Hawaii One of Few States Without Medical Safety Net

Paul Phillips
Paul Phillips
State Senator David Ige
State Senator David Ige

HONOLULU (KHNL) --  Hawaii's lack of a medical safety net could mean big out of pocket expenses for those facing sudden unemployment.  Many of Aloha Airlines' former employees are affected.

Hawaii is only a handful of states that do not have what's called a Health Coverage Tax Credit.  If another major Hawaii-based company goes under, even more people could face major expenses for medical coverage.

Two weeks after Aloha employees stepped off the plane for the last time, they and close to two thousand of their colleagues continue to look for jobs.  They also have to look for ways to pay for health insurance for their families.

"I'm going to be out of pocket the entire COBRA (Consolidated Omnibus Budget Reconciliation Act)  amount which for my family is just under $900 a month," said Paul Phillips, a former Aloha Airlines pilot who was with the company for two decades.

He says it's even more expensive for Aloha employees who took early retirement.

"For a husband and wife retiree, they're looking at a cost of almost $1,300 a month for healthcare," said Phillips.

Hawaii is one of only seven states that do not have what's called a Health Coverage Tax Credit or HCTC.  Delaware, Mississippi, Nevada, New Mexico, South Dakota, and Wyoming are the others.

This federal tax credit pays 65 percent of health insurance premiums for people who are drawing from their pension.

To qualify for HCTC, the potential beneficiary has to be at least 55 years old.  Between 55 and 65 years of age, you have to be drawing pension from PBGC (Pension Benefit Guarantee Corporation), which is responsible for insuring certain benefits under private defined benefit pension plans.

And any person drawing PBGC pension is eligible for HCTC, not just former Aloha employees.

"What we're trying to do is tell the state, look, you've got all these pension people out there, you have healthcare out there but you have a hole in the system that 2,000 people could potentially fall through," said Phillips.

"I was surprised to find that out that there isn't a qualified plan in the state of Hawaii," said  Sen. David Ige, (D-Aiea, Pacific Palisades, Pearl City, and Waimalu) who chairs the Senate Health Committee.  "And I really don't understand why that's the case but it does show us that we have some work to do to try and ensure that every citizen has access to health insurance."

Phillips says for that to happen, Hawaii's healthcare providers must get involved.

"We would like to see the two insurance companies -- the major insurance companies in this state -- step up to the plate, and show that they can help out the people of Hawaii," said Phillips.

Lawmakers hope to work with health insurance providers so Hawaii can qualify for that tax credit.   Another blow to former Aloha employees; they also lost their life, disability and long term care insurance.