Hawaii workers' compensation insurance

Every business in Hawaii that has employees must have workers’ compensation insurance. This applies to all types of employees: full-time, part-time, permanent, or temporary.

However, there are several exemptions to Hawaii’s requirements for workers’ comp. Certain business owners, officers, and executives are not required to carry coverage, including:

• Sole proprietors and independent contractors
• Partners in a business
• Any corporate officer who owns at least 50% of the business

Members of limited liability companies (LLCs) are also exempt from workers’ compensation as long as they are a person (and not a business entity) and would stand to receive at least 50% of the LLC’s value if the firm were liquidated or sold.

Even when it's not required, you should still consider carrying workers' comp coverage. It's usually a wise decision, as personal health insurance plans exclude coverage for work-related injuries.

Certain employees are also exempt from workers’ comp coverage, including:

• Voluntary or unpaid workers for a church, charity, school, or nonprofit organization
• Students working for a school, university, or college club in exchange for room, board, or tuition
• Authorized ministers, priests, or rabbis
• Domestic workers making less than $225 each calendar quarter
• People providing domestic services to public welfare recipients
• Some 25% stockholders
• All 50% stockholders
• Real estate salespersons and brokers compensated totally on the basis of commissions

Employers may decide to voluntarily cover excluded employees, which makes sense given the potential cost of medical bills from a work injury.

To save money on workers' comp insurance, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.

In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.

Finally, a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.

Workers' compensation insurance covers the cost of medical treatment when an employee is injured on the job. It also provides disability benefits while the employee recovers.

Policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury. However, the exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer if they accept workers' comp benefits.

Workers' compensation benefits can cover:

• The cost of all medical care related to the injury
• Temporary total disability benefits
• Permanent partial disability benefits
• Permanent total disability benefits
• Disfigurement benefits
• Death benefits
• Vocational rehabilitation

Explore the State of Hawaii's Disability Compensation Division's FAQs for details.

Hawaii business owners can compare quotes and purchase a policy from private insurance companies. (Insureon offers this service with its online insurance marketplace.) If they’re unable to qualify, they can buy it from the Hawaii Employers’ Mutual Insurance Company (HEMIC), the state’s workers’ compensation insurer of last resort.

Eligible employers can also choose to self-insure their workers’ compensation claims. This means they’ll cover their own workers’ comp medical and rehabilitation expenses rather than submit them to an insurance carrier.

If an employer violates the Hawaii workers’ compensation law, it will be liable for fines and penalties of up to $100 per employee per day. Companies that fail to provide workers’ comp protection also leave themselves open to employee lawsuits to recover benefits that should have been paid.

If an employee dies as a result of a work-related injury or illness, surviving dependents are eligible to receive death benefits.

In Hawaii, any family member who was financially dependent on the deceased worker can receive cash payments. This includes:

• A spouse living with the injured employee when the injury occurred or who relied on the person financially
• An unmarried child younger than 18 or a married child who relies on the worker financially
• An unmarried child under age 22 who is a full-time student
• An unmarried child regardless of age who is not financially independent

In Hawaii, the amount of a workers’ comp death benefit depends on which family members are applying for benefits. The total benefits paid for all family members can’t exceed two-thirds of the injured worker’s average weekly wages.

Death benefits in Hawaii end when a spouse passes away or gets remarried. When a spouse decides to remarry, the person can apply for a lump sum equal to two years of workers’ compensation benefits.

Hawaii workers’ compensation also provides funds toward payment of funeral costs.

In Hawaii, workers who get sick or injured on the job often agree to a workers’ compensation settlement. This is a voluntary agreement between the employee and the employer to close out the case in return for the worker receiving a lump-sum payment. A settlement resolves a workers’ compensation claim fully and permanently.

Every Hawaii workers’ compensation settlement must be approved by the Disability Compensation Division (DCD).

The statute of limitations for a Hawaii workers’ compensation claim is two years from the date at which an injury becomes apparent and five years from the date the accident caused the injury.

Start a free online application today to compare workers’ compensation insurance quotes for your business from leading U.S. providers. Insureon’s licensed agents specialize in insurance for numerous Hawaii businesses.