How Hawaii's Prepaid Health Care Act Works With the WIMPER Program

Hawaii’s Prepaid Health Care Act (HPHCA) has been in effect since 1974. It requires employers to provide health insurance to employees who work 20 or more hours per week for four consecutive weeks. No other state has a comparable law.

For Hawaii employers, this means you carry a cost that most mainland employers do not. The WIMPER program does not add to that cost. It helps you recover FICA tax dollars from the health coverage investment you are already making.

What the Prepaid Health Care Act Requires

Under the HPHCA, employers must provide health insurance that meets minimum coverage standards to eligible employees. The key requirements:

• Eligibility: Employees working 20+ hours per week for four consecutive weeks
• Employer contribution: Employers must pay at least 50% of the premium cost
• Coverage standards: Plans must meet minimum benefit requirements set by the Hawaii Prepaid Health Care Advisory Council
• Approved plans: Coverage must be through a carrier approved under the Act

These requirements are established under Hawaii’s Prepaid Health Care Act (HRS Chapter 393); see the Hawaii Department of Labor and Industrial Relations for the governing standards.

Most Hawaii employers meet this through HMSA (Blue Cross Blue Shield of Hawaii), Kaiser Permanente, or other approved carriers.

Where WIMPER Fits

The WIMPER program does not touch your HPHCA-compliant health coverage. It operates as a separate, parallel structure.

Here is the relationship:

Your existing health plan (HPHCA):

• Stays exactly as it is
• Same carrier, same premiums, same employee coverage
• Continues to satisfy the Prepaid Health Care Act requirements

WIMPER program (Section 125/105):

• Added alongside your existing plan
• Creates a pre-tax contribution structure under Section 125
• Establishes a Section 105(b) SIMRP for medical expense reimbursement
• Reduces taxable wages for both employer and employees
• Generates FICA savings for the employer

These are two separate structures serving two different purposes. One satisfies a state law. The other recovers federal FICA tax dollars. They do not conflict.

Why This Matters Financially

Because you are already providing health coverage, the foundational investment is made. WIMPER does not ask you to spend more on employee benefits. It restructures a portion of existing compensation so that both you and your employees pay less in FICA tax.

The result:

• Employer saves the standard projected $1,119.20 for most enrolled employees, with employee-level savings slightly lower above the applicable FICA wage-base cap
• Employee saves on their FICA contribution and gets access to supplemental wellness benefits
• Nobody loses existing health coverage or take-home pay

For example, a 75-person company with 80% participation would have 60 enrolled employees and roughly $67,200 in projected annual FICA recovery. These figures are estimates that depend on your specific payroll, wage levels, and employee participation, which vary from employer to employer.

Common Questions From Hawaii Employers

“Will this affect my employees’ HMSA or Kaiser coverage?” No. Your existing health plan is completely separate. Nothing changes.

“Does the state have any issue with this?” The WIMPER program operates under federal tax code (IRC Sections 125, 105(b), and 213(d)). It does not modify or replace your state-mandated coverage. There is no conflict with the HPHCA.

“What if I already have a Section 125 plan for premium deductions?” Many employers already have a basic Section 125 plan that allows employees to pay health insurance premiums with pre-tax dollars. WIMPER expands on this by adding the Section 105(b) SIMRP component, which is where the additional FICA savings and supplemental benefits come from.

The Bottom Line

Hawaii employers are uniquely positioned for the WIMPER program because the hardest part, providing employee health coverage, is already done. WIMPER simply adds a compliant structure alongside what exists and returns FICA dollars to your business.

If you want to see what the numbers look like for your company, request a ProForma. Brandon Attebury will walk you through your specific projections. No obligation.

Sources

1. Hawaii Department of Labor and Industrial Relations, About the Prepaid Health Care Act. Used for the HPHCA requirements: 1974 effective date, 20+ hours per week for four consecutive weeks eligibility, the employer share of at least 50% of the premium, Prepaid Health Care Advisory Council coverage standards, and approved-carrier requirement (Hawaii Revised Statutes Chapter 393).
2. Cornell Law School, Legal Information Institute, 26 U.S. Code § 125, Cafeteria plans. Used for the federal Section 125 cafeteria plan framework.
3. Cornell Law School, Legal Information Institute, 26 U.S. Code § 105, Amounts received under accident and health plans. Used for the Section 105(b) self-insured medical reimbursement reference.
4. Cornell Law School, Legal Information Institute, 26 U.S. Code § 213, Medical, dental, etc., expenses. Used for the Section 213(d) qualifying medical expense reference.
5. Cornell Law School, Legal Information Institute, 26 U.S. Code § 3121, Definitions (FICA). Used for the FICA tax framework.
6. IRS, About Publication 15-B, Employer’s Tax Guide to Fringe Benefits. Used for cafeteria plan and qualified-benefit background.

This article is educational tax and benefits commentary, not legal, tax, payroll, or plan-administration advice. Dollar figures are illustrative estimates that depend on your specific payroll, wages, and employee participation. The interaction between a Section 125/105(b) structure and Hawaii’s Prepaid Health Care Act should be reviewed with qualified tax and legal counsel for your specific situation before acting.