Payment of Tax

All Hawaii pharmacies

Prescription drugs are exempt from the general excise tax for Hawaii. However, Hawaii state excise tax will be applied to all taxable prescription items. Taxable items include medical supplies and devices which are dispensed as prescriptions ordered by authorized prescribers. Taxable items include, but are not limited to, diabetic supplies (such as strips, lancets, syringes, gauze and alcohol wipes) and diaphragms.

Tax on covered items is a benefit for members with coverage codes 00F, 00V, QUEST, and under HMSA's 65C Plus Prescription Drug Coverage and HMSA's Medicare Rx Plan. For these plans, the excise tax for Hawaii state taxable prescription items will be paid to pharmacies only if submitted and will be reimbursed up to the appropriate excise tax amount based on island of service. Tax should not be charged separately to the member. The tax will also be reflected in the Report to Providers (RTP).

For all other drug plans, tax is not a benefit. For these plans, pharmacies will receive a message that states "tax is not a benefit under plan" when claims are submitted for a covered benefit that is a taxable prescription item. The pharmacy will then have the option to collect the applicable tax from the member. The pharmacy shall not base the general excise tax on a charge which exceeds the Eligible Charge.

Oahu pharmacies

Effective January 1, 2007, tax will increase to 4.712 percent for Oahu only as a result of the recent adjustment to the General Excise Tax.

Out-of-state pharmacies

Excise tax will not be limited to specific items since the designation of which items are taxable varies from state to state.

For drug plans which include tax as a benefit (i.e., coverage codes 00F, 00V, QUEST, 65C Plus Prescription Drug Coverage and Medicare Rx Plan), the claims processing system will accept and pay the submitted tax up to the state allowable amount.

For drug plans in which tax is not a benefit, pharmacies will receive a message that states "tax is not a benefit under plan" when tax is submitted for claims for covered benefits. The pharmacy will then have the option to collect the applicable tax from the member. The pharmacy shall not base the general excise tax on a charge which exceeds the Eligible Charge.

Revision History