SB 2931: DHS; DLIR; Insurance Commissioner; Hawaii CARES Fund Long-Term Services and Supports Trust Program; Payroll Premium; Benefit Units; Exemptions; Out-of-State Participants; Supplemental Insurance; Consumer Education; Reports; Rules; Appropriation

THE SENATE	S.B. NO.	2931
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII

A BILL FOR AN ACT

 

 

relating to LONG-TERM CARE.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The legislature finds that most long-term care needs are not covered by medicare or most private health insurance plans, and that the private long-term care insurance market is unaffordable or unavailable for most working families.  The legislature further finds that middle-income families are at significant risk because many residents have not saved enough money to cover long-term care costs and are forced to spend down limited assets to qualify for public assistance, placing family members and caregivers at risk for their own future long-term care needs.

     The legislature also finds that the State faces a convergence of demographic and economic pressures, including an aging population, declining caregiver-to-elder ratios, high costs of health care, workforce shortages in long-term services and supports, and inadequate retirement preparedness, all of which increase reliance on medicaid long-term services and supports and increase financial hardship for families.

     The legislature further finds that an alternative, payroll‑based funding mechanism for long-term services and supports can reduce hardship on families, lessen the long-term burden on medicaid, and produce positive economic impacts by improving access to paid care, supporting family caregivers, and reducing workforce disruptions.

       The legislature additionally finds that program design should support consumer choice of setting and services, including care in the home, community-based settings, assisted living settings, and skilled nursing facilities, and should facilitate seamless transitions among public and private sources of long-term care financing.

     Accordingly, the purpose of this Act is to establish a statewide long-term services and supports trust program funded by an employee payroll premium to provide a meaningful long-term care benefit, with a benefit unit structure and approved services modeled on Washington's long-term services and supports trust program, including portability and prorated vesting for older workers, and to incorporate enhancements reflected in the structure of recent long-term care programs in other states, including structured options to promote supplemental private coverage, regulatory modernization, and consumer education.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

Hawaii cares fund long-term services and supports trust program

     §   -1  Definitions.  As used in this chapter:

     "Activities of daily living" means the functional activities of eating, toileting, transferring, bathing, dressing, continence, and other activities as may be defined by the department by rule for long-term services and supports programs.

"Approved service" means a long-term service or support that is eligible for reimbursement under this chapter and includes:

     (1)  Adult day services;

     (2)  Care transition coordination;

     (3)  Memory care;

     (4)  Adaptive equipment and technology;

     (5)  Environmental modification;

     (6)  Personal emergency response system;

     (7)  Home safety evaluation;

     (8)  Respite for family caregivers;

     (9)  Home-delivered meals;

    (10)  Transportation;

    (11)  Dementia supports;

    (12)  Education and consultation;

    (13)  Eligible relative care;

    (14)  Professional services;

    (15)  Services that assist paid and unpaid family members caring for eligible individuals, including training for individuals providing care who are not otherwise employed as long-term care workers;

    (16)  In-home personal care;

    (17)  Assisted living services;

    (18)  Adult residential care home services; and

    (19)  Nursing facility services.

     "Benefit unit" means a unit of benefits in the amount determined pursuant to section   -7, paid as reimbursement for approved services provided to an eligible beneficiary on a specific date.

     "Commission" means the long-term services and supports trust commission established pursuant to section   -4.

     "Council" means the long-term services and supports trust council established pursuant to section   -5.

     "Department" means the department of human services.

     "Director" means the director of human services.

     "Eligible beneficiary" means a qualified individual who has been determined by the department to meet the functional eligibility requirements of section   -7 and who:

     (1)  Is a resident of the State; or

     (2)  Is an out-of-state participant who has elected to continue participation pursuant to section   -13.

     "Eligible relative care" means personal care services provided by a qualified family member, as determined by the department by rule, including services provided pursuant to an eligible beneficiary's care plan.

     "Employee" means an individual performing services for an employer for remuneration, and includes any individual in employment.

     "Employer" means any person, including an individual, partnership, association, corporation, or governmental entity, that employs one or more employees.

     "Exempt employee" means an employee with an approved exemption pursuant to section   -10,    -11, or    -12.

     "Long-term services and supports" means assistance with activities of daily living and other services and supports designed to assist an individual to live independently and safely, including approved services.

     "Long-term services and supports provider" means an entity or individual, including a qualified family member, that provides approved services and meets provider qualifications and registration requirements established by the department by rule.

     "Premium" means the long-term services and supports premium assessed on wages pursuant to section   -9.

     "Program" means the Hawaii CARES fund long-term services and supports trust program established under section   -2.

     "Qualified family member" means an individual, including a family member or other person chosen by an eligible beneficiary, who satisfies criteria established by the department by rule to provide eligible relative care or other approved services, including training or competency requirements, as applicable.

     "Qualified individual" means an individual deemed by the department of labor and industrial relations to be a qualified individual pursuant to section   -6.

     "Self-employed person" means a sole proprietor, independent contractor, partner, joint venturer, or other individual who derives income from self-employment, as determined by the department of labor and industrial relations by rule.

     "Wages" means all remuneration paid by an employer to an employee for services performed, including commissions, bonuses, and the cash value of all remuneration paid in any medium other than cash, as determined by the department of labor and industrial relations by rule.  "Wages" includes remuneration for services performed within or without the State as may be necessary to administer section   -13.

     §   -2  Hawaii CARES fund long-term services and supports trust program; established; purpose.  (a)  There is established within the department the Hawaii CARES fund long-term services and supports trust program to provide eligible beneficiaries with a lifetime long-term services and supports benefit payable in benefit units for approved services.

     (b)  The program shall be structured to:

     (1)  Provide meaningful financial assistance for approved services across home- and community-based settings and institutional settings;

     (2)  Promote consumer choice of services and settings;

     (3)  Facilitate seamless transitions among private and public sources of long-term care financing, including Medicaid long-term services and supports;

     (4)  Support paid and unpaid caregivers, including qualified family members, through eligible relative care and caregiver supports; and

     (5)  Encourage innovation and supplemental private coverage to expand access to affordable long-term care protection.

     §   -3  Departmental duties; coordination among agencies.  (a)  The department shall administer benefits under this chapter and shall:

     (1)  Determine an individual's status as an eligible beneficiary pursuant to section   -7;

     (2)  Approve the scope of approved services and establish by rule, the types of goods and services that are and are not covered within each approved service category, in a manner designed to maximize usage of all available public and private benefits for eligible beneficiaries;

     (3)  Develop and implement a provider registration system for long-term services and supports providers, including standards for provider qualification, participation, suspension, and removal;

     (4)  Develop standards for qualified family members and eligible relative care, including training and competency requirements, as appropriate, and procedures for reimbursement;

     (5)  Disburse benefit payments from the Hawaii CARES trust fund pursuant to section   -8;

     (6)  Provide customer service, program materials, and operational support for applicants, eligible beneficiaries, employers, and long-term services and supports providers;

     (7)  Collect and analyze program data to monitor program utilization, equity, workforce impacts, and program outcomes; and

     (8)  Adopt rules pursuant to chapter 91 as necessary to implement this chapter.

     (b)  The department of labor and industrial relations shall administer premium assessment and collection under this chapter and shall:

     (1)  Assess and collect premiums pursuant to section   -9 and deposit premiums as required under section   -15;

     (2)  Determine an individual's status as a qualified individual pursuant to section   -6;

     (3)  Administer exemptions and elections of coverage pursuant to sections   -10 through    -14;

     (4)  Conduct investigations to determine compliance with premium payment requirements;

     (5)  Establish employer remittance procedures, reporting requirements, and record retention standards; and

     (6)  Adopt rules pursuant to chapter 91 as necessary to implement and administer its duties under this chapter.

     (c)  The department of commerce and consumer affairs, through the insurance commissioner, shall implement section   ‑18(a) and shall coordinate with the department and the commission to support supplemental private coverage and consumer protections.

     (d)  The director of finance shall invest moneys in the Hawaii CARES trust fund pursuant to section   -16.

     (e)  The department, the department of labor and industrial relations, and the department of commerce and consumer affairs shall enter into memoranda of understanding as necessary to coordinate eligibility determinations, premium collection, data sharing, fraud prevention, provider oversight, and consumer education, consistent with section    -23.

     §   -4  Long-term services and supports trust commission; establishment.  (a)  There is established the long-term services and supports trust commission to provide policy oversight and ongoing recommendations regarding implementation and administration of the program.

     (b)  The commission shall consist of the following fourteen members:

     (1)  The director, or the director's designee;

     (2)  The director of labor and industrial relations, or the director's designee;

     (3)  The insurance commissioner, or the commissioner's designee;

     (4)  The director of health, or the director's designee;

     (5)  The director of finance, or the director's designee;

     (6)  One member of the senate appointed by the president of the senate;

     (7)  One member of the house of representatives appointed by the speaker of the house of representatives; and

     (8)  Seven members appointed by the governor to represent, collectively:

          (A)  Employees who are premium payers;

          (B)  Employers subject to premium collection requirements;

          (C)  Long-term services and supports providers, including home- and community-based providers;

          (D)  Nursing facility providers;

          (E)  Consumer advocates and family caregivers;

          (F)  Individuals with expertise in aging, disability, and dementia services; and

          (G)  Individuals with expertise in actuarial science, public finance, or long-term care insurance.

     (c)  Appointed members shall serve terms of four years and may be reappointed for one additional consecutive four-year term; provided that initial appointments shall be for staggered terms, as determined by the governor.  Vacancies shall be filled for the unexpired term in the same manner as the original appointment.

     (d)  The commission shall elect a chairperson and vice chairperson from among its members.  The commission shall meet at least quarterly and at other times as necessary.

     (e)  Members of the commission shall serve without compensation but may be reimbursed for reasonable expenses, including travel expenses, necessary for the performance of their duties, subject to the availability of funds.

     (f)  The commission shall:

     (1)  Establish policy recommendations and strategic priorities for program implementation and administration;

     (2)  Recommend to the department and department of labor and industrial relations rules, procedures, and operational standards necessary to implement this chapter;

     (3)  Review actuarial audits and valuations and advise the council regarding actions necessary to maintain actuarial solvency, benefit adequacy, and administrative sustainability;

     (4)  Monitor benefit utilization, access to approved services, provider network adequacy, workforce impacts, and equity outcomes, and recommend improvements;

     (5)  Develop and oversee consumer education and outreach priorities pursuant to section   -19;

     (6)  Coordinate with the insurance commissioner and stakeholders to promote a supplemental private coverage framework pursuant to section   -18;

     (7)  Evaluate potential program design enhancements reflected in other state long-term care program structure, including options for progressive premium structures, wage caps, contribution waivers for low‑wage workers, shared employer-employee contribution approaches, and mechanisms to strengthen portability and benefit adequacy; and

     (8)  Submit reports, including findings and recommendations, to the legislature pursuant to section   -20.

     §   -5  Long-term services and supports trust council; establishment.  (a)  There is established the long-term services and supports trust council.  The council shall be responsible for setting the premium rate within the cap established by section   -9 and determining the annual benefit unit adjustment pursuant to section    -7, based on actuarial analysis and program experience.

     (b)  The council shall consist of the following five members:

     (1)  The director of finance, or the director's designee, who shall serve as chairperson;

     (2)  The director, or the director's designee;

     (3)  The director of labor and industrial relations, or the director's designee;

     (4)  The insurance commissioner, or the commissioner's designee; and

     (5)  One public member with expertise in actuarial science  or public finance, appointed by the governor.

     (c)  The council shall:

     (1)  Beginning January 1, 2030, and biennially thereafter, set the premium rate pursuant to section   -9 at the lowest amount necessary to maintain actuarial solvency of the program; provided that the premium rate shall not exceed the maximum rate specified in section   -9 unless otherwise authorized by the legislature;

     (2)  Determine the annual adjustment to the benefit unit amount pursuant to section   -7;

     (3)  Require a biennial actuarial audit and valuation of the program by an independent actuary selected by the council through a procurement process, and consider recommendations regarding solvency, benefit adequacy, contribution sufficiency, and administrative costs; and

     (4)  Submit to the legislature and the commission, no later than twenty days after setting or adjusting the premium rate or benefit unit amount, a report describing the council's determination, the actuarial basis for the determination, and any recommendations for legislative action.

     §   -6  Qualified individuals.  (a)  Except as provided in subsection (b), the department of labor and industrial relations shall deem a person to be a qualified individual under this chapter if the person has paid premiums required by section   ‑9 for the equivalent of either:

     (1)  A total of ten years; or

     (2)  Three years within the last six years from the date of application for benefits.

     (b)  A person born before January 1, 1968, who has not met the duration requirements under subsection (a)(1), may become a qualified individual with fewer than ten years of premium payment if the person has paid premiums required by section   ‑9 for at least one year.  A person becoming a qualified individual pursuant to this subsection may receive one-tenth of the maximum number of lifetime benefit units available under section   -7 for each year of premium payments; provided that nothing in this subsection shall prohibit a person born before January 1, 1968, who meets the conditions of subsection (a)(2) from receiving the maximum number of lifetime benefit units available under section    -7.

     (c)  When deeming a person to be a qualified individual, the department of labor and industrial relations shall require that the person have worked at least five hundred hours during each of the years counted toward subsection (a)(1), (a)(2), or (b), as applicable, in a manner determined by the department of labor and industrial relations by rule.

     (d)  An exempt employee shall not be deemed a qualified individual unless:

     (1)  The employee's exemption was rescinded pursuant to section   -10; or

     (2)  The employee's exemption was discontinued pursuant to section   -12.

     (e)  An out-of-state participant whose elective coverage has been canceled by the department of labor and industrial relations pursuant to section    -13 shall not be deemed a qualified individual.

     (f)  Benefits for eligible beneficiaries residing in the State shall not be available until January 1, 2030, and benefits for out-of-state participants who become eligible beneficiaries shall not be available until January 1, 2034; provided that nothing in this chapter shall require the department to accept applications for determining an individual's status as an eligible beneficiary before January 1, 2030.

     §   -7  Eligible beneficiaries; benefits available; benefit units.  (a)  The department shall make determinations regarding an individual's status as an eligible beneficiary.

     (b)  The department shall determine that an individual meets the functional eligibility requirements to become an eligible beneficiary if the department determines that the individual either:

     (1)  Is unable to perform, without substantial assistance from another individual, at least three of the following activities of daily living for at least ninety days due to loss of functional capacity: eating, toileting, transferring, bathing, dressing, or continence; or

     (2)  Requires substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

     (c)  The department shall ensure sufficient assessor capacity and establish procedures to make functional eligibility determinations within forty-five days from receipt of a completed request for benefits, except as otherwise provided by rule for good cause.

     (d)  The benefit unit amount shall be $100.  Beginning January 1, 2031, and annually thereafter, the benefit unit amount shall be adjusted by the council at a rate not to exceed the percentage change in the Consumer Price Index for all urban consumers for Honolulu, as published by the United States Bureau of Labor Statistics, for the previous calendar year; provided that any adjustment shall be subject to revision by the legislature.

     (e)  Benefit units may be paid as reimbursement for approved services provided to an eligible beneficiary on a specific date, in the manner established by the department by rule.

     (f)  The total lifetime limit of benefit units available to an eligible beneficiary shall be three hundred sixty-five benefit units.  The department shall:

     (1)  Authorize payment of a partial benefit unit if the amount due for an approved service is less than the benefit unit amount; and

     (2)  Allow an eligible beneficiary to combine benefit units to receive additional approved services per day; provided that the total number of lifetime benefit units has not been exceeded.

     (g)  Benefits shall be payable only for approved services and only after the individual has been determined to be an eligible beneficiary and the services are consistent with a care plan or authorization process established by the department by rule.

     §   -8  Payment of benefits; provider registration; qualified family member.  (a)  The department shall disburse benefits from the Hawaii CARES trust fund to long-term services and supports providers, as reimbursement, for approved services delivered to eligible beneficiaries, in accordance with this chapter and rules adopted pursuant to this chapter.

     (b)  The department shall establish, by rule:

     (1)  Provider registration standards, including provider qualifications, compliance requirements, billing standards, and procedures for suspension and removal;

     (2)  Procedures for verifying delivery of approved services;

     (3)  Procedures for payment to long-term services and supports providers and, when appropriate, reimbursement to eligible beneficiaries for approved services;

     (4)  Standards for qualified family members, including training and competency requirements and safeguards to prevent fraud and abuse; and

     (5)  Criteria for approval of eligible relative care and payment for services delivered by qualified family members, including services delivered outside the State for eligible beneficiaries who are out-of-state participants.

     (c)  The department shall coordinate payment of benefits with other private and public sources of funding for long-term services and supports, including medicaid long-term services and supports, to the extent allowable under federal and state law, to maximize the benefit available to eligible beneficiaries and support seamless transitions among funding sources.

     (d)  The department may adopt rules establishing prior authorization, care planning, and utilization controls necessary to prevent inappropriate use of benefits, ensure program integrity, and preserve solvency, while maintaining meaningful access to approved services.

     §   -9  Premium assessment; rate; collection.  (a)  Unless otherwise exempted pursuant to this chapter, beginning January 1, 2027, the department of labor and industrial relations shall assess for each individual in employment with an employer a premium based on the amount of the individual's wages.  The initial premium rate shall be 0.58 per cent of the individual's wages.

     (b)  Beginning January 1, 2030, and biennially thereafter, the premium rate shall be set by the council at a rate no greater than 0.58 per cent of wages; provided that the council shall set the premium rate at the lowest amount necessary to maintain actuarial solvency.  To facilitate premium rate setting, the council shall require a biennial actuarial audit and valuation pursuant to section    -5.

     (c)  The employer shall collect premiums from employees through payroll deductions and remit the amounts collected to the department of labor and industrial relations. In collecting employee premiums, the employer shall act as the agent of the employees and shall remit the amounts as required by this chapter and rules adopted pursuant to this chapter.

     (d)  Premiums shall be collected in the manner and at intervals as directed by the department of labor and industrial relations.  To the extent feasible, the department of labor and industrial relations shall use existing premium assessment, collection, and reporting procedures used for other payroll‑ based contributions administered by the department of labor and industrial relations.

     (e)  The department of labor and industrial relations shall deposit all premiums collected under this section into the Hawaii CARES trust fund.

     (f)  An employer may elect to pay all or part of an employee's premium in addition to, or in lieu of, withholding from wages, as permitted by rules adopted by the department of labor and industrial relations; provided that any employer payment shall be treated as a payment to the program and shall not create an employee entitlement beyond the benefit structure established by this chapter.

     §   -10  Premium assessment; exemption for employees with long-term care insurance.  (a)  An employee who attests that the employee has long-term care insurance purchased before January 1, 2028, may apply for an exemption from the premium assessment under section   -9.

     (b)  The department of labor and industrial relations shall accept applications for exemptions only from July 1, 2026, through December 31, 2027.  Only employees who are eighteen years of age or older may apply for an exemption.

     (c)  The department of labor and industrial relations shall not be required to verify an employee's attestation that the employee has long-term care insurance.

     (d)  Approved exemptions shall take effect on the first day of the calendar quarter immediately following approval of the exemption.

     (e)  Exempt employees shall not be entitled to a refund of any premium deductions made before the effective date of an approved exemption.

     (f)  An exempt employee shall provide written notification of the approved exemption to all current and future employers. If an exempt employee fails to notify an employer of an approved exemption, the exempt employee shall not be entitled to a refund of any premium deductions made before the written notification is provided.

     (g)  Employers shall not deduct premiums after being notified by an employee of an approved exemption.  Employers shall retain written notifications of exemptions received from employees.  Any employer that deducts premiums after being notified of an approved exemption shall be solely responsible for refunding to the employee any premiums deducted after the notification.  The employer shall not be entitled to a refund from the department of labor and industrial relations for any premiums remitted on behalf of exempt employees.

     (h)  Except as provided in subsection (i), an exempt employee shall not become a qualified individual or eligible beneficiary and shall be permanently ineligible for coverage under this chapter.

     (i)  Before January 1, 2032, an employee who has received an approved exemption pursuant to this section may rescind the exemption and participate in the program by notifying the department of labor and industrial relations in a form and manner established by the department of labor and industrial relations.  Upon notification, the employee shall be subject to premium assessments under section   -9 or    -14.  The employee shall not be responsible for premiums that would have been assessed before the rescission.  When deeming a person to be a qualified individual under section   -6, the department of labor and industrial relations shall not count any year during which the employee was exempt unless premiums were assessed for part of the year and the minimum work hour requirement under section   -6 was satisfied.

     (j)  The department of labor and industrial relations shall adopt rules necessary to implement and administer this section, including rules governing applications and rescissions.

     §   -11  Premium assessment; exemption for certain nonimmigrant visa holders.  (a)  An employee holding a nonimmigrant visa that authorizes temporary work in the United States, as determined by the department of labor and industrial relations by rule, shall not be subject to the premium assessment under section    -9 unless the employee notifies the employer that the employee elects to participate in the program.

     (b)  If an employee described in subsection (a) becomes a lawful permanent resident or a citizen of the United States and is employed in the State, the employee shall become subject to the premium assessment under section    -9 unless otherwise exempt pursuant to this chapter.

     (c)  The department of labor and industrial relations shall adopt rules necessary to implement this section, including rules governing employee elections and notification to employers.

     §   -12  Premium assessment; voluntary exemptions.  (a)  An employee may apply for an exemption from the premium assessment under section   -9 if the employee is:

     (1)  A veteran with a service-connected disability rating of seventy per cent or greater, as determined by the United States Department of Veterans Affairs, and receiving compensation for the disability;

     (2)  The spouse or reciprocal beneficiary of an active duty service member who is relocating as the result of a military transfer;

     (3)  Employed in the State but maintaining a permanent address outside the State; or

     (4)  An active duty service member engaged in off-duty civilian employment.

     (b)  An employee seeking an exemption shall apply to the department of labor and industrial relations in a manner prescribed by the department of labor and industrial relations by rule.

     (c)  An employer shall not deduct premiums after receiving written notification from an employee of an approved exemption under this section.

     (d)  An employee exempt under this section shall not become a qualified individual or eligible beneficiary and shall be permanently ineligible for coverage under this chapter unless the exemption is discontinued pursuant to subsection (e).

     (e)  An exemption under this section shall be discontinued when the employee no longer meets the requirements for the exemption.  The employee shall discontinue the exemption within ninety days of the change, and shall notify the department of labor and industrial relations and the employer within ninety days.

     (f)  An employee required to discontinue an exemption who fails to begin paying premiums within ninety days shall be liable for unpaid premiums that would have been assessed since the discontinuation, plus interest at one per cent per month, as determined by the department of labor and industrial relations by rule.

     (g)  The department of labor and industrial relations shall adopt rules necessary to implement and administer this section, including rules on applications, approvals, discontinuations, and enforcement.

     §   -13  Out-of-state participants; reporting; collection of premiums.  (a)  Beginning January 1, 2030, an employee or self-employed person who has elected coverage pursuant to section     -14 and who relocates outside of the State may elect to continue participation in the program if the person:

     (1)  Has been assessed premiums for at least three years and has worked at least five hundred hours during each of those years in the State, as determined by the department of labor and industrial relations by rule; and

     (2)  Notifies the department of labor and industrial relations, within one year of establishing a primary residence outside the State, that the person is no longer a resident of the State and elects to continue participation.

     (b)  An out-of-state participant shall report wages or self-employment earnings to the department of labor and industrial relations, and remit premiums according to standards established by the department of labor and industrial relations by rule; provided that the out-of-state participant shall submit any documentation required under the standards even if the out‑of-state participant has not earned wages or self-employment earnings during a reporting period.

     (c)  When an out-of-state participant reaches sixty-seven years of age, the participant shall not be required to submit documentation pursuant to subsection (b) unless the participant continues to earn wages or self-employment earnings; provided that if the participant continues to earn wages or self‑employment earnings, the participant shall report and remit premiums pursuant to subsection (b).

     (d)  An out-of-state participant who elects to continue participation pursuant to subsection (a) shall remain covered by the program.  The department of labor and industrial relations may cancel elective coverage if the out-of-state participant fails to make required payments or submit required reports; provided that the cancellation shall be effective no later than thirty days from the date of written notice informing the out‑of-state participant of the cancellation.

     (e)  The department of labor and industrial relations shall adopt rules establishing standards for reporting and remitting premiums by out-of-state participants, including standards for verifying wages or self-employment earnings and minimizing procedural burdens.

     (f)  Entities providing approved services to an eligible beneficiary outside the State shall comply with section    -21 and any additional nondiscrimination standards established by the department by rule.

     (g)  Any participant who relocated outside of the State may elect to opt out of continued participation by ceasing to report wages or self-employment earnings to the department of labor and industrial relations in the manner established by rule.

     §   -14  Election of coverage; self-employed persons.  (a)  Beginning January 1, 2027, any self-employed person may elect coverage under this chapter.  Coverage shall be elected before January 1, 2030, or within three years of becoming self-employed for the first time, whichever is later, in a manner established by the department of labor and industrial relations by rule.

     (b)  A self-employed person who elects coverage under this section shall be responsible for payment of one hundred per cent of all premiums assessed under section   -9 and shall remit premiums to the department of labor and industrial relations in the manner established by rule.

     (c)  A self-employed person who has elected coverage shall not withdraw from coverage, except as provided in subsection (d).

     (d)  A self-employed person who elects coverage shall continue to pay premiums until the person retires from the workforce or is no longer self-employed.  To cease premium assessment and collection, the person shall file a notice with the department of labor and industrial relations, in the manner established by rule.

     (e)  The department of labor and industrial relations may cancel elective coverage if the self-employed person fails to make required payments or submit reports as required.  The department of labor and industrial relations may collect due and unpaid premiums and may levy an additional premium for the remainder of the period of coverage.  The cancellation shall be effective no later than thirty days from the date of written notice informing the self-employed person of the cancellation.

     §   -15  Hawaii CARES trust fund; established.  (a)  There is established in the state treasury the Hawaii CARES trust fund, to be administered and expended by the department.  All receipts from employers and employees under section    -9 and out-of-state participants under section    -13, delinquent premiums, penalties, and interest received pursuant to section    -22, and any funds attributable to savings derived through a waiver with the federal Centers for Medicare and Medicaid Services pursuant to section    -17 shall be deposited into the fund.

     (b)  Moneys in the fund shall be used to expand long-term care in the State, including for:

     (1)  Benefit payments under this chapter; and

     (2)  Administrative activities necessary to implement and administer the program, including activities of the department, the department of labor and industrial relations, and the department of commerce and consumer affairs related to this chapter.

     (c)  Moneys in the fund shall not be used, either in whole or in part, to supplant existing state or county funds for programs that meet the definition of approved services.

     (d)  The department shall submit a report to the legislature no later than twenty days prior to the convening of each regular session to provide an accounting of the receipts and expenditures of the fund.

     (e)  If moneys in the fund are appropriated or expended for any purpose other than as permitted in this chapter, the legislature shall notify each qualified individual by mail that the person's premiums were used for an alternate purpose, describe the alternate purpose, and state the plan for restoring the funds so that premiums are not increased and benefits are not reduced.

     §   -16  Hawaii CARES trust fund; investment; policies.  (a)  The director of finance shall invest moneys in the Hawaii CARES trust fund.  The director of finance shall have full authority to invest, reinvest, manage, contract, sell, or exchange fund assets, consistent with applicable state law and prudent investment standards.

     (b)  Investment and operating costs associated with fund investments shall be paid from the fund.  Except for these expenses, all investment earnings shall be retained in the fund.

     (c)  Except for investment expenses under subsection (b), disbursements from the fund shall be made only upon the authorization of the director or the director's designee, and moneys in the fund shall be expended only for purposes authorized by this chapter.

     (d)  The director of finance and any board, committee, or agent acting within the scope of delegated investment authority shall not be liable for any action or inaction except for willful dishonesty or intentional violation of law.  The director of finance may purchase liability insurance as appropriate.

     §   -17  Data access; federal waiver; shared savings.  (a)  The department shall:

     (1)  Seek access to medicare data from the federal Centers for Medicare and Medicaid Services to analyze potential savings in medicare expenditures attributed to the operation of the program;

     (2)  Apply for a demonstration waiver from the federal Centers for Medicare and Medicaid Services to allow the State to share in savings generated in the federal match for medicaid long-term services and supports and in medicare expenditures attributable to the operation of the program; and

     (3)  Submit a report to the legislature on the status of the waiver, in accordance with section 93-16, no later than December 1, 2027, and annually thereafter until the waiver is approved or denied.

     (b)  If the State obtains a waiver that results in shared savings attributable to long-term services and supports spending, the amount of shared savings shall be deposited into the Hawaii CARES trust fund established pursuant to section   ‑15.

     §   -18  Supplemental private coverage framework; innovation and regulatory modernization.  (a)  The insurance commissioner shall, in consultation with the commission and the department, establish a regulatory pathway for insurers to offer supplemental long-term care insurance products designed to coordinate with the program.  The pathway shall, at a minimum, establish standards for supplemental products that:

     (1)  Recognize the public benefit available under this chapter as a deductible or offset to reduce consumer premium costs;

     (2)  Provide benefits that complement approved services and are designed to reduce medicaid spend-down risk for middle-income households;

     (3)  Are portable and provide clear consumer disclosures regarding how benefits interact with benefits under this chapter; and

     (4)  Comply with solvency, marketing conduct, and consumer protection standards established by the insurance commissioner.

     (b)  The commission shall establish an innovation and market modernization working group to:

     (1)  Evaluate hybrid insurance models, including life insurance and long-term care combination products, employer-based voluntary benefits, and other emerging products;

     (2)  Identify barriers to affordability and availability of supplemental coverage and recommend regulatory or statutory changes to address those barriers;

     (3)  Monitor impacts on medicaid long-term services and supports utilization and spend-down trends and recommend strategies to align medicaid planning with private market expansion; and

     (4)  Recommend updates to program design, portability standards, benefit unit adjustments, and premium design options, consistent with actuarial solvency.

     (c)  The department shall coordinate with employers, insurers, labor organizations, and consumer groups to encourage employer group plan options and voluntary benefits that complement the program and expand uptake of supplemental coverage.

     §   -19  Consumer education and outreach.  (a)  The department, in consultation with the commission, shall implement a multilingual, multimedia public education campaign to inform residents and employers regarding:

     (1)  The availability and scope of benefits under this chapter;

     (2)  The distinction between medicare coverage and long-term services and supports needs;

     (3)  Coordination of benefits among the program, private long-term care insurance, medicaid, and other public programs;

     (4)  Exemptions, elections, and portability provisions;

     (5)  Approved services and the process by which eligible beneficiaries may access services; and

     (6)  Fraud prevention and consumer protections.

     (b)  The department shall prioritize outreach to populations disproportionately impacted by long-term care costs and caregiving burdens, including caregivers, older workers, individuals with disabilities, and low- and moderate-income households.

     §   -20  Annual reports; audits.  (a)  The commission shall submit a report to the legislature no later than December 31 of each year, beginning December 31, 2027, that includes:

     (1)  Program implementation status and major administrative actions;

     (2)  Premium collections, expenditures, and fund balance;

     (3)  Benefit utilization data by approved service type and setting;

     (4)  Demographic and equity analyses of participation and benefit utilization;

     (5)  Provider network capacity and workforce impacts;

     (6)  Actuarial audit and valuation summaries and council determinations regarding premium rate and benefit unit adjustments; and

     (7)  Recommendations for legislative or administrative actions to improve solvency, benefit adequacy, and access.

     (b)  The auditor shall conduct periodic audits of the program and the Hawaii CARES trust fund, including financial and performance audits, as determined appropriate by the auditor, and shall submit audit findings to the legislature.

     §   -21  Discrimination prohibited.  Any long-term services and supports provider and any entity providing services to an eligible beneficiary under this chapter, including services delivered outside the State to an eligible beneficiary who is an out-of-state participant, shall not discriminate in the provision of approved services on any basis prohibited by federal or state law, including but not limited to race, color, religion, sex, sexual orientation, gender identity or expression, age, disability, national origin, ancestry, or preexisting condition, and shall comply with applicable state and federal nondiscrimination laws.

     §   -22  Enforcement; delinquent premiums; penalties.  (a)  The department of labor and industrial relations may investigate employer and individual compliance with premium assessment, collection, reporting, and remittance requirements under this chapter.

     (b)  If an employer fails to collect, remit, or report premiums as required, the department of labor and industrial relations may assess delinquent premiums, interest, and penalties in a manner established by rule.  Interest shall accrue on delinquent premiums at one per cent per month unless otherwise provided by rule consistent with this chapter.

     (c)  The department of labor and industrial relations may establish by rule penalty schedules, notice procedures, and collection remedies, including administrative offsets, liens, and other lawful collection mechanisms, to ensure compliance; provided that due process protections, including notice and opportunity to be heard, shall be provided.

     (d)  The department of labor and industrial relations shall adopt rules necessary to implement this section, including rules regarding employer liability, recordkeeping, audits, and enforcement coordination with other payroll-based contribution programs.

     §   -23  Confidentiality; data sharing.  (a)  Personally identifiable information collected or maintained by the department, the department of labor and industrial relations, or the insurance commissioner for purposes of this chapter shall be confidential and shall not be subject to public inspection, except as otherwise provided by law.

     (b)  The department, the department of labor and industrial relations, and the insurance commissioner may share confidential information with each other as necessary to administer and enforce this chapter, prevent fraud, coordinate benefits, and evaluate program performance; provided that information sharing shall be governed by written agreements and shall include safeguards to protect confidentiality and data security.

     (c)  Aggregate data that does not identify individuals may be disclosed in reports required by this chapter.

     §   -24  Rules.  The department, the department of labor and industrial relations, and the insurance commissioner shall adopt rules pursuant to chapter 91 as necessary to implement this chapter, including rules regarding eligibility determinations, benefit payments, provider registration, premium assessment and collection, exemptions, elections, portability, fraud prevention, and consumer protections."

     SECTION 3.  There is appropriated out of the general revenues of the State of Hawaii the sum of $4,500,000 or so much thereof as may be necessary for fiscal year 2026-2027 for the initial establishment and implementation of the Hawaii CARES fund long-term services and supports trust program, including information technology systems, rulemaking, staffing, outreach, and interagency coordination.

     The sum appropriated shall be expended by the department of human services for the purposes of this Act.

     SECTION 4.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 5.  This Act shall take effect on July 1, 2026.

 

INTRODUCED BY:	_____________________________

 

 

 

Report Title:

DHS; DLIR; Insurance Commissioner; Hawaii CARES Fund Long-Term Services and Supports Trust Program; Payroll Premium; Benefit Units; Exemptions; Out-of-State Participants; Supplemental Insurance; Consumer Education; Reports; Rules; Appropriation

 

Description:

Establishes the Hawaii CARES Fund Long-term Services and Supports Trust Program within the Department of Human Services to be implemented in collaboration with the Department of Labor and Industrial Relations and the Insurance Commissioner, provide eligible beneficiaries with a lifetime benefit for approved long-term services and supports funded through payroll-based premium assessed on wages, with exemptions and optional participation for self-employed persons and certain out‑of‑state participants.  Establishes a trust fund commission and council.  Establishes premium assessment and collection requirements.  Provides cancellation procedures under certain circumstances.  Establishes a supplemental private coverage framework and consumer education requirements.  Establishes the Hawaii CARES trust fund and investment requirements.  Requires DHS, DLIR, and the Insurance Commissioner to adopt rules.  Requires reports to the Legislature.  Appropriates funds.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.