Some Honolulu patients are finding an unpleasant surprise on their medical bills: tax charges that appear to be calculated on the full sticker price of care, instead of what insurers actually pay. The dollar amounts are often relatively small, a few dozen bucks here and there, but the mistakes are real, can take months to unwind, and create yet another paperwork headache for families and small independent clinics.
How the math can go wrong
In one case reviewed by local reporters, an emergency room visit was listed at just over $1,400 in charges, with a tax line calculated at 4.71% that came out to $67.47. The catch: the insurer ultimately paid just over $400, which meant the correct tax should have been $19.92. That left the patient more than $47 overcharged until the provider corrected the bill about three months later, according to Hawaii News Now.
State guidance: tax charged on what providers actually receive
The Department of Taxation’s “Tax Facts” guidance on medical and dental charges says Hawaii’s general excise tax, or GET, is imposed on the gross income a provider actually receives. It explains that participating providers should compute the tax on the plan’s eligible charge or the amount paid by the insurer, not on the original billed amount, according to the Department of Taxation.
The same guidance notes that the maximum visible pass-on rate is 4.712%, which includes county surcharges. Exemptions for Medicare, Medicaid, and TRICARE payments took effect on Jan. 1, 2026, per Bloomberg Law.
Independent clinics say it is a systemic problem
Independent physicians say the miscalculations are often baked into the system, because clinics typically do not know what an insurer will actually pay until weeks after a visit. Dr. Scott Miscovich described the situation as “impossible for a doctor’s office to be able to solve,” while Dr. Kelley Withy urged patients to wait to see how much insurance pays before settling up their balances, as reported by Hawaii News Now.
What patients should do
If a tax line on your bill looks off, you can start by asking your provider or its billing company to recalculate the GET using the insurer’s eligible charge or the amount actually remitted, instead of the original list price. The Department of Taxation’s “Tax Facts” publication explains how the GET should be computed, lists contact information for questions, and warns that businesses that misrepresent GET may face penalties, according to the Department of Taxation.
Where reform stands
In 2024, lawmakers approved a measure to exempt amounts paid under Medicare, Medicaid, and TRICARE from the GET, and that exemption took effect Jan. 1, 2026. The governor’s signing of the bill and its intent were reported when the measure became Act 47, per Bloomberg Law…