3.3 Hawaii Disability and Long-Term Care Insurance

Hawaii Temporary Disability Insurance (TDI)

Hawaii is one of only a handful of states with a mandatory state Temporary Disability Insurance (TDI) program (alongside California, New Jersey, New York, and Rhode Island). The Temporary Disability Insurance Law requires employers to provide partial wage replacement when an employee cannot work because of a non-occupational sickness or injury — including pregnancy and childbirth. The single most important distinction the exam tests: TDI covers off-the-job disabilities; on-the-job injuries are paid by Workers' Compensation. If a question describes someone hurt at work, the answer is Workers' Comp, not TDI.

2026 TDI parameters (verified)

Eligibility and funding

To qualify, an employee must have at least 14 weeks of Hawaii employment, with at least 20 hours and $400 in wages in those weeks, in the 52 weeks before the disability. Funding is the mirror image of PHCA: employees may be charged up to 0.5% of weekly wages, capped at $7.50/week in 2026, and the employer pays any remaining cost. The employer may elect to cover the full premium.

Worked example: An employee earns $1,000 average weekly wage and is disabled by a non-work surgery. TDI pays 58% = $580/week (below the $871 cap), starting the 8th day of disability, for up to 26 weeks. The first seven days are unpaid unless disability continues — note Hawaii does not retroactively pay the waiting week the way some states do.

Employer options and exclusions

An employer satisfies TDI by buying coverage from an authorized carrier, self-insuring with state approval, or providing a collectively bargained plan that meets the statutory floor. Whatever route the employer chooses, the benefits paid must equal or exceed the statutory schedule. Excluded from TDI are federal employees, certain agricultural labor, and workers already covered by an equivalent or better employer plan. Domestic workers and family members in a family business may also be exempt.

The key takeaway for the exam: TDI is a floor, not a ceiling — an employer can offer richer benefits, and many supplement it with private group disability income coverage.

Individual Disability Income Insurance

Private disability income (DI) insurance replaces a portion of earned income when illness or injury prevents work, supplementing the limited, capped TDI benefit. Hawaii applies the Uniform Individual Accident and Sickness Policy Provisions and consumer-protection rules to these policies.

• Free-look: Individual DI policies carry a 10-day free-look — the buyer may return the policy for a full premium refund within 10 days of delivery.
• Underwriting classifies the insured by occupation class; the more hazardous the duties, the higher the premium and the stricter the definition of disability.
• The policy's definition of disability (own-occupation vs. any-occupation) and its elimination period (the waiting period before benefits begin) drive both cost and claims, and are heavily tested.

Long-Term Care (LTC) Insurance

Long-term care (LTC) insurance pays for custodial and skilled care — nursing home, assisted living, or home care — typically triggered when the insured cannot perform a set number of Activities of Daily Living (ADLs): bathing, dressing, transferring, toileting, continence, and eating. Hawaii follows the NAIC LTC model with strong consumer safeguards.

• Free-look: LTC policies carry a 30-day free-look, three times longer than DI, reflecting the complexity and cost of the product.
• Guaranteed renewable: LTC policies must be guaranteed renewable — the insurer cannot cancel for health changes and can only raise premiums by class.
• Pre-existing condition look-back: limited to a maximum of 6 months.
• Inflation protection: carriers must offer an inflation-protection option (commonly 5% compound); the applicant may decline in writing.
• Nonforfeiture: carriers must offer a nonforfeiture benefit so a lapsing insured retains some value.
• Suitability and Outline of Coverage: the producer must deliver an Outline of Coverage and assess suitability; an LTC Shopper's Guide must be provided.

Trap: candidates mix up the two free-look periods. Remember the ladder — individual health and DI = 10 days, Medigap and LTC = 30 days. Replacement of an LTC policy also requires a written replacement notice and a suitability determination, and producers must avoid selling coverage that duplicates Medicare or existing LTC benefits.