation with the insurance commissioner, shall submit annual reports on the development and implementation of the nontraditional workforce portable health care benefit plan pilot program established pursuant to this section, including impacts to statewide health insurance enrollment, health care costs and affordability, health outcomes, and any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular sessions of 2027, 2028, 2029, and 2030.

(e) The department, in consultation with the insurance commissioner, shall submit a final report on the nontraditional workforce portable health care benefit plan pilot program established pursuant to this section, including impacts to statewide health insurance enrollment, health care costs and affordability, health outcomes, recommendations on whether the pilot program should be extended or made permanent, and any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2031.

(f) For the purposes of this section:

"Catastrophic plan" has the same meaning as defined in title 42 United States Code section 18022(e).

"Department" means the department of labor and industrial relations.

"Health savings account" has the same meaning as defined in title 26 United States Code section 223(d).

"High deductible health plan" has the same meaning as defined in title 26 United States Code section 223(c)(2).

"Hiring party" means a person who hires or enters into a contract for services with a nontraditional worker. "Hiring party" includes the State, any of its political subdivisions, or any instrumentality of the State or its political subdivisions. "Hiring party" does not include:

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

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

(3) Any foreign government or instrumentality wholly owned by a foreign government; provided that:

(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.

"Nontraditional worker" means a person who performs a service for hire for a hiring party pursuant to a contract but is not an employee, as defined in section 87A-1, Hawaii Revised Statutes, or a regular employee as defined in section 393-3, Hawaii Revised Statutes, and is not eligible for health benefits under chapter 87A, Hawaii Revised Statutes, or a prepaid health care plan under chapter 393, Hawaii Revised Statutes; provided that "nontraditional worker" does not include a person employed in seasonal employment, as defined in section 393-3, Hawaii Revised Statutes. "Nontraditional worker" includes independent contractors, including gig workers; part-time employees; sole proprietors; and self-employed individuals.

"Portable health care benefit plan" means a group health care plan that:

(1) Offers a high deductible health plan or catastrophic plan in accordance with federal law;

(2) Offers at least one health savings account-eligible plan option in accordance with federal law; and

(3) Is assigned to an individual beneficiary and is not associated with a specific employer or hiring party.

(g) The nontraditional workforce portable health care benefit plan pilot program shall cease to exist on June 30, 2031.

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2026-2027 for the development and implementation of the nontraditional workforce portable health care benefit plan pilot program established by section 2 of this Act.

The sum appropriated shall be expended by the department of labor and industrial relations for the purposes of this Act.

SECTION 4. If this Act or any provision of this Act conflicts at any time with any federal law, then the federal law shall prevail and this Act or the relevant provisions of this Act shall become ineffective and invalid. The ineffectiveness and invalidity of this Act or any of its provisions shall not affect any other provisions or applications of this Act, which shall be given effect without the invalid provision or application, and to this end, the provisions of this Act are severable.

SECTION 5. If any part of this Act is found to be in conflict with federal requirements that are a prescribed condition for the allocation of federal funds to the State or the State's eligibility for federal waiver programs, the conflicting part of this Act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this Act in its application to the agencies concerned.

SECTION 6. This Act shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2088
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII