ARSD Article 20:06 — INSURANCE

LABOR AND REGULATION LABOR AND REGULATION

Chapter 20:06:01 Administration

ARSD 20:06:01:01 Definitions

Terms used in this article mean:

(1) "Director," the director of the Division of Insurance, Department of Labor and Regulation;

(2) "Division," the Division of Insurance, Department of Labor and Regulation;

(3) "Department," the Department of Labor and Regulation.

History

Source: 15 SDR 143, effective March 29, 1989; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-4-1.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8.

ARSD 20:06:01:02 Determination of penalty amount

In determining the penalty for a violation of an insurance law by an agent, broker, or insurer, the director may consider, but is not limited to, the following factors:

(1) Prior violations of the law by the agent, broker, or insurer;

(2) Number of violations of a statute;

(3) Number of statutes violated;

(4) Penalties assessed against other agents, brokers, or insurers for the same violations;

(5) Magnitude of the harm to the public and insured; and

(6) Any mitigating circumstances.

History

Source: 15 SDR 143, effective March 29, 1989; 16 SDR 208, effective June 3, 1990; 31 SDR 21, effective August 23, 2004.
General Authority: SDCL 58-4-1, 58-30-195(1)(7).
Law Implemented: SDCL 58-4-28.1, 58-30-167.

ARSD 20:06:01:03 Determination of good standing

In determining whether a person is in good standing, the director may consider, but is not limited to, the following factors:

(1) Suspension, revocation, or denial of license by a state;

(2) Administrative or judicial action pending in any state and the nature of that action;

(3) Complaints, nature and number, against the person;

(4) False statements, oral or written, to the division, including omissions;

(5) Neglect of financial or fiduciary responsibilities;

(6) Conduct which is unlawful, dishonest, deceitful, or fraudulent;

(7) Evidence of drug or alcohol abuse or dependency; and

(8) Acting as an agent without being licensed.

In reviewing these factors the director may consider the recentness of the action or conduct overall, any mitigating circumstances, evidence of rehabilitation, and the person's cooperation.

History

Source: 16 SDR 208, effective June 3, 1990; 31 SDR 21, effective August 23, 2004.
General Authority: SDCL 58-4-1, 58-30-195(1).
Law Implemented: SDCL 58-4-1, 58-30-159.

ARSD 20:06:01:04 Determination of denial of license

In determining whether a license application should be denied or why a prior revocation or refusal to renew a license should not bar licensure, the director may, in addition to the factors in § 20:06:01:03, consider the following factors:

(1) Restitution made;

(2) Any unresolved complaints;

(3) Employment record during interim; and

(4) Length of time since revocation or refusal.

History

Source: 16 SDR 208, effective June 3, 1990; 31 SDR 21, effective August 23, 2004.
General Authority: SDCL 58-4-1, 58-30-195(1)(3)(7).
Law Implemented: SDCL 58-4-1, 58-30-111, 58-30-167.

ARSD 20:06:01:05 Record keeping

20:06:01 :05. Record keeping. An insurer must keep for five years all insurance applications, riders, endorsements, or other documents which require the insured's signature to alter the terms or conditions of the policy or contract.

Records may be maintained in paper, photograph, microprocess, magnetic, mechanical, or electronic media or by any process which accurately reproduces a record or forms a durable medium for its reproduction. A company is in compliance with this section if it can produce the data which was contained on the original document. In cases where there is no paper document, a company is in compliance if it can produce information or data which accurately represents a record of representations by the insured to the company or accurately reflects a transaction or event.

History

Source: 16 SDR 208, effective June 3, 1990; 19 SDR 160, effective April 27, 1993; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-3-26.
Law Implemented: SDCL 58-1-26, 58-3-7, 58-33-66.

ARSD 20:06:01:05.01 Records to be maintained by producers

The following types of records are business records pertaining to transactions under the insurance producer's license and are required to be kept pursuant to SDCL 58-30-91:

(1) Applications;

(2) Binders and certificates of coverage;

(3) Claim reports;

(4) Declarations or daily pages for personal and commercial lines;

(5) Lapse notices;

(6) Claim checks issued by producer;

(7) Change requests that relate to policy or coverage changes;

(8) Cash receipts;

(9) Account payable invoices;

(10) Account payable ledger;

(11) Account receivable invoices;

(12) Account receivable ledgers;

(13) Bank records for any account through which insurance business is transacted including deposits by item, cancelled checks, electronic and other transfers, and monthly statements. If co-mingled, a delineation of those funds that are trust monies;

(14) Producer's commissions;

(15) Licenses;

(16) Agency contracts;

(17) Check registers;

(18) Correspondence, telephone and written notes, and other communications, including electronic, that document coverage placed or premium transactions;

(19) Delivery receipts (copies of) and proof of delivery;

(20) All company commission statements;

(21) New business transmittal forms; and

(22) Communications concerning commission charge backs.

Nothing in this section requires a producer to maintain originals of records. Copies may be retained in any form that provides an authentic copy, including electronic format. Records which were never in the producer's possession are not required to be obtained for purposes of compliance with this section.

History

Source: 29 SDR 84, effective December 15, 2002.
General Authority: SDCL 58-30-195(14)(15).
Law Implemented: SDCL 58-30-91.

ARSD 20:06:01:06 Qualifications of insurers providing security for judgments

Pursuant to SDCL chapter 21-3A, an insurer which is qualified to provide security for payment of a judgment is one which is licensed to do business in the state in that line of insurance. Failure of an insurer to post security as directed by the court is a violation of SDCL 58-33-38. The rate of discount is calculated in accordance with SDCL 21-3A-6.

History

Source: 19 SDR 160, effective April 27, 1993.
General Authority: SDCL 21-3A-12.
Law Implemented: SDCL 21-3A-12.

ARSD 20:06:01:07 Examination of foreign insurers

Foreign or alien insurers must be examined every five years unless they qualify for exemption under SDCL 58-3-4.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-3-26.
Law Implemented: SDCL 58-3-26.

Chapter 20:06:02 Individual risk premium, Repealed

ARSD 20:06:02 Repealed chapter

CHAPTER 20:06:02

INDIVIDUAL RISK PREMIUM

(Repealed. 7 SDR 4, effective July 27, 1980.)

Chapter 20:06:03 Domestic stock insurers

ARSD 20:06:03:01 Definitions

The terms "solicit" and "solicitation" for purposes of this chapter shall include:

(1) Any request for a proxy, whether or not accompanied by or included in a form of proxy;

(2) Any request to execute or not to execute, or to revoke, a proxy; or

(3) The furnishing of a proxy or other communication to stockholders under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:02 Limitations on definitions

The terms "solicit" and "solicitation" do not include:

(1) Any solicitation by a person in respect to stock of which the person is the beneficial owner;

(2) An action by a broker or other person in respect to stock carried in the broker's or other person's name or in the name of a nominee in forwarding to the beneficial owner of the stock soliciting material received from the company, or impartially instructing the beneficial owner to forward a proxy to the person, if any, to whom the beneficial owner desires to give a proxy, or impartially requesting instructions from the beneficial owner with respect to the authority to be conferred by the proxy and stating that a proxy will be given if the instructions are received by a certain date; or

(3) The furnishing of a form of proxy to a stockholder upon the unsolicited request of such stockholder, or the performance by any person of ministerial acts on behalf of a person soliciting a proxy.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:03 Scope of chapter

This chapter is applicable to all domestic stock insurers having 100 or more stockholders; provided, however, that this chapter shall not apply to any insurer if 95 percent or more of its stock is owned or controlled by a parent or an affiliated insurer and the remaining shares are held by less than 500 stockholders. A domestic stock insurer which files with the securities and exchange commission forms of proxies, consents and authorizations complying with the requirements of the Securities and Exchange Act of 1934 and the Securities and Exchange Acts Amendments of 1964 and 17 C.F.R. § 240 promulgated thereunder shall be exempt from the provisions of this regulation.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:04 Proxies, consents, and authorizations

No domestic stock insurer, or any director, officer, or employee of such insurer subject to section one hereof, or any other person, may solicit, or permit the use of his name to solicit, by mail or otherwise, any proxy, consent, or authorization in respect of any stock of such insurer in contravention of this chapter.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:05 Disclosure of equivalent information

Unless proxies, consents or authorizations in respect of a stock of a domestic insurer subject to § 20:06:03:03 hereof are solicited by or on behalf of the management of such insurer from the holders of records of stock of such insurer in accordance with this chapter prior to any annual or other meeting, such insurer shall, in accordance with this chapter, file with the director of insurance and transmit to all stockholders of record information substantially equivalent to the information which would be required to be transmitted if a solicitation were made.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:06 Information to be furnished to stockholders

The following information must be furnished to stockholders:

(1) No solicitation subject to this chapter shall be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in §§ 20:06:03:22 to 20:06:03:36, inclusive;

(2) If the solicitation is made on behalf of the management of the insurer and relates to an annual meeting of stockholders at which directors are to be elected, each proxy statement furnished pursuant to subdivision (1) of this section shall be accompanied or preceded by an annual report (in preliminary or final form) to such stockholders containing such financial statements for the last fiscal year as are referred to in schedule stockholder information supplement of the annual statement under the heading "financial reporting to stockholders." Subject to the foregoing requirements with respect to financial statements, the annual report to stockholders may be in any form deemed suitable by the management;

(3) Two copies of each report sent to the stockholders pursuant to this section shall be mailed to the director of insurance not later than the date on which such report is first sent or given to stockholders or the date on which preliminary copies of solicitation material are filed with the director of insurance pursuant to § 20:06:03:08, whichever date is later.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:07 Requirements as to proxy

Proxies shall have the following requirements:

(1) The form of proxy:

(a) Shall indicate in bold face type whether or not the proxy is solicited on behalf of the management;

(b) Shall provide a specifically designated blank space for dating the proxy; and

(c) Shall identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the management, or stockholders. No reference need be made to proposals as to which discretionary authority is conferred pursuant to subdivision (3) of this section;

(2) Means shall be provided in the proxy for the person solicited to specify by ballot a choice between approval or disapproval of each matter or group of related matters referred to therein, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not so specified if the form of proxy states in bold face type how it is intended to vote the shares or authorization represented by the proxy in each such case;

(3) A proxy may confer discretionary authority with respect to other matters which may come before the meeting, provided the persons on whose behalf the solicitation is made are not aware a reasonable time prior to the time the solicitation is made that any other matters are to be presented for action at the meeting and provided further that a specific statement to that effect is made in the proxy statement or in the form of proxy;

(4) No proxy shall confer authority:

(a) To vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement; or

(b) To vote at any annual meeting other than the next annual meeting (or any adjournment thereof) to be held after the date on which the proxy statement and form of proxy are first sent or given to stockholders;

(5) The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the proxy will be voted and that where the person solicited specifies by means of ballot provided pursuant to subdivision (2) of this section a choice with respect to any matter to be acted upon, the vote will be in accordance with the specifications so made;

(6) The information included in the proxy statement shall be clearly presented and the statements made shall be divided into groups according to subject matter, with appropriate headings. All printed proxy statements shall be clearly and legibly presented.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:08 Material required to be filed

The division shall require the following material to be filed:

(1) Two preliminary copies of the proxy statement and form of proxy and any other soliciting material to be furnished to stockholders concurrently therewith shall be filed with the director of insurance at least 10 days prior to the date definitive copies of such material are first sent or given to stockholders, or such shorter period prior to that date as the director of insurance may authorize upon a showing of good cause therefor;

(2) Two preliminary copies of any additional soliciting material relating to the same meeting or subject matter to be furnished to stockholders subsequent to the proxy statements shall be filed with the director of insurance at least two days (exclusive of Saturdays, Sundays or holidays) prior to the date copies of this material are first sent or given to stockholders or a shorter period prior to such date as the director of insurance may authorize upon a showing of good cause therefor;

(3) Two definitive copies of the proxy statement, form of proxy and all other soliciting material, in the form in which this material is furnished to stockholders, shall be filed with, or mailed for filing to, the director of insurance not later than the date such material is first sent or given to the stockholders;

(4) Where any proxy statement, form of proxy or other material filed pursuant to these rules is amended or revised, two of the copies shall be marked to clearly show such changes;

(5) Copies of replies to inquiries from stockholders requesting further information and copies of communications which do no more than request that forms of proxy theretofore solicited be signed and returned need not be filed pursuant to this section;

(6) Notwithstanding the provisions of subdivisions (1) and (2) of this section and of subdivision 20:06:03:11(5), copies of soliciting material in the form of speeches, press releases and radio or television scripts may, but need not, be filed with the director of insurance prior to use or publication. Definitive copies, however, shall be filed with or mailed for filing to the director of insurance as required by subsection three hereof not later than the date such material is used or published. The provisions of subdivisions (1) and (2) of this section and subdivision 20:06:03:11(5) shall apply, however, to any reprints or reproduction of all or any part of such material.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:09 False or misleading statements

No solicitation subject to this regulation shall be made by means of any proxy statement, form of proxy, notice of meeting, or other communication, written or oral, containing any statement which at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of a proxy for the same meeting or subject matter which has become false or misleading.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:10 Prohibition of certain solicitations

No person making a solicitation which is subject to this regulation shall solicit any undated or postdated proxy or any proxy which provides that it shall be deemed to be dated as of any date subsequent to the date on which it is signed by the stockholder.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:11 Special provisions applicable to election contests

Sections 20:06:03:11 to 20:06:03:22, inclusive, shall apply to any solicitation subject to this chapter by any person or group for the purpose of opposing a solicitation subject to this chapter by any other person or group with respect to the election or removal of directors at any annual or special meeting of stockholders.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:12 Participant or participants in a solicitation

For purposes of §§ 20:06:03:11 to 20:06:03:22, inclusive, the terms "participant" and "participant in a solicitation" include:

(1) The insurer;

(2) Any director of the insurer, and any nominee for whose election as a director proxies are solicited; and

(3) Any other person, acting alone or with one or more other persons, committees or groups, in organizing, directing or financing the solicitation.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:13 Limitations on definitions

For the purposes of §§ 20:06:03:11 to 20:06:03:22, inclusive, the terms "participant" and "participant in a solicitation" do not include:

(1) A bank, broker, or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of stock and who is not otherwise a participant;

(2) Any person or organization retained or employed by a participant to solicit stockholders or any person who merely transmits proxy soliciting material or performs ministerial or clerical duties;

(3) Any person employed in the capacity of attorney or accountant or advertising, public relations, or financial adviser whose activities are limited to the performance of duties in the course of such employment;

(4) Any person regularly employed as an officer or employee of the insurer or any of its subsidiaries or affiliates who is not otherwise a participant; or

(5) Any officer or director of, or any person regularly employed by any other participant, if the officer, director, or employee is not otherwise a participant.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:14 Filing of information required

No solicitation subject to this section shall be made by any person other than the management of an insurer unless at least five business days prior thereto, or such shorter period as the director of insurance may authorize upon a showing of good cause therefor, there has been filed, with the director of insurance, by or on behalf of each participant in such solicitation, a statement in duplicate containing the information specified by §§ 20:06:03:37 to 20:06:03:40, inclusive, and a copy of any material proposed to be distributed to stockholders in furtherance of such solicitation. Where preliminary copies of any materials are filed, distribution to stockholders should be deferred until the director's comments have been received and complied with.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:15 Time for filing

Within five business days after a solicitation subject to this section is made by the management of an insurer, or such longer period as the director of insurance may authorize upon a showing of good cause therefor, there shall be filed with the director of insurance by or on behalf of each participant in such solicitation, other than the insurer, and by or on behalf of each management nominee for director, a statement in duplicate containing the information specified by §§ 20:06:03:37 to 20:06:03:40, inclusive.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:16 Opposition solicitation

If any solicitation on behalf of management or any other person has been made, or if proxy material is ready for distribution, prior to a solicitation subject to this section in opposition thereto, a statement in duplicate containing the information specified in §§ 20:06:03:37 to 20:06:03:40, inclusive, shall be filed with the director of insurance, by or on behalf of each participant in such prior solicitation, other than the insurer, as soon as reasonably practicable after the commencement of the solicitation in opposition thereto.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:17 Additional participants

If, subsequent to the filing of the statements required by §§ 20:06:03:14 to 20:06:03:16, inclusive, additional persons become participants in a solicitation subject to this rule, there shall be filed with the director of insurance, by or on behalf of each such person, a statement in duplicate containing the information specified by §§ 20:06:03:37 to 20:06:03:40, inclusive, within three business days after such person becomes a participant, or such longer period as the director of insurance may authorize upon a showing of good cause therefor.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:18 Material changes

If any material change occurs in the facts reported in any statement filed by or on behalf of any participant, an appropriate amendment to such statement shall be filed promptly with the director of insurance.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:19 Files are public

Each statement and amendment thereto filed pursuant to §§ 20:06:03:14 to 20:06:03:18, inclusive, shall be part of the public files of the director of insurance.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:20 Solicitations prior to furnishing required written proxy statement

Notwithstanding the provisions of subdivision 20:06:03:06(1), a solicitation subject to this section may be made prior to furnishing stockholders a written proxy statement containing the information specified in §§ 20:06:03:22 to 20:06:03:36, inclusive, with respect to such solicitation, provided that:

(1) The statements required by §§ 20:06:03:14 to 20:06:03:19, inclusive, hereof are filed by or on behalf of each participant in such solicitation;

(2) No form of proxy is furnished to stockholders prior to the time the written proxy statement required by subdivision 20:06:03:06(1) is furnished to such persons: provided, however, that this subdivision shall not apply where a proxy statement then meeting the requirements of §§ 20:06:03:22 to 20:06:03:36, inclusive, has been furnished to stockholders;

(3) At least the information specified in §§ 20:06:03:15 and 20:06:03:16 hereof to be filed by each participant, or an appropriate summary thereof, are included in each communication sent or given to stockholders in connection with the solicitation;

(4) A written proxy statement containing the information specified in §§ 20:06:03:22 to 20:06:03:36, inclusive, with respect to a solicitation is sent or given stockholders at the earliest practicable date.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:21 Solicitations prior to furnishing required written proxy statement and filing requirements and application to report

Solicitations prior to furnishing required written proxy statement and filing requirements and application to report:

(1) Two copies of any soliciting material proposed to be sent or given to stockholders prior to the furnishing of the written proxy statement required by subdivision 20:06:03:06(1) shall be filed with the director of insurance in preliminary form at least five business days prior to the date definitive copies of such material are first sent or given to such persons, or shorter period as the director of insurance may authorize upon a showing of good cause therefor; and

(2) Notwithstanding the provisions of subdivisions 20:06:03:06(2) and (3), two copies of any portion of the report referred to in subdivision 20:06:03:06(2) which comments upon or refers to any solicitation subject to this section, or to any participant in any such solicitation, other than the solicitation by the management, shall be filed with the director of insurance as proxy material subject to this chapter. Such portion of the report shall be filed with the director of insurance in preliminary form at least five business days prior to the date copies of the report are first sent or given to stockholders.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:22 Information required in proxy statement -- Schedule a

The solicitor shall state whether or not the person giving the proxy has the power to revoke it. If the right of revocation before the proxy is exercised is limited or is subject to compliance with any formal procedure, briefly describe such limitation or procedure.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:23 Dissenters' rights of appraisal

Outline briefly the rights of appraisal or similar rights of dissenting stockholders with respect to any matter to be acted upon and indicate any statutory procedure required to be followed by such stockholders in order to perfect their rights. Where such rights may be exercised only within a limited time after the date of the adoption of a proposal, the filing of a charter amendment, or other similar act, state whether the person solicited will be notified of such date.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:24 Persons making solicitations excluded

Special solicitations are subject to the following guidelines:

(1) If the solicitation is made by the management of the insurer, the solicitor shall so state. The solicitor shall give the name of any director of the insurer who has informed the management in writing that the director intends to oppose any action intended to be taken by the management and indicate the action which the director intends to oppose;

(2) If the solicitation is made otherwise than by the management of the insurer, the solicitor shall state the names and addresses of the persons by whom and on whose behalf it is made and the names and addresses of the persons by whom the cost of solicitation has been or will be borne, directly or indirectly;

(3) If the solicitation is to be made by specially engaged employees or paid solicitors, they shall state:

(a) The material features of any contract or arrangement for such solicitation and identify the parties; and

(b) The cost or anticipated cost of the contract or arrangement.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:25 Interest of certain persons in matters to be acted upon

The solicitor shall describe briefly any substantial interest, direct or indirect, by stockholdings or otherwise, of any director, nominee for election for director, officer and, if the solicitation is made otherwise than on behalf of management, each person on whose behalf the solicitation is made, in any matter to be acted upon other than elections to office.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:26 Stocks and principal stockholders

Principal stockholders shall:

(1) State, as to each class of voting stock of the insurer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled;

(2) Give the date as of which the record list of stockholders entitled to vote at the meeting will be determined. If the right to vote is not limited to stockholders of record on that date, indicate the conditions under which other stockholders may be entitled to vote; and

(3) If action is to be taken with respect to the election of directors and if the persons solicited have cumulative voting rights, make a statement that they have such rights and state briefly the conditions precedent to the exercise thereof.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:27 Nominees and directors

If action is to be taken with respect to the election of directors, the solicitor shall furnish the following information, in tabular form to the extent practicable, with respect to each person nominated for election as a director and each other person whose term of office as a director will continue after the meeting:

(1) The name of each such person, when the person's term of office or the term of office for which the person is a nominee will expire and all other positions and offices with the insurer presently held by the person and which persons are nominees for election as directors at the meeting;

(2) The present principal occupation or employment and the name and principal business of any corporation or other organization in which such employment is carried on and similar information as to all of the persons' principal occupations or employments during the last five years, unless the person is now a director and was elected to the present term of office by a vote of stockholders at a meeting for which proxies were solicited under this chapter;

(3) Whether the person is or has previously been a director of the insurer and the period or periods during which the person has served as such; and

(4) As of the most recent practicable date, the approximate amount of each class of stock of the insurer or any of its parents, subsidiaries, or affiliates other than directors' qualifying shares, beneficially owned directly or indirectly by the person. If the person is not the beneficial owner of any such stocks a statement to that effect shall be included.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:28 Remuneration and other transactions with management and others

The solicitor shall furnish the information reported or required in item one of the schedule of stockholder information supplement under the heading "information regarding management and directors" if action is to be taken with respect to:

(1) The election of directors;

(2) Any remuneration plan, contract or arrangement in which any director, nominee for election as a director, or officer of the insurer will participate;

(3) Any pension or retirement plan in which any such person will participate, or;

(4) The granting or extension to any such person of any options, warrants or rights to purchase any stocks, other than warrants or rights issued to stockholders, as such, on a pro rata basis. If the solicitation is made on behalf of persons other than the management, information shall be furnished only as to subsection (1) (a) aforesaid heading of schedule of stockholder information supplement.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:29 Bonus, profit sharing, and other remuneration plans

If action is to be taken with respect to any bonus, profit sharing, or other remuneration plan, of the insurer, furnish the following information:

(1) A brief description of the material features of the plan, each class of persons who will participate therein, the approximate number of persons in each such class and the basis of such participation;

(2) The amounts which would have been distributable under the plan during the last calendar year to:

(a) Each person named in item seven of this schedule;

(b) Directors and officers as a group; and

(3) If the plan to be acted upon may be amended, other than by a vote of stockholders, in a manner which would materially increase the cost thereof to the insurer or to materially alter the allocation of the benefits as between the groups specified in subdivision (2) of this section, the nature of such amendments should be specified.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:30 Pension and retirement plan

If action is to be taken with respect to any pension or retirement plan of the insurer, the solicitor shall furnish the following information:

(2) The approximate total amount necessary to fund the plan with respect to past services, the period over which such amount is to be paid and the estimated annual payments necessary to pay the total amount over such period;

(3) The estimated annual payment to be made with respect to current services;

(4) The amount of such annual payments to be made for the benefit of each person named in § 20:06:03:28 as directors and officers as a group and employees as a group;

(5) If the plan to be acted upon may be amended, other than by a vote of stockholders, in a manner which would materially increase the cost thereof to the insurer or to materially alter the allocation of the benefits as between the groups specified in subsection 20:06:03:29(2)(c) the nature of such amendments should be specified.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:31 Options, warrants, or rights

If action is to be taken with respect to the granting or extension of any options, warrants, or rights, all referred to herein as "warrants", to purchase stock of the insurer or any subsidiary or affiliate, other than warrants issued to all stockholders on a pro rata basis, the solicitor shall furnish the following information:

(1) The title and amount of stock called for or to be called for, the prices, expiration dates, and other material conditions upon which the warrants may be exercised, the consideration received or to be received by the insurer, subsidiary, or affiliate for the granting or extension of the warrants and the market value of the stock called for or to be called for by the warrants, as of the latest practicable date;

(2) If known, the amount of stock called for or to be called for by warrants received or to be received by the following persons, naming each such person:

(a) Each person named in § 20:06:03:28; and

(b) Each other person who will be entitled to acquire five percent or more of the stock called for or to be called for by such warrants;

(3) If known, the total amount of stock called for or to be called for by such warrants, received or to be received by all directors and officers of the company as a group and all employees, without naming them.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:32 Authorization or issuance of stock

The following rules apply to stock authorization or issuance:

(1) If action is to be taken with respect to the authorization or issuance of any stock of the insurer furnish the title, amount and description of the stock to be authorized or issued;

(2) If the shares of stock are other than additional shares of common stock of a class outstanding, furnish a brief summary of the following, if applicable: dividend, voting, liquidation, preemptive and conversion rights, redemption and sinking fund provisions, interest rate and date of maturity;

(3) If the shares of stock to be authorized or issued are other than additional shares of common stock of a class outstanding, the director of insurance may require financial statements comparable to those contained in the annual report.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:33 Mergers, consolidations, acquisitions, and similar matters

Information and financial statements for mergers, consolidations, and acquisitions should be filed as follows:

(1) If action to be taken with respect to a merger, consolidation, acquisition, or similar matter, furnish in brief outline the following information:

(a) The rights of appraisal or similar rights of dissenters with respect to any matters to be acted upon. Indicate any procedure required to be followed by dissenting stockholders in order to perfect such rights;

(b) The material features of the plan or agreement;

(d) If available, the high and low sales prices for each quarterly period within two years;

(e) The percentage of outstanding shares which must approve the transaction before it is consummated;

(2) For each company involved in a merger, consolidation, or acquisition, the following financial statements should be furnished:

(a) A comparative balance sheet as of the close of the last two fiscal years;

(b) A comparative statement of operating income and expenses for each of the last two fiscal years and, as a continuation of each statement, a statement of earnings per share after related taxes and cash dividends paid per share;

(c) A pro forma combined balance sheet and income and expense statement for the last fiscal year giving effect to the necessary adjustments with respect to the resulting company.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:34 Restatement of accounts

If action is to be taken with respect to the restatement of any asset, capital, or surplus of the insurer, the solicitor shall furnish the following information:

(1) The nature of the restatement and the date as of which it is to be effective;

(2) The reasons for the restatement and for the selection of the particular effective date;

(3) The name and amount of each account affected by the restatement and the effect of the restatement thereon.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:35 Matters not required to be submitted

If action is to be taken with respect to any matter which is not required to be submitted to a vote of stockholders, the solicitor shall state the nature of such matter, the reason for submitting it to a vote of stockholders and what action is intended to be taken by the management in the event of a negative vote on the matter by the stockholders.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:36 Amendment of charter, by-laws, or other documents

If action is to be taken with respect to any amendment of the insurer's charter, by-laws or other documents as to which information is not required above, state briefly the reasons for and general effect of such amendment and the vote needed for its approval.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:37 Information to be included in statements filed by or on behalf of a participant (other than the insurer) in a proxy solicitation in an election contest -- Schedule b

The statements filed by or on behalf of a participant shall include the following information:

(1) The name and address of the insurer;

(2) The solicitor's name and business address;

(3) The solicitor's present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is carried on;

(4) The solicitor's residence address;

(5) Information as to all material occupations, positions, offices or employments during the last 10 years, giving starting and ending dates of each and the name, principal business and address of any business corporations or other business organization in which each such occupation, position, office or employment was carried on;

(6) Whether or not the solicitor has been a participant in any other proxy contest involving the company or other companies within the past 10 years. If so, the principals, the subject matter and the solicitor's relationship to the parties and the outcome shall be identified;

(7) Whether or not, during the past 10 years, the solicitor has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, and, if so, the dates, nature of conviction, name and location of court and penalty imposed or other disposition of the case. A negative answer to this subdivision need not be included in the proxy statement or other proxy soliciting material.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:38 Interest in stock of the insurer

Stock interests should be divulged as follows:

(1) The amount of each class of stock of the insurer which the solicitor owns beneficially, directly or indirectly;

(2) The amount of each class of stock of the insurer which the solicitor owns of record but not beneficially;

(3) With respect to the stock specified in subdivisions (1) and (2) the amounts acquired within the past two years, the dates of acquisition and the amounts acquired on each date;

(4) If any part of the purchase price or market value of any of the stock specified in subdivision (3) is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such stock, it shall be stated and indicated, the amount of the indebtedness as of the latest practicable date. If such funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker or dealer the transaction shall be briefly described and the names of the parties shall be stated;

(5) Whether or not the solicitor is a party to any contracts, arrangements or understandings with any person with respect to any stock of the insurer, including but not limited to joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. If so, the persons with whom such contracts, arrangements, or understandings exist shall be named and the details thereof given;

(6) The amount of stock of the insurer owned beneficially, directly or indirectly, by each of the associates and the name and address of each such associate;

(7) The amount of each class of stock of any parent, subsidiary or affiliate of the insurer which the solicitor owns beneficially, directly or indirectly.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:39 Further matters

The following general information should be filed:

(1) The time and circumstances under which the solicitor became a participant in the solicitation and state the nature and extent of the activities or proposed activities as a participant;

(2) Briefly, and where practicable, the approximate amount of, any material interest, direct or indirect, of the solicitor and of each of the solicitor's associates in any material transactions since the beginning of the company's last fiscal year, or in any material proposed transactions, to which the company or any of its subsidiaries or affiliates was or is to be a party;

(3) State whether or not the solicitor or any associates have any arrangement or understanding with any person:

(a) With respect to any future employment by the insurer or its subsidiaries or affiliates; or

(b) With respect to any future transactions to which the insurer or any of its subsidiaries or affiliates will or may be a party and if so, describe such arrangement or understanding and state the names of the parties thereto.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

ARSD 20:06:03:40 Certification

The statement shall be dated and signed in the following manner: "I certify that the statements made in this statement are true, complete, and correct, to the best of my knowledge and belief," followed by the date and signature of the participant or an authorized representative.

History

Source: SL 1975, ch 16, § 1; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-49.
Law Implemented: SDCL 58-5-49.

Chapter 20:06:04 Insider trading of equity securities

ARSD 20:06:04:01 Definitions

Terms used in this chapter mean:

(1) "Insurer," any domestic stock insurance company with an equity security subject to the provisions of SDCL 58-5-68 to 58-5-78, inclusive, and not exempt thereunder;

(2) "Act," SDCL 58-5-68 to 58-5-78, inclusive;

(3) "Officer," a president, vice-president, treasurer, actuary, secretary, controller and any other person who performs for the insurer functions corresponding to those performed by the foregoing officers;

(4) "Equity security," any stock or similar security; or any voting trust certificate or certificate of deposit for such a security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right;

(5) "Class," all securities of an insurer which are of substantially similar character and the holders of which enjoy substantially similar rights and privileges.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-77.

ARSD 20:06:04:02 Securities held of record

For the purpose of determining whether the equity securities of an insurer are held of record by 100 or more persons, securities shall be deemed to be held of record by each person who is identified as the owner of such securities on records of security holders maintained by or on behalf of the insurer, subject to the following:

(1) In any case where the records of security holders have not been maintained in accordance with accepted practice, any additional person who would be identified as such an owner on such records if they had been maintained in accordance with accepted practice shall be included as a holder of record;

(2) Securities identified as held of record by a corporation, a partnership, a trust whether or not the trustees are named, or other organization shall be included as so held by one person;

(3) Securities identified as held of record by one or more persons as trustees, executors, guardians, custodians or in other fiduciary capacities with respect to a single trust, estate or account shall be included as held of record by one person;

(4) Securities held by two or more persons as co-owners shall be included as held by one person;

(5) Each outstanding unregistered or bearer certificate shall be included as held of record by a separate person, except to the extent that the insurer can establish that, if such securities were registered, they would be held of record, under the provisions of this section, by a lesser number of persons;

(6) Securities registered in substantially similar names, where the insurer has reason to believe because of the address or other indications that such names represent the same person, may be included as held of record by one person.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-68 to 58-5-78.

ARSD 20:06:04:03 Securities held in trust, deposit agreements

Notwithstanding § 20:06:04:02, securities held, to the knowledge of the insurer, subject to a voting trust, deposit agreement or similar arrangement shall be included as held of record by the record holders of the voting trust certificates, certificates of deposit, receipts or similar evidences of interest in such securities; provided, however, that the insurer may rely in good faith on such information as is received in response to its request from a nonaffiliated insurer of the certificates or evidences of interest.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-68.

ARSD 20:06:04:04 When beneficial owners are record owners

Notwithstanding § 20:06:04:02, if the insurer knows or has reason to know that the form of holding securities of record is used primarily to circumvent the provisions of the act, the beneficial owners of such securities shall be deemed to be the record owners thereof.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-68.

ARSD 20:06:04:05 Determination of ownership of more than 10 percent of an equity security

In determining, for the purpose of SDCL 58-5-69 whether a person is the beneficial owner, directly or indirectly, of more than 10 percent of any class of any equity security, such class shall be deemed to consist of the total amount of such class outstanding, exclusive of any securities of such class held by or for the account of the insurer or a subsidiary of the insurer; except that for the purpose of determining percentage ownership of voting trust certificates or certificates of deposit for equity securities, the class of voting trust certificates or certificates of deposit shall be deemed to consist of the amount of voting trust certificates or certificates of deposit issuable with respect to the total amount of outstanding equity securities of the class which may be deposited under the voting trust agreement or deposit agreement in question, whether or not all of such outstanding securities have been so deposited. For the purpose of this section a person acting in good faith may rely on the information contained in the latest convention form statement filed with the director with respect to the amount of securities of a class outstanding or in the case of voting trust certificates or certificates of deposit the amount thereof issuable.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:06 Disclaimer of beneficial ownership

Any person filing a statement may expressly declare therein that the filing of such statement shall not be construed as an admission that such person is, for the purpose of the act, the beneficial owner of any equity securities covered by the statement.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:07 Exemptions from statements of ownership filings and restrictions on profits

During the period of 12 months following their appointment and qualification, securities held by the following persons shall be exempt from SDCL 58-5-69, 58-5-71, 58-5-72, 58-5-73:

(1) Executors or administrators of the estate of a decedent;

(2) Guardians or committees for an incompetent; and

(3) Receivers, trustees in bankruptcy, assignees for the benefit of creditors, conservators, liquidating agents, and other similar persons duly authorized by law to administer the estate or assets of other persons.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-73.

ARSD 20:06:04:08 Profits in estates

After the 12-month period following their appointment or qualification the persons named in § 20:06:04:07 shall be required to file reports under SDCL 58-5-69 with respect to the securities held by the estates which they administer and shall be liable for profits realized from trading in such securities pursuant to SDCL 58-5-71 to 58-5-73, inclusive, only when the estate being administered is a beneficial owner of more than 10 percent of any class of equity security of an insurer subject to the act.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-73.

ARSD 20:06:04:09 Securities reacquired for account of an insurer

Securities reacquired by or for the account of an insurer and held by it for its account shall be exempt from SDCL 58-5-69, 58-5-71, 58-5-72, 58-5-73 during the time they are held by the insurer.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-73.

ARSD 20:06:04:10 Exemption of securities purchased or sold by odd lot dealers

Securities purchased or sold by an odd lot dealer in odd lots so far as reasonably necessary to carry on odd lot transactions or in round lots to offset odd lot transactions previously or simultaneously executed or reasonably anticipated in the usual course of business, shall be exempt with respect to participation by such odd lot dealer in such transactions.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-73.

ARSD 20:06:04:11 Certain transactions subject to statements of ownership filings

The acquisition or disposition of any transferable option shall be deemed such a change in the beneficial ownership of the security to which such privilege relates as to require the filing of a statement reflecting the acquisition or disposition of such privilege. Nothing in this section, however, shall exempt any person from filing the statements required upon the exercise of such option.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-73.

ARSD 20:06:04:12 Ownership of securities held in trust

Beneficial ownership of a security for the purpose of SDCL 58-5-69 shall include the ownership of:

(1) Securities as a trustee where either the trustee or members of the trustee's immediate family have a vested interest in the income or corpus of the trust;

(2) A vested beneficial interest in a trust; and

(3) Securities as a settlor of a trust in which the settlor has the power to revoke the trust without obtaining the consent of all the beneficiaries.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:13 Exemptions from statements of ownership filings

Except as provided in § 20:06:04:15, beneficial ownership of securities solely as a settlor or beneficiary of a trust shall be exempt from the provisions of SDCL 58-5-69 where less than 20 percent in market value of the securities having a readily ascertainable market value held by such trust, determined as of the end of the preceding fiscal year of the trust, consists of equity securities with respect to which reports would otherwise be required. Exemption is likewise accorded from SDCL 58-5-69 with respect to any obligation which would otherwise be imposed solely by reason of ownership as settlor or beneficiary of securities held in trust, where the ownership, acquisition, or disposition of such securities by the trust is made without prior approval by the settlor or beneficiary. No exemption pursuant to this section shall, however, be acquired or lost solely as a result of changes in the value of the trust assets during any fiscal year or during any time when there is no transaction by the trust in the securities otherwise subject to the reporting requirements of SDCL 58-5-69.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:14 Trust filing requirement

In the event that 10 percent of any class of any equity security of an insurer is held in a trust, that trust and the trustees thereof as such shall be deemed a person required to file the reports specified in SDCL 58-5-69.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:15 Trustee report

Not more than one report need be filed to report any holdings or with respect to any transaction in securities held by a trust, regardless of the number of officers, directors, or 10 percent stockholders who are either trustees, settlors, or beneficiaries of a trust. The report filed shall disclose the names of all trustees, settlors, and beneficiaries who are officers, directors, or 10 percent stockholders. A person having an interest only as a beneficiary of a trust is not required to file such a report as long as the person relies in good faith upon an understanding that the trustee of the trust will file whatever reports might otherwise be required of the beneficiary.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:16 Definition of trustee

As used in §§ 20:06:04:12 to 20:06:04:16, inclusive, the "immediate family" of a trustee means:

(1) A son or daughter of the trustee, or a descendant of either;

(2) A stepson or stepdaughter of the trustee;

(3) The father or mother of the trustee, or an ancestor of either;

(4) A stepfather or stepmother of the trustee;

(5) A spouse of the trustee.

For the purpose of determining whether any of the foregoing relations exist, a legally adopted child of a person shall be considered a child of such person by blood.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:17 Determination of beneficial owner

In determining, for the purposes of SDCL 58-5-69, whether a person is the beneficial owner, directly or indirectly, or more than 10 percent of any class of any equity security, the interest of such person in the remainder of a trust shall be excluded from the computation.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:18 Indirect interests

No report shall be required by any person, whether or not otherwise subject to the requirement of filing reports under SDCL 58-5-69, with respect to the person's indirect interest in portfolio securities held by a pension or retirement plan holding securities of an insurer whose employees generally are the beneficiaries of the plan or a business trust with over 25 beneficiaries.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:19 Prior transactions

Nothing in §§ 20:06:04:12 to 20:06:04:18, inclusive, shall be deemed to impose any duties or liabilities with respect to reporting any transaction or holding prior to its effective date.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-73.

ARSD 20:06:04:20 Exemption for small transactions

Any acquisition of securities shall be exempt from SDCL 58-5-69 where the person effecting the acquisition does not:

(1) Within 6 months thereafter effect any disposition, otherwise than by way of gifts, of securities of the same class; and

(2) Participate in acquisitions or in dispositions of securities of the same class having a total market value in excess of $3,000 for any 6-month period during which the acquisition occurs.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:21 Gifts

Any acquisition or disposition of securities by way of gift, where the total amount of such gifts does not exceed $3,000 in market value for any 6-month period, shall be exempt from SDCL 58-5-69 and may be excluded from the computations prescribed in subdivision 20:06:04:20(2).

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:22 First report after transaction

Any person exempted by §§ 20:06:04:20 and 20:06:04:21 shall include in the first report filed by the person after a transaction within the exemption a statement showing the person's acquisitions and dispositions for each six months' period or portion thereof which has elapsed since the last filing.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

ARSD 20:06:04:23 Exemption from restrictions on profits, transactions which need not be reported under statements of ownership filings

Any transaction which has been or shall be exempted from the requirements of SDCL 58-5-69 shall, insofar as it is otherwise subject to the provisions of SDCL 58-5-71 to 58-5-73, inclusive, be likewise exempted from SDCL 58-5-71 to 58-5-73, inclusive.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:24 Exemption from restrictions on profits of certain transactions effected in connection with a distribution

Any transaction of purchase and sale, or sale and purchase, of a security which is effected in connection with the distribution of a substantial block of securities shall be exempt from SDCL 58-5-71 to 58-5-73, inclusive, to the extent specified in this section as not comprehended within the purpose of said section, upon the following conditions:

(1) The person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of such business, in the distribution of such block of securities;

(2) The security involved in the transaction is a part of such block of securities and is acquired by the person effecting the transaction, with a view to the distribution thereof, from the insurer or other person on whose behalf such securities are being distributed or from a person who is participating in good faith in the distribution of such block of securities or a security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with such distribution;

(3) Other persons not within the purview of SDCL 58-5-71 to 58-5-73, inclusive, are participating in the distribution of such block of securities on terms at least as favorable as those on which such person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of SDCL 58-5-71 to 58-5-73, inclusive, by this section. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing such functions shall not preclude an exemption which would otherwise be available under this section; and

(4) The exemption of a transaction pursuant to this section with respect to the participation therein of one party thereto shall not render such transaction exempt with respect to participation of any other party therein unless such other party also meets the conditions of this section.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:25 Exemption from restrictions on profits of acquisitions of shares of stock and stock options under certain stock bonus, stock option, or similar plans

Any acquisition of shares of stock, other than stock acquired upon the exercise of an option, warrant or right, pursuant to a stock bonus, profit sharing, retirement, incentive, thrift, savings or similar plan, or any acquisition of a qualified or a restricted stock option pursuant to a qualified or a restricted stock option plan, or a stock option pursuant to an employee stock purchase plan, by a director or officer of an insurer issuing such stock or stock option shall be exempt from the operation of SDCL 58-5-71 to 58-5-73, inclusive, if the plan has been approved, directly or indirectly by the:

(1) Affirmative votes of the holders of a majority of the securities of such insurer present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of the state of South Dakota; or

(2) Written consent of the holders of a majority of the securities of such insurer entitled to vote;

(3) Such vote or written consent (subdivisions 20:06:04:05(1) and (2)) is to be solicited substantially in accordance with chapter 20:06:03. For the purposes of this subdivision, the term "insurer" includes a predecessor corporation if the plan or obligations to participate thereunder were assumed by the insurer in connection with the succession.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:26 Participation of officers

If the selection of any director or officer of the insurer to whom stock may be allocated or to whom qualified, restricted or employee stock purchase plan stock options may be granted pursuant to the plan, or the determination of the maximum number of shares of stock which may be allocated to any such director or officer or which may be covered by qualified, restricted or employee stock purchase plan stock options granted to any such director or officer, is subject to the discretion of any person, then such discretion shall be exercised only as provided by §§ 20:06:04:27 to 20:06:04:29, inclusive.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:27 Participation of directors

With respect to the participation of directors:

(1) By the board of directors of the insurer, a majority of which board and majority of the directors acting in the matter are disinterested persons;

(2) By, or only in accordance with the recommendations of, a committee of three or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons; or

(3) Otherwise in accordance with the plan, if the plan:

(a) Specifies the number or maximum number of shares of stock which directors may acquire or which may be subject to qualified, restricted or employee stock purchase plan stock options granted to directors and the terms upon which, and the times at which, or the periods within which, such stock may be acquired or such options may be acquired and exercised; or

(b) Sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the insurer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares of percentages thereof outstanding from time to time, or similar factors.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:28 Participation of officers who are not directors

20:06:04 :28. Participation of officers who are not directors. Discretion shall be exercised with respect to the participation of officers who are not directors:

(1) By the board of directors of the insurer or a committee of three or more directors; or

For the purpose of this section, a director or committee member shall be deemed to be a disinterested person only if such person is not at the time such discretion is exercised eligible and has not at any time within one year prior thereto been eligible for selection as a person to whom stock may be allocated or to whom qualified, restricted or employee stock purchase plan stock options may be granted pursuant to the plan or any other plan of the insurer or any of its affiliates entitling the participants therein to acquire stock or qualified, restricted or employee stock purchase plan stock options of the insurer or any of its affiliates.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:29 Exclusions of options and equity securities acquired

The provisions of § 20:06:04:28 shall not apply with respect to any option granted, or other equity security acquired, prior to the date that SDCL 58-5-69, 58-5-71 to 58-5-73, inclusive, and 58-5-70 first become applicable with respect to any class of equity securities of any insurer.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:30 Limitations

As to each participant or as to all participants the plan shall effectively limit the aggregate dollar amount or the aggregate number of shares of stock which may be allocated, or which may be subject to qualified, restricted, or employee stock purchase plan stock options granted, pursuant to the plan. The limitations may be established on an annual basis, or for the duration of the plan, whether or not the plan has a fixed termination date and may be determined either by fixed or maximum dollar amounts or fixed or maximum numbers of shares or by formulas based upon earnings of the insurer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors which will result in an effective and determinable limitation. Such limitations may be subject to any provisions for adjustment of the plan or of stock allocable or options outstanding thereunder to prevent dilution or enlargement of rights.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:31 Additional definitions

Unless the context otherwise requires, all terms used in §§ 20:06:04:31 to 20:06:04:46, inclusive, shall have the same meaning as in SDCL 58-5-68 to 58-5-78, inclusive, and § 20:06:04:01. In addition, the following definitions apply:

(1) The term "plan" includes any plan, whether or not set forth in any formal written document or documents and whether or not approved in its entirety at one time;

(2) The definition of the terms "qualified stock option" and "employee stock purchase plan" that are set forth in sections 422 and 423 of the Internal Revenue Code of 1954 are to be applied to those terms where used in §§ 20:06:04:31 to 20:06:04:46, inclusive;

(3) The term "restricted stock option" as defined in section 424 (b) of the Internal Revenue Code of 1954 shall be applied to that term as used in §§ 20:06:04:31 to 20:06:04:46, inclusive, provided, however, that for the purposes of §§ 20:06:04:31 to 20:06:04:46, inclusive, an option which meets all of the conditions of section 424 (b), other than the date of issuance shall be deemed to be a "restricted stock option."

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-68 to 58-5-78.

ARSD 20:06:04:32 Exemption from restrictions on profits of certain transactions in which securities are received by redeeming other securities

Any acquisition of an equity security, other than a convertible security or right to purchase a security, by a director or officer of the insurer issuing such security shall be exempt from the operation of SDCL 58-5-71 to 58-5-73, inclusive, upon condition that:

(1) The equity security is acquired by way of redemption of another security of an insurer substantially all of whose assets other than cash or government bonds consist of securities of the insurer issuing the equity security so acquired, and which:

(a) Represented substantially and in practical effect a stated or readily ascertainable amount of such equity security;

(b) Had a value which was substantially determined by the value of such equity security;

(c) Conferred upon the holder the right to receive such equity security without the payment of any consideration other than the security redeemed;

(2) No security of the same class as the security redeemed was acquired by the director or officer within six months prior to such redemption or is acquired within six months after such redemption;

(3) The insurer issuing the equity security acquired has recognized the applicability of subdivision 20:06:04:32(1) by appropriate corporate action.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:33 Exemption of long-term profits incident to sales within six months of the exercise of an option

To the extent specified in § 20:06:04:33 there is hereby exempted as not comprehended within the purpose of SDCL 58-5-71 to 58-5-73, inclusive, any transaction or transactions involving the purchase and sale, or sale and purchase, of any equity security where such purchase is pursuant to the exercise of an option or similar right either acquired more than six months before its exercise, or acquired pursuant to the terms of an employment contract entered into more than six months before its exercise.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-70 to 58-5-73.

ARSD 20:06:04:34 Limitations on profits

In respect of transactions specified in § 20:06:04:33 the profits inuring to the insurer shall not exceed the difference between the proceeds of sale and the lowest market price of any security of the same class within six months before or after the date of sale. Nothing in §§ 20:06:04:33 and 20:06:04:34 shall be deemed to enlarge the amount of profit which would inure to such insurer in the absence of this section.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-70 to 58-5-73.

ARSD 20:06:04:35 Exemption of plans or agreements of merger

There is also hereby exempted as not comprehended within the purposes of SDCL 58-5-71 to 58-5-73, inclusive, the disposition of a security, purchased in a transaction specified in § 20:06:04:33, pursuant to a plan or agreement for merger or consolidation, or reclassification of the insurer's securities, or for the exchange of its securities for the securities of another person who has acquired its assets, or who is in control, as defined in section 368 (c) of the Internal Revenue Code of 1954, of a person who has acquired its assets, where the terms of such plan or agreement are binding upon all stockholders of the insurer except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-70 to 58-5-73.

ARSD 20:06:04:36 Excluded

The exemptions provided by §§ 20:06:04:31 to 20:06:04:36, inclusive, shall not apply to any transaction made unlawful by SDCL 58-5-70 or by any rules and regulations passed thereunder.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-70 to 58-5-73.

ARSD 20:06:04:37 Establishing market price

The burden of establishing market price of a security for the purpose of §§ 20:06:04:31 to 20:06:04:37, inclusive, shall rest upon the person claiming the exemption.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-70 to 58-5-73.

ARSD 20:06:04:38 Exemption from restrictions on profits of certain acquisitions and dispositions of securities pursuant to merger or consolidations

The following transactions shall be exempt from the provisions of SDCL 58-5-71 to 58-5-73, inclusive, as not comprehended within the purpose of said sections:

(1) The acquisition of a security of an insurer, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company;

(2) The disposition of a security, pursuant to a merger or consolidation of an insurer which, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company;

(3) The acquisition of a security of an insurer, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation as determined by reference to their most recent available financial statements for a 12-month period prior to the merger or consolidation;

(4) The disposition of a security, pursuant to a merger or consolidation, of an insurer which, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to merger or consolidation, as determined by reference to their most recent available financial statements for a 12-month period prior to the merger or consolidation.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:39 Merger defined

A merger within the meaning of §§ 20:06:04:38 to 20:06:04:40, inclusive, shall include the sale or purchase of substantially all the assets of one insurer by another in exchange for stock which is then distributed to the security holders of the insurer which sold its assets.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:40 Availability of exemption

Notwithstanding § 20:06:04:39, if an officer, director or stockholder shall make any purchase, other than a purchase exempted by §§ 20:06:04:38 to 20:06:04:44, inclusive, of a security in any company involved in the merger or consolidation and any sale, other than a sale exempted by §§ 20:06:04:38 to 20:06:04:40, inclusive, of a security in any other company involved in the merger or consolidation within any period of less than six months during which the merger or consolidation took place, the exemption provided by §§ 20:06:04:38 to 20:06:04:40, inclusive, shall be unavailable to such officer, director, or stockholder.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:41 Exemption from restrictions on profits of certain securities received upon surrender of similar equity securities

Any receipt by a person from an insurer of shares of stock of a class having general voting power, upon the surrender by such person of an equal number of shares of stock of the insurer of a class which does not have general voting power, pursuant to provisions of the insurer's certificate of incorporation, for the purpose of and accompanied simultaneously or followed immediately by the sale of the shares so received, shall be exempt from the operation of SDCL 58-5-71 to 58-5-73, inclusive, as a transaction not comprehended within the purpose of said section, if the following conditions exist:

(1) The person so receiving such shares is not an officer or director, or the beneficial owner, directly or indirectly, immediately prior to such receipt, of more than ten percent of an equity security of the insurer;

(2) The shares surrendered and the shares issued upon such surrender shall be of classes which are freely transferable and entitle the holders thereof to participate equally per share in all distributions of earnings and assets;

(3) The surrender and issuance are made pursuant to provisions of a certificate of incorporation which require that the shares issued upon such surrender shall be registered upon issuance in the name of a person or persons other than the holder of the shares surrendered and may be required to be issued as of right only in connection with the public offering, sale and distribution of such shares and the immediate sale by such holder of such shares for that purpose, or in connection with a gift of such shares;

(4) Neither the shares so surrendered nor any shares of the same class, nor other shares of the same class as those issued upon such surrender, have been or are purchased, otherwise than in a transaction exempted by this section, by the person surrendering such shares, within six months before or after such surrender or issuance.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:42 Exemption from restrictions on profits of certain transactions involving an exchange of similar securities

Any acquisition or disposition of securities made in an exchange of shares of a class, or series thereof, of stock of an insurer for an equivalent number of shares of another class, or series thereof, of stock of the same insurer, pursuant to a right of conversion under the terms of the insurer's charter or other governing instruments shall be exempt from the operation of SDCL 58-5-71 to 58-5-73, inclusive, if:

(1) The shares surrendered and those acquired in exchange therefor evidence substantially the same rights and privileges except that, pursuant to the provisions of the insurer's charter or other governing instruments, the board of directors may declare and pay a lesser dividend per share on shares of the class surrendered than on shares of the class acquired in exchange therefore, or may declare and pay no dividend on shares of the class surrendered; and

(2) The transaction was effected in contemplation of a public sale of the shares acquired in the exchange; provided, that this section shall not be construed to exempt from the operation of SDCL 58-5-71 to 58-5-73, inclusive, any purchase or sale of shares of the class surrendered and any sale or purchase of shares of the class acquired in the exchange, otherwise than in the transaction of exchange exempted by this section, within a period of less than six months.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-73, 58-5-77.
Law Implemented: SDCL 58-5-71 to 58-5-73.

ARSD 20:06:04:43 Exemption of certain securities from insider trading

A security is exempt from the operation of SDCL 58-5-70 to the extent necessary to render lawful under that section the execution by a broker of an order for an account in which the broker has no direct or indirect interest.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-70.

ARSD 20:06:04:44 Exemption from insider trading of the act of certain transactions effected in connection with a distribution

Any security shall be exempt from the operation of SDCL 58-5-70 to the extent necessary to render lawful under such section any sale made by or on behalf of a dealer in connection with a distribution of a substantial block of securities upon the following conditions:

(1) The sale is represented by an over-allotment in which the dealer is participating as a member of an underwriting group, or the dealer or a person acting on the dealer's behalf intends in good faith to offset the sale with a security to be acquired by or on behalf of the dealer as a participant in an underwriting, selling, or soliciting-dealer group of which the dealer is a member at the time of the sale, whether or not the security to be so acquired is subject to a prior offering to existing security holders or some other class of persons; and

(2) Other persons not within the purview of SDCL 58-5-70 are participating in the distribution of such block of securities on terms at least as favorable as those on which such dealer is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of SDCL 58-5-70 by this section. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing such functions shall not preclude an exemption which would otherwise be available under this section.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-70.

ARSD 20:06:04:45 Exemption from insider trading of the act of sales of securities to be acquired

When any person is entitled, as an incident to the person's ownership of an issued security and without the payment of consideration, to receive another security "when issued" or "when distributed," the security to be acquired is exempt from the operation of SDCL 58-5-70 provided that:

(1) The sale is made subject to the same conditions as those attaching to the right of acquisition;

(2) The person exercises reasonable diligence to deliver the security to the purchaser promptly after the person's right of acquisition matures; and

(3) The person reports the sale on the appropriate form for reporting transaction by persons subject to SDCL 58-5-69.

This section may not be construed as exempting transactions involving both a sale of a security "when issued" or "when distributed" and a sale of the security by virtue of which the seller expects to receive the "when issued" or "when distributed" security, if the two transactions combined result in a sale of more units than the aggregate of those owned by the seller plus those to be received by the seller pursuant to the seller's right of acquisition.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-70.

ARSD 20:06:04:46 Arbitrage transactions under insider trading

A director or officer of an insurer may not effect any foreign or domestic arbitrage transaction in any equity security of that insurer, unless the director or officer includes the transaction in the statements required by SDCL 58-5-69 and accounts to the insurer for the profits arising from the transaction as provided in SDCL 58-5-71 to 58-5-73, inclusive, thereof. The provisions of SDCL 58-5-70 do not apply to such arbitrage transactions. The provisions of the Act do not apply to any bona fide foreign or domestic arbitrage transaction insofar as it is effected by any person other than the director or officer of the insurer.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-76.

ARSD 20:06:04:47 Approval of forms

Forms required by chapter 20:06:04 shall be filed with and approved by the director of insurance.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-5-77.
Law Implemented: SDCL 58-5-69.

Chapter 20:06:05 Voting proxies of domestic mutuals, Repealed

ARSD 20:06:05 Repealed chapter

CHAPTER 20:06:05

VOTING PROXIES OF DOMESTIC MUTUALS

(Repealed. 39 SDR 219, effective June 26, 2013)

Chapter 20:06:06 Credit life, health, and unemployment insurance

ARSD 20:06:06:01 Premium rates -- Fifty percent loss ratio benchmark

A basic test of the reasonableness of the relation of benefits to the premium charged shall be the development of an anticipated loss ratio of claims incurred to premiums earned of at least 50 percent. If the total current expected expenses, including acquisition expenses, exceed 50 percent of the premium dollar, this shall be considered prima facie evidence that a company intends to write credit business at a loss ratio not in compliance with this rule. Commissions, including retrospective premium refunds, bonuses, or acquisition expenses, shall not exceed 40 percent. If a company is not in compliance with this rule, it shall be required to show just cause why the premium rates as filed should not be disapproved.

History

Source: 4 SDR 6, effective August 9, 1977; 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:02 Prima facie acceptable credit insurance rates

20:06:06:02 Prima facie acceptable credit insurance rates. It shall be presumed that premium rates charged or to be charged are not excessive in relation to the benefits if the premiums or premium rates as filed with the director do not exceed the rates, or actuarially equivalent rates, in §§ 20:06:06:03 and 20:06:06:04.

History

Source: 4 SDR 6, effective August 9, 1977; 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:03 Credit life insurance -- Acceptable rates

The acceptable rates for credit life insurance are as follows:

(1) For decreasing term credit life insurance, a single premium of $.56 a year for each $100 of initial insured indebtedness. A premium payable monthly at the rate of $.88 for each $1,000 of outstanding unpaid insured indebtedness will be considered the actuarial equivalent of the foregoing rate; and

(2) For level term credit life insurance, a single premium of $1.02 a year for each $100 of initial indebtedness.

History

Source: 4 SDR 6, effective August 9, 1977; 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 26 SDR 150, adopted May 21, 2000, effective July 1, 2000.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:03.01 Premium rates presumed not excessive in relation to death benefits plan -- Restrictions allowed

The premium rates for credit life insurance specified in § 20:06:06:03 shall be presumed not excessive only in relation to a plan of death benefits, with or without requirements for evidence of insurability. The insurance shall contain no exclusions, exceptions, or limitations on coverage other than for suicide within one year from the effective date of the insurance and shall contain no age restrictions other than those making debtors 65 or over at the time the indebtedness is incurred ineligible for the coverage.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:03.02 Return of premium to debtor over eligibility age

If a debtor exceeds the eligibility age but stated the age correctly in writing or otherwise and a certificate or policy is issued in error, the insurer has a period within 60 days from the effective date of insurance to terminate coverage and refund any premiums paid. Failure on the part of the insurer to return the premium within 60 days subjects it to the full risk. If the debtor dies within the 60-day period before the insurer terminates coverage, the insurer is liable for the amount of the debtor's insurance at death.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:03.03 Joint credit life insurance rates

Where credit life insurance on a single indebtedness is provided on two lives, it shall mean insurance on spouse, family member or business partners only, where both are jointly and severally liable for the debt. The writing of insurance on more than two lives on the same indebtedness is prohibited. Decreasing or level joint credit life insurance shall be issued at a premium rate not to exceed the single life rate in § 20:06:06:03 multiplied by a factor of 1.5. Joint life rates shall be filed and approved by the director.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:03.04 Determination of premiums by age

If premiums are to be determined according to the age of the insured debtor or by age brackets, an insurer may determine premium rates on a basis actuarially consistent with the rates set forth in § 20:06:06:03, but the rates shall be filed with and approved by the director.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:04 Credit health insurance -- Acceptable rates

The acceptable rates for credit health insurance are as follows:

(1) The following table gives the single premium rates for each per $100 of initial insured indebtedness:

No. of months

Nonretroactive

Benefits

Retroactive

Benefits

in which

14-day

30-day

14-day

30-day

indebtedness

nonretroactive

retroactive

is repayable

6 or less

$ .88

$ .34

$1.60

$1.15

7-9

1.06

.52

1.78

1.33

10-12

1.24

.70

1.96

1.51

13-15

1.42

.88

2.14

1.69

16-18

1.60

1.06

2.32

1.87

19-21

1.78

1.24

2.50

2.05

22-24

1.96

1.42

2.68

2.23

25-27

2.14

1.60

2.86

2.41

28-30

2.32

1.78

3.04

2.59

31-33

2.50

1.96

3.22

2.77

34-36

2.68

2.14

3.40

2.95

37-39

2.79

2.25

3.51

3.06

40-42

2.91

2.37

3.63

3.18

43-45

3.01

2.47

3.73

3.28

46-48

3.13

2.59

3.85

3.40

49-51

3.22

2.68

3.94

3.49

52-54

3.31

2.77

4.03

3.58

55-57

3.40

2.86

4.12

3.67

58-60

3.49

2.95

4.21

3.76

61-63

3.58

3.04

4.30

3.85

64-66

3.67

3.13

4.39

3.94

67-69

3.76

3.22

4.48

4.03

70-72

3.85

3.31

4.57

4.12

73-75

3.94

3.40

4.66

4.21

76-78

4.03

3.49

4.75

4.30

79-81

4.12

3.58

4.84

4.39

82-84

4.21

3.67

4.93

4.48

85-87

4.30

3.76

5.02

4.57

88-90

4.39

3.85

5.11

4.66

91-93

4.48

3.94

5.20

4.75

94-96

4.57

4.03

5.29

4.84

97-99

4.66

4.12

5.38

4.93

100-102

4.75

4.21

5.47

5.02

103-105

4.84

4.30

5.56

5.11

106-108

4.93

4.39

5.65

5.20

109-111

5.02

4.48

5.74

5.29

112-114

5.11

4.57

5.83

5.38

115-117

5.20

4.66

5.92

5.47

118-120

5.29

4.75

6.01

5.56

(2) Premiums payable other than on a single premium basis or for benefits on a basis different than illustrated above shall be actuarially consistent with the rates specified above.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 26 SDR 150, adopted May 21, 2000, effective July 1, 2000.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:04.01 Repealed

Credit disability insurance prohibited on more than one life on single debt.** Repealed.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 16 SDR 208, effective June 3, 1990.

ARSD 20:06:06:04.02 Credit health insurance -- Exclusions and restrictions allowed

The premium rates specified in § 20:06:06:04 are for policies which contain no exclusion for preexisting conditions except for those conditions which manifested themselves to the insured by requiring medical diagnosis or treatment, or would have caused a reasonably prudent person to have sought medical diagnosis or treatment, within six months preceding the effective date of the insurance and which caused loss within the six months following the effective date of coverage; however, any disability commencing after that time resulting from such conditions shall be covered. For open end accounts, the effective date of coverage for each part of the insurance attributable to a different advance or charge to the plan or account is the date on which the advance or charge is posted to the plan or account. Any contract to which the credit health insurance rates apply may contain provisions excluding or restricting coverage in the event of total disability resulting from pregnancy, intentionally self-inflicted injuries, foreign travel or residence, flight in nonscheduled aircraft, war or military service. Except in unusual cases, such insurance shall not be sold to military persons, since their pay continues through periods of disability. The policies may contain the same age limitation on eligibility as set forth for credit life policies.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-17-97, 58-19-26.

ARSD 20:06:06:04.03 Reduction of period of exclusion

The policy shall provide that in event the indebtedness covered by the policy results from the refinancing in whole or part of a prior debt with the same creditor, any period of exclusion for preexisting conditions shall be reduced by any period that creditor-debtor disability coverage was in force in connection with the prior indebtedness.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:04.04 Joint credit disability insurance -- Acceptable rates

Joint credit disability insurance may be issued at a premium rate that does not exceed the single disability rates specified in § 20:06:06:04, multiplied by a factor of 1.75. Joint disability rates shall be filed with and approved by the director.

Joint credit disability insurance may only be issued when the indebtedness insured was granted based on both insureds' income.

History

Source: 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-4-1, 58-19-34.
Law Implemented: SDCL 58-19-12, 58-19-13, 58-19-14.

ARSD 20:06:06:05 Restricted coverages -- Rates

If a credit life or credit health insurance form provides for coverages which are more restrictive than provided for in § 20:06:06:03.01 or 20:06:06:04.02, the insurer shall demonstrate to the satisfaction of the director that the schedule of premium rates applicable to such forms will, or can reasonably be expected to, produce a loss ratio of 50 percent in accordance with the basic test set forth in § 20:06:06:01. In no event will an insurer limit pre-existing condition coverage to be more restrictive than that allowed in SDCL 58-17-97 or a suicide exclusion that is more restrictive than allowed in SDCL 58-15-45.

History

Source: 4 SDR 6, effective August 9, 1977; 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-15-45, 58-17-97, 58-19-26.

ARSD 20:06:06:06 Deviations from prima facie acceptable credit insurance rates

Deviations from prima facie acceptable credit insurance rates may be approved as follows:

(1) Requests for rates higher than those established in this chapter for a debtor or a creditor or a class or classes of debtors or creditors may be approved on a satisfactory showing by the insurer that, because of the nature of the risk, the mortality or morbidity experience which may reasonably be anticipated will be significantly higher than the average anticipated experience upon which the applicable rate standard was based;

(2) In judging requests for higher rates, the director of insurance will consider the following:

(a) Available mortality and morbidity data pertaining to the debtors of a creditor or a class or classes of debtors of a creditor;

(b) Previous experience, if any, for an actuarially credible period of the creditor's debtors, including the experience of any subsidiary or affiliate of the creditor;

(d) A reasonable rate of expense;

(3) Age data and prior experience of the creditor's program shall always be submitted; and

(4) Commissions or other payments or allowances to creditors, agents, or general agents shall not be considered a justification for higher rates.

History

Source: 4 SDR 6, effective August 9, 1977; 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:07 Refunds

If credit life insurance on a debtor terminates prior to expiration of the period for which the debtor has been charged because of early discharge of indebtedness for any reason other than payment of a death claim under the credit life insurance policy, a refund of the charge for insurance shall be made to the debtor or credited to the debtor's account, using one of the formulas following this paragraph. If credit accident and health insurance on a debtor terminates prior to expiration of the period for which the debtor has been charged for any reason except for payment of a lump sum disability insurance benefit, a refund of the charge for insurance shall be made to the debtor, the debtor's beneficiary, or the debtor's estate, as appropriate, using one of the following formulas:

(1) The amount of the refund in the case of reducing term credit life insurance or of credit health insurance on which the charges to the debtor are payable by other than a single sum of level term credit life insurance may not be less than the pro rata gross unearned amount charged;

(2) The amount of the refund in the case of reducing term credit life insurance or of credit health insurance on which the insurance charges to the debtor are paid in a single sum may not be less than the amount computed by the "sum of the digits" formula, commonly known as the "rule of 78"; and

(3) A premium refund or credit need not be made if the amount is less than one dollar.

History

Source: 4 SDR 6, effective August 9, 1977; 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-15.

ARSD 20:06:06:07.01 Refinancing or consolidation

Refinancing** or consolidation. In any refinancing or consolidation of an indebtedness, no policy provision covering the new indebtedness shall operate to deny benefits which would have been payable had the refinancing or consolidation not taken place.

History

Source: 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-19.

ARSD 20:06:06:08 Filing of experience information

Insurers doing credit life or credit health insurance business, or both, in this state shall annually file with the division a report of its credit life insurance experience and credit health insurance experience on the following form prescribed by the director:

CREDIT LIFE INSURANCE EXPERIENCE EXHIBIT

All Credit Life Insurance Written Under the N.A.I.C.

Model Credit Insurance Bill in the State of South Dakota

Experience of Calendar year 19__ or of

Policy Years Ending in 19__ (Indicate Which)

To be filed on or before June 30

I.Single Premium Paid in Advance, Reducing Term

A.Other than Commercial and Savings Banks

a.Cash Loans (Small Loans, Industrial Bank Loans, etc.)

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Losses per $100.00 initial amount on basis of

12 months policy (13/24 X Item 5) _____

7.Premium rate per $100.00 initial amount on basis of

12 months policy: (a) minimum ____ (b) maximum ____

in force _____

8.Eligibility requirements (explain) (Footnote a) _____ _____

9.Underwriting limitations (explain) (Footnote b) _____ _____

10.Other limits on coverage (explain) _____ _____

11.Loss ratio (Item 6 -:- Item 7(c)) _____

Name

Company (Please Print)

*Mean insurance in force after appropriate deduction for reducing term provision and terminations. b.Sales Finance (Discount Transactions, etc.)

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Losses per $100.00 initial amount on basis of

12 months policy (13/24 X Item 5) _____

7.Premium rate per $100.00 initial amount on basis of

12 months policy: (a) minimum ____ (b) maximum ____

in force _____

8.Eligibility requirements (explain) (Footnote a) _____ _____

9.Underwriting limitations (explain) (Footnote b) _____ _____

10.Other limits on coverage (explain) _____ _____

11.Loss ratio (Item 6 - Item 7(c)) _____

Name

Company (Please Print)

*Mean insurance in force after appropriate deduction for reducing term provision and terminations.

B.Commercial and Savings Banks

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Losses per $100.00 initial amount on basis of

12 months policy (13/24 X Item 5) _____

7.Premium rate per $100.00 initial amount on basis of

12 months policy: (a) minimum ____ (b) maximum ____

in force _____

8.Eligibility requirements (explain) (Footnote a) _____ _____

9.Underwriting limitations (explain) (Footnote b) _____ _____

10.Other limits on coverage (explain) _____ _____

11.Loss ratio (Item 6 - Item 7(c)) _____

Name

Company (Please Print)

*Mean insurance in force after appropriate deduction for reducing term provision and terminations.

C.Credit Unions

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Losses per $100.00 initial amount on basis of

12 months policy (13/24 X Item 5) _____

7.Premium rate per $100.00 initial amount on basis of

12 months policy: (a) minimum ____ (b) maximum ____

insurance in force _____

8.Eligibility requirements (explain) (Footnote a) _____ _____

9.Underwriting limitations (explain) (Footnote b) _____ _____

10.Other limits on coverage (explain) _____ _____

11.Loss ratio (Item 6 - Item 7(c)) _____

Name

Company (Please Print)

*Mean insurance in force after appropriate deduction for reducing term provision and terminations.

II.Single Premium Paid in Advance, Level Term

A.Other than Commercial and Savings Banks

a.Cash Loans (Small Loans, Industrial Bank Loans, etc.)

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Annual premium rate per $100.00: (a) minimum _____

(b) maximum _____ (c) average, weighted by amounts

of mean insurance in force _____

7.Eligibility requirements (explain) (Footnote a) _____ _____

8.Underwriting limitations (explain) (Footnote b) _____ _____

9.Other limits on coverage (explain) _____ _____

10.Loss ratio (Item 5 -:- Item 6(c)) _____

Name

Company (Please Print)

*Mean insurance in force reflecting terminations during the year.

b.Sales Finance (Discount Transactions, etc.)

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Annual premium rate per $100.00: (a) minimum ____

(b) maximum ____ (c) average, weighted by amounts

of mean insurance in force _____

7.Eligibility requirements (explain) (Footnote a) _____ _____

8.Underwriting limitations (explain) (Footnote b) _____ _____

9.Other limits on coverage (explain) _____ _____

10.Loss ratio (Item 5 -:- Item 6(c)) _____

Name

Company (Please Print)

*Mean insurance in force reflecting terminations during the year.

B.Commercial and Savings Banks

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Annual premium rate per $100.00: (a) minimum ____

(b) maximum ____ (c) average, weighted by amounts

of mean insurance in force _____

7.Eligibility requirements (explain) (Footnote a) _____ _____

8.Underwriting limitations (explain) (Footnote b) _____ _____

9.Other limits on coverage (explain) _____ _____

10.Loss ratio (Item 5 -:- Item 6(c)) _____

Name

Company (Please Print)

*Mean insurance in force reflecting terminations during the year.

C.Credit Unions

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Annual premium rate per $100.00: (a) minimum ____

(b) maximum ____ (c) average, weighted by amounts

of mean insurance in force _____

7.Eligibility requirements (explain) (Footnote a) _____ _____

8.Underwriting limitations (explain) (Footnote b) _____ _____

9.Other limits on coverage (explain) _____ _____

10.Loss ratio (Item 5 -:- Item 6(c)) _____

Name

Company (Please Print)

*Mean insurance in force reflecting terminations during the year.

III.Outstanding Balance Premium Method

A.Other than Commercial and Savings Banks

a.Cash Loans (Small Loans, Industrial Bank Loans, etc.)

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Annual premium rate per $100.00: (a) minimum ____

(b) maximum ____ (c) average, weighted by amounts

of mean insurance in force _____

7.Eligibility requirements (explain) (Footnote a) _____ _____

8.Underwriting limitations (explain) (Footnote b) _____ _____

9.Other limits on coverage (explain) _____ _____

10.Loss ratio (Item 5 -:- Item 6(c)) _____

Name

Company (Please Print)

*Mean insurance in force reflecting terminations during the year.

b.Sales Finance (Discount Transactions, etc.)

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Annual premium rate per $100.00: (a) minimum ____

(b) maximum ____ (c) average, weighted by amounts

of mean insurance in force _____

7.Eligibility requirements (explain) (Footnote a) _____ _____

8.Underwriting limitations (explain) (Footnote b) _____ _____

9.Other limits on coverage (explain) _____ _____

10.Loss ratio (Item 5 -:- Item 6(c)) _____

Name

Company (Please Print)

*Mean insurance in force reflecting terminations during the year.

B.Commercial and Savings Banks

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Annual premium rate per $100.00: (a) minimum ____

(b) maximum ____ (c) average, weighted by amounts

of mean insurance in force _____

7.Eligibility requirements (explain) (Footnote a) _____ _____

8.Underwriting limitations (explain) (Footnote b) _____ _____

9.Other limits on coverage (explain) _____ _____

10.Loss ratio (Item 5 -:- Item 6(c)) _____

Name

Company (Please Print)

*Mean insurance in force reflecting terminations during the year.

C.Credit Unions

1.Mean insurance in force* $_____

2.Losses paid _____

3.Increase (+) or decrease (-) in loss reserves,

including incurred but unreported _____

4.Losses incurred (Item 2 + Item 3) _____

5.Losses per $100.00 mean insurance in force

(100 X Item 4 -:- Item 1) _____

6.Annual premium rate per $100.00: (a) minimum ____

(b) maximum ____ (c) average, weighted by amounts

of mean insurance in force _____

7.Eligibility requirements (explain) (Footnote a) _____ _____

8.Underwriting limitations (explain) (Footnote b) _____ _____

9.Other limits on coverage (explain) _____ _____

10.Loss ratio (Item 5 -:- Item 6(c)) _____

Name

Company (Please Print)

*Mean insurance in force reflecting terminations during the year.

(a)Show eligibility requirements such as age, good health, employment, etc.

(b)Show such limitations as statement of good health, use of application, any limitations on amount because of age or underwriting restrictions, etc.

_____All States

_____All Model Act States

_____State of South Dakota

_____Other (Explain Fully) _____ _____ _____ _____

(Check one of the above, this being at Insurer's Option)

1.Gross Premium Written (A) _____ _____ _____ _____

2.Refunds on Termination _____ _____ _____ _____

3.Net Premium Written (1-2) _____ _____ _____ _____

4.Premium Reserve at Start of Period (B) _____ _____ _____ _____

5.Premium Reserve at End of Period (B) _____ _____ _____ _____

6.Earned Premium (3+4-5) _____ _____ _____ _____

7.Claims Paid _____ _____ _____ _____

8.Reserve for Claims at End of Period _____ _____ _____ _____

9.Reserve for Claims at Beginning of Period _____ _____ _____ _____

10.Incurred Losses (7+8-9) _____ _____ _____ _____

11.Loss Ratio - Ratio of Line 10 to Line 6 _____ _____ _____ _____

(A)Include membership fees or policy fees and all other insurance fees (excluding reinsurance assumed and without deduction of reinsurance ceded), without any reduction or deduction for any purpose or to any extent.

(B)For purposes of this form, premium reserves shall be reported on a monthly pro rata basis.

(C)Experience under forms providing substantially the same benefits at the same premium rates with substantially the same eligibility and underwriting requirements shall be reported on a combination basis if the difference in the number of the form is primarily due to difference in required uniform provisions or required differences in wording of other policy provisions. Where substantially different benefits are provided under the same form, the experience shall be reported separately.

(D)Indicate, also, waiting period and whether coverage is retroactive or nonretroactive as well as any approved limits on preexisting conditions.

(E)Show eligibility requirements such as age, good health, employment, etc.

(F)Show such limitations as statement of good health, use of application, etc.

(G)Show cash loans (small loans, industrial bank loans, etc.); Sales Finance (discount transactions, etc.); Credit Unions, Banks (Commercial and Savings).

Name

Company (Please Print)

_____ Calendar Year or

_____ Policy Year

(Check one of the above, this being at Insurer's Option)

To be Filed on or Before June 30 of Each Year

1.Form No. (C) _____ _____ _____ _____

2.Indicate Group or Individual _____ _____ _____ _____

3.Brief Description of Type of Coverage (D) _____ _____ _____ _____

4.Premium Rates (A) _____ _____ _____ _____

5.Eligibility Requirements (E) _____ _____ _____ _____

6.Underwriting Limitations (F) _____ _____ _____ _____

7.Other Limitations on Coverage _____ _____ _____ _____

8.Class of Business (G) _____ _____ _____ _____

9.Other Remarks _____ _____ _____ _____

(B)For purposes of this form, premium reserves shall be reported on a monthly pro rata basis.

(C)Experience under forms providing substantially the same benefits at the same premium rates with substantially the same eligibility and underwriting requirements shall be reported on a combination basis if the difference in the number of the form is primarily due to differences in required uniform provisions or required differences in wording of other policy provisions. Where substantially different benefits are provided under the same form, the experience shall be reported separately.

(D)Indicate, also, waiting period and whether coverage is retroactive or nonretroactive as well as any approved limits on preexisting conditions.

(E)Show eligibility requirements such as age, good health, employment, etc.

(F)Show such limitations as statement of good health, use of application, etc.

(G)Show cash loans (small loans, industrial bank loans, etc.); Sales Finance (discount transactions, etc.); Credit Unions, Banks (Commercial and Savings).

Name

Company (Please Print)

History

Source: 4 SDR 6, effective August 9, 1977; 5 SDR 91, effective April 25, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-19-34.
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:09 Minimum benefits of credit unemployment insurance policies

A credit unemployment insurance policy must contain coverage for unemployment for any reason except the following, which may be excluded:

(1) Voluntary forfeiture of salary, wage, or other employment income;

(2) Resignation;

(3) Retirement;

(4) General strike;

(5) Illegal walk out;

(6) War;

(7) Separation from the military;

(8) Willful misconduct or criminal misconduct or unlawful behavior; or

(9) Disability caused by injury, sickness, or pregnancy.

For unemployment insurance that provides for a monthly benefit in the event of unemployment, benefits must start after a waiting period of not longer than 30 days. The coverage must be retroactive to the first day of unemployment and must have a maximum benefit period that is no shorter than six months.

History

Source: 29 SDR 84, effective December 15, 2002.
General Authority: SDCL 58-19-34(6).
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:10 Limited eligibility requirements for credit unemployment insurance policies

A credit unemployment insurance policy may not contain eligibility requirements more restrictive than the following:

(1) Excluding the following persons for coverage:

(a) Self-employed individuals;

(b) Workers in seasonal or temporary jobs, defined as jobs designed to last six consecutive months or less;

(c) Debtors who have been notified either orally or in writing of any layoff or of employment termination immediately or within the next 60 days; or

(d) Debtors who have been notified either orally or in writing of any layoff or of employment termination prior to effective date of coverage;

(2) Requiring the debtor be employed full-time on the effective date of coverage for at least 12 consecutive months prior to the effective date of coverage. Full-time means a regular workweek of not less than 30 hours; or

(3) Providing that no insurance will become effective on debtors on or after the attainment of age 66 and that all insurance will terminate upon the loan anniversary date at age 66.

The exclusions allowed by subdivision (1) of this section must be disclosed to all prospective insureds.

History

Source: 29 SDR 84, effective December 15, 2002.
General Authority: SDCL 58-19-34(6).
Law Implemented: SDCL 58-19-26.

ARSD 20:06:06:11 Disclosure requirements

Any application or other document disclosing the coverage provided for under credit life, credit health, credit property, or credit unemployment insurance shall clearly and prominently disclose the amount, type, and length of coverage provided or being applied for. If the credit insurance is associated with a loan that contains a balloon payment, the application and other documents provided to the insured shall clearly and prominently disclose whether or not the balloon payment is covered by the credit insurance. If the balloon payment is not covered, the mere listing of the number of months or other time frames for which the credit insurance provides coverage is insufficient disclosure. Separate and prominent disclosure that the balloon payment is not covered must be provided in any such application or other coverage or disclosure document. Examples of documents which do not comply with this section are found in Appendices A and B. This section applies to all applications taken and to any policy, certificate, or contract issued on or after September 1, 2006.

History

Source: 32 SDR 203, effective June 5, 2006.
General Authority: SDCL 58-19-34(9).
Law Implemented: SDCL 58-19-26, 58-19-44, 58-19-50.

Chapter 20:06:07 Variable annuity contracts

ARSD 20:06:07:01 Definitions

Terms used in this chapter mean:

(1) "Contract on a variable basis" or "variable contract," a policy or contract which provides for insurance or annuity benefits which may vary according to the investment experience of any separate account or accounts maintained by the insurer for the policy or contract, as provided in SDCL 58-28;

(2) "NAIC," National Association of Insurance Commissioners.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-28-31.

ARSD 20:06:07:02 Qualification of insurance companies to issue variable contracts

No company may deliver or issue for delivery variable contracts within this state unless it meets the following requirements:

(1) It is licensed or organized to do a life insurance or annuity business in this state and it is authorized to sell variable contracts in its state of domicile; and

(2) The director is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this state. In this connection, the director shall consider among other things:

(a) The history and financial condition of the company;

(b) The character, responsibility, and fitness of the officers and directors of the company; and

(c) The law and regulation under which the company is authorized in the state of domicile to issue variable contracts; and

(3) It has submitted to the director a general description of the kinds of variable contracts it intends to issue.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-28-26.

ARSD 20:06:07:03 Separate accounts

20:06:07 :03. Separate accounts. A domestic company issuing variable contracts shall establish one or more separate accounts pursuant to SDCL 58-28 subject to the following requirements:

(1) Investments shall be made as follows:

(a) Amounts allocated to any separate account and the accumulation on that account may be invested and reinvested without regard to any requirements or limitations prescribed by SDCL 58-27 governing the investments of life insurance companies. However, to the extent that the company's reserve liability with regard to benefits guaranteed as to dollar amount and duration and funds guaranteed as to principal amount or stated rate of interest is maintained in a separate account, a portion of the assets of that separate account at least equal to the reserve liability shall be invested, unless the director otherwise approves, in accordance with SDCL 58-27 governing the investments of life insurance companies. The investments in such a separate account or accounts may not be taken into account in applying the investment limitations applicable to the investments of the company;

(b) With respect to 75 percent of the market value of the total assets in a separate account, a company may not purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal or interest by the United States, if immediately after the purchase or acquisition the market value of the investment, together with prior investments of the separate account in that security taken at market, would exceed 10 percent of the market value of the assets of the separate account. The director may waive this limitation if, in the director's opinion, the waiver will not render the operation of the separate account hazardous to the public or the policyholders in this state;

(c) A company, whether for its separate accounts or otherwise, may not invest in the voting securities of a single issuer in an amount in excess of ten percent of the total issued and outstanding voting securities of the issuer. This does not apply to securities held in separate accounts, the voting rights in which are exercisable only in accordance with instructions from persons having interests in the accounts;

(d) The limitations provided in subsections (b) and (c) of this subdivision do not apply to the investment of a separate account in the securities of an investment company registered under the Investment Company Act of 1940, provided that the investments of the investment company comply in substance with subsections (b) and (c) of this subdivision;

(2) Unless otherwise approved by the director, assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, as provided under the terms of the contract, the rules, or other written agreement applicable to the separate account. The portion of the assets of the separate account equal to the company's reserve liability with regard to the benefits and funds referred to in subsection (a) of subdivision (1) of this section, if any, shall be valued in accordance with SDCL 58-28-21;

(3) If and to the extent so provided under the applicable contracts, that portion of the assets of a separate account equal to the reserves and other contract liabilities of the account are not chargeable with liabilities arising out of any other business the company may conduct;

(4) Notwithstanding any other provisions of law, a company may do the following:

(a) With respect to a separate account registered with the Securities and Exchange Commission as a unit investment trust, exercise voting rights in connection with any securities of a regulated investment company registered under the Investment Company Act of 1940 and held in the separate accounts in accordance with instructions from persons having interests in the accounts ratably as determined by the company; or

(b) With respect to a separate account registered with the Securities and Exchange Commission as a management investment company, establish for the account a committee, board, or other body, the members of which may or may not be otherwise affiliated with the company and may be elected to membership by the vote of persons having interests in the account ratably as determined by the company. The committee, board, or other body may have the power, exercisable alone or in conjunction with others, to manage the separate account and the investment of its assets. A company, committee, board, or other body may make such provisions for the separate account as it considers appropriate to facilitate compliance with requirements of federal or state law if the director approves such provisions as not hazardous to the public or the company's policyholders in this state;

(5) A sale, exchange, or other transfer of assets may not be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the contracts of the separate account to which the transfer is made, and unless the transfer, whether into or from a separate account, is made as follows:

(a) By a transfer of cash; or

(b) By a transfer of securities having a valuation which could be readily determined in the marketplace, provided the transfer of securities is approved by the director.

The director may authorize other transfers among the accounts if, in the director's opinion, such transfers would not be inequitable;

(6) The company shall maintain in each separate account assets with a value at least equal to the reserves and other contract liabilities for the account, except as otherwise approved by the director;

(7) Rules under any provision of SDCL title 58 or any regulation applicable to the officers and directors of insurance companies concerning conflicts of interest also apply to members of any separate account's committee, board, or other similar body. An officer or director of a company or any member of the committee, board, or body of a separate account may not receive directly or indirectly a commission or any other compensation for the purchase or sale of assets of the separate account.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-28-31.

ARSD 20:06:07:04 Filing of contracts

The filing requirements applicable to variable contracts are those filing requirements otherwise applicable under existing statutes and regulations of this state governing individual and group life insurance and annuity contract form filings.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-11-12, 58-28-30, 58-28-31.

ARSD 20:06:07:05 Contracts providing for variable benefits

Features required are as follows:

(1) Any variable contract providing benefits payable in variable amounts delivered or issued for delivery in this state shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of the variable benefits. Any such contract, including a group contract and any certificate issued under it, shall state that the dollar amount will vary to reflect investment experience. The contract shall contain on its first page a clear statement to the effect that the benefits under it are on a variable basis;

(2) Illustrations of benefits payable under any contract providing benefits payable in variable amounts shall not include projections of past investment experience into the future or attempted predictions of future investment experience. Nothing contained in this subdivision is intended to prohibit use of hypothetical assumed rates of return to illustrate possible levels of annuity payments;

(3) No individual variable annuity contract calling for the payment of periodic stipulated payments may be delivered or issued for delivery in this state unless it contains in substance the following provisions or provisions which in the opinion of the director are more favorable to the holders of such contracts:

(a) A provision that there shall be a period of grace of 30 days or of one month, within which any stipulated payment to the insurer falling due after the first may be made, during which period of grace the contract shall continue in force. The contract may include a statement of the basis for determining the date as of which any such payment received during the period of grace shall be applied to produce the values under the contract arising from the payment;

(b) A provision that, at any time within one year from the date of default in making periodic stipulated payments to the insurer during the life of the annuitant and unless the cash surrender value has been paid, the contract may be reinstated upon payment to the insurer of the overdue payments as required by the contract and of all indebtedness to the insurer on the contract, including interest. The contract may include a statement of the basis for determining the date as of which the amount to cover the overdue payments and indebtedness shall be applied to produce the values under the contract arising from them;

(c) A provision specifying the options available in the event of default in a periodic stipulated payment. Such options may include an option to surrender the contract for a cash value as determined by the contract and shall include an option to receive a paid-up annuity if the contract is not surrendered for cash. The amount of the paid-up annuity shall be determined by applying the value of the contract at the annuity commencement date in accordance with the terms of the contract;

(4) An individual variable annuity contract delivered or issued for delivery in this state shall stipulate the expense, mortality, and investment increment factors to be used in computing the dollar amount of variable benefits or other contractual payments or values under it, and may guarantee that expense, mortality results or both shall not adversely affect such dollar amounts. The following provisions apply in computing the dollar amount of variable benefits or other contractual payments or values under an individual variable annuity contract:

(a) The annual net investment increment assumption shall not exceed five percent, except with the approval of the director;

(b) To the extent that the level of benefits may be affected by mortality results, the mortality factor shall be determined from the Annuity Mortality Table of 1949, Ultimate, or any modification of that table not having a higher mortality rate at any age, or, if approved by the director, from another table. "Expense," as used in this section, may exclude some or all taxes, as stipulated in the contract;

(5) The reserve liability for variable annuities shall be established pursuant to the requirements of SDCL 58-26 in accordance with actuarial procedures that recognize the variable nature of the benefits provided.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-28-31.

ARSD 20:06:07:06 Required reports

Reports required are as follows:

(1) Any company issuing individual variable contracts providing benefits in variable amounts shall mail to the contract holder at least once in each second and succeeding contract year, at the address last known to the company, a statement or statements reporting the investments held in the separate account and, in the case of contracts under which payments have not yet commenced, a statement as of a date not more than four months previous to the date of mailing. This statement shall contain the following:

(a) The number of accumulation units credited to such contracts and the dollar value of a unit; or

(b) The value of the contract holder's account;

(2) The company shall submit annually to the insurance director a statement of the business of its separate account or accounts on forms provided by the National Association of Insurance Commissioners.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-6-75, 58-28-31.

ARSD 20:06:07:07 Foreign companies

If the law or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public which is substantially equal to that provided by this chapter, the director, in the director's discretion, may consider compliance with that law or regulation as compliance with this chapter.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-28-25, 58-28-26.

ARSD 20:06:07:08 Variable contract agent license required prior to solicitation or sale

Before a person may sell a variable contract, the person must:

(1) Pass the life insurance examination and be licensed as a life insurance agent under SDCL Title 58;

(2) Pass either a series 6, series 7, series 63, or series 66 examination given by the Financial Industry Regulatory Authority; and

(3) File a form approved by the director requesting to have variable annuities, variable life, or both, added as lines to the license.

A nonresident agent must also submit an original home state certification which is not more than 90 days old.

Cross-Reference: Policy forms -- Filing with and approval by the director, SDCL 58-11-11.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 208, effective June 3, 1990; 23 SDR 55, effective October 20, 1996; 24 SDR 67, effective November 23, 1997; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-28-31.

ARSD 20:06:07:09 Repealed

Application procedure for variable contract agents.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 16 SDR 208, effective June 3, 1990.

ARSD 20:06:07:10 Repealed

Variable contract agent licensure requirements.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 16 SDR 208, effective June 3, 1990.

ARSD 20:06:07:11 Repealed

Exemption from portion of examination.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 12 SDR 117, effective January 19, 1986.

ARSD 20:06:07:12 Repealed

Requirements to pass examination.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 12 SDR 117, effective January 19, 1986.

ARSD 20:06:07:13 Repealed

Fees for examinations and reexaminations.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 12 SDR 117, effective January 19, 1986.

ARSD 20:06:07:14 Repealed

Examination reporting form.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 12 SDR 117, effective January 19, 1986.

ARSD 20:06:07:15 Repealed

Rules governing life insurance agents apply to variable annuity agents.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 12 SDR 117, effective January 19, 1986.

ARSD 20:06:07:16 Repealed

Examination required of certain life insurance salesmen.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 12 SDR 117, effective January 19, 1986.

ARSD 20:06:07:17 Repealed

Reports of examinations to be made available -- Retention of records.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 16 SDR 208, effective June 3, 1990.

ARSD 20:06:07:18 Licensees required to report to director

A person licensed in this state to sell variable contracts shall immediately report the following to the director:

(1) Any suspension or revocation of the licensee's variable contract agent's license or life insurance agent's license in any other state or territory of the United States;

(2) The imposition of any disciplinary sanction, including suspension or expulsion from membership and suspension, revocation, or denial of registration, imposed upon the licensee by any national securities exchange or national securities association or any federal, state, or territorial agency with jurisdiction over securities or variable contracts;

(3) Any judgment or injunction entered against the licensee on the basis of conduct deemed to have involved fraud, deceit, misrepresentation, or violation of any insurance or securities law or regulation.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-28-31.

ARSD 20:06:07:19 Rejection of applications -- Suspension or revocation of license -- Renewals

The director may reject any application or suspend, revoke, or refuse to renew any variable contract agent's license upon any ground that would bar the applicant or the agent from being licensed to sell life insurance contracts in this state. The rules governing any proceeding relating to the suspension or revocation of a life insurance agent's license shall also govern any proceeding for suspension or revocation of a variable contract agent's license.

Renewal of a variable contract agent's license shall follow the same procedure established for renewal of an agent's license to sell life insurance contracts in this state.

Cross-References: Suspension, revocation, or refusal of license -- Notice and hearing -- Grounds, SDCL 58-30-106; Renewal of license -- Fee -- Form of request, SDCL 58-30-74.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 117, effective January 19, 1986; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-28-31.
Law Implemented: SDCL 58-28-31.

Chapter 20:06:08 Life insurance and annuities

ARSD 20:06:08:01 Repealed

Definition of replacement.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 8 SDR 52, effective January 1, 1982.

ARSD 20:06:08:02 Repealed

Purpose of chapter.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 8 SDR 52, effective January 1, 1982.

ARSD 20:06:08:03 Repealed

Exemptions.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 8 SDR 52, effective January 1, 1982.

ARSD 20:06:08:04 Repealed

Duty of the company.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 8 SDR 52, effective January 1, 1982.

ARSD 20:06:08:05 Repealed

Duty of the agent.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 8 SDR 52, effective January 1, 1982.

ARSD 20:06:08:06 Repealed

Forms.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 8 SDR 52, effective January 1, 1982.

ARSD 20:06:08:07 Repealed

Penalty.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; repealed, 8 SDR 52, effective January 1, 1982.

ARSD 20:06:08:08 Repealed

Definitions.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:09 Repealed

Exemptions.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; 8 SDR 122, effective March 28, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:10 Repealed

Duties of agent.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:11 Repealed

Signed statements.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:12 Repealed

Notice of replacement of life insurance.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:13 Repealed

Comparative information form.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:14 Repealed

Sales proposals for replacement insurance.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:15 Repealed

Submissions to replacing insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:16 Repealed

Sales proposals for conservation of insurance.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:17 Repealed

Duties of replacing insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:18 Repealed

Agents to be informed of requirements.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:19 Repealed

Replacing insurer to require signed statements.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:20 Repealed

Replacing insurer to require forms.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:21 Repealed

Replacing insurer to verify accuracy of information.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:22 Repealed

Replacing insurer to provide policy summary.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:23 Repealed

Replacing insurer to send comparative information form to existing insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:24 Repealed

Replacing insurer to delay issue of policy -- Exception.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:25 Repealed

Delivery of policy summary when replacing insurer is existing insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:26 Repealed

Records to be maintained by replacing insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:27 Repealed

Duties of direct response insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:28 Repealed

Direct response insurer to inform personnel of requirements.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:29 Repealed

Direct response insurer to require signed statement from applicant.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:30 Repealed

Use of notice when replacement is involved but not proposed by direct response insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:31 Repealed

Notice requirements when replacement is proposed.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:32 Repealed

Duties of existing insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:33 Repealed

Use of comparative information form and policy summary.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:34 Repealed

Records to be maintained by existing insurer.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:35 Repealed

Additional requirements.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; 8 SDR 122, effective March 28, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:36 Repealed

Penalty.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 12 SDR 151, 12 SDR 155, effective July 1, 1986.

ARSD 20:06:08:37 Repealed

Effective date.** Repealed.

History

Source: 8 SDR 52, effective January 1, 1982; repealed, 8 SDR 122, effective March 28, 1982.

ARSD 20:06:08:38 Definitions

Terms used in this chapter mean:

(1) "2001 CSO Mortality Table," that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. Unless the context indicates otherwise, the 2001 CSO Mortality Table includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables;

(2) "2001 CSO Mortality Table (F)," that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table;

(3) "2001 CSO Mortality Table (M)," that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table;

(4) "Composite mortality tables," mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers;

(5) "Direct-response solicitation," a solicitation through a sponsoring or endorsing entity or individually sold solely through mail, telephone, the Internet, or other mass communication media;

(6) "Existing insurer," the insurance company whose policy or contract is or will be changed or affected in a manner described within the definition of "replacement";

(7) "Existing policy or contract," an individual life insurance policy (policy) or annuity contract (contract) in force, including a policy under a binding or conditional receipt or a policy or contract that is within an unconditional refund period;

(8) "Financed purchase," the purchase of a new policy involving the actual or intended use of funds obtained by the withdrawal, surrender, or borrowing from values of an existing policy to pay all of part of any premium due on the new policy;

(9) "Illustration," a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years as defined in chapter 20:06:38;

(10) "Policy summary," for purposes of §§ 20:06:08:49 to 20:06:08:65, inclusive;

(a) For policies or contracts other than universal life policies, a written statement regarding a policy or contract which shall contain to the extent applicable, but need not be limited to, the following information: current death benefit; annual contract premium; current cash surrender value; current dividend; application of current dividend; and amount of outstanding loan;

(b) For universal life policies, a written statement that shall contain at least the following information: the beginning and end date of the current report period; the policy value at the end of the previous report period and at the end of the current report period; the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders); the current death benefit at the end of the current report period on each life covered by the policy; the net cash surrender value of the policy as of the end of the current report period; and the amount of outstanding loans, if any, as of the end of the current report period;

(11) "Producer," for the purpose of §§ 20:06:08:49 to 20:06:08:65, inclusive, includes agents, brokers and producers;

(12) "Registered contract," a variable annuity contract or variable life insurance policy subject to the prospectus delivery requirements of the Securities Act of 1933;

(13) "Replacement," a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer if there is no producer, that by reason of the transaction, an existing policy or contract has been or is to be:

(a) Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated;

(b) Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values;

(c) Amended so as to effect either a reduction in benefits in the term for which coverage would otherwise remain in force or for which benefits would be paid;

(d) Reissued with a reduction in cash value; or

(e) Used in a financed purchase;

(14) "Replacement notice," the form used by a replacing insurer to notify an existing insurer of the replacement of existing insurance;

(15) "Replacing insurer," the insurance company that issues or proposes to issue a new policy or contract that replaces an existing policy or contract or is a financed purchase;

(16) " Sales material," a sales illustration and any other written, printed, or electronically presented information created, completed, or provided by the company or producer and used in the presentation to the policy or contract owner related to the policy or contract purchased;

(17) "Smoker and nonsmoker mortality tables," mortality tables with separate rates of mortality for smokers and nonsmokers;

Reference: 2001 Commissioners Standard Ordinary (CSO) Mortality Table, may be obtained free of charge from the Proceedings of the NAIC 2^nd Quarter 2002 from the National Association of Insurance Commissioners, Publications Department, Telephone 816-783-8300, Fax 816-460-7593, or by email to prodserv@naic.org. Cost: Free to members; $180 for nonmembers.

History

Source: 15 SDR 143, effective March 29, 1989; 30 SDR 189, effective June 7, 2004; 39 SDR 55, effective October 4, 2012; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-26-57, 58-33A-7(20).
Law Implemented: SDCL 58-26-57, 58-33-5, 58-33-6, 58-33-8.

ARSD 20:06:08:39 Repealed

Replacement notice required.** Repealed.

History

Source: 15 SDR 143, effective March 29, 1989; 16 SDR 208, effective June 3, 1990; 32 SDR 128, effective January 29, 2006; 39 SDR 55, effective October 4, 2012; repealed, 39 SDR 55, effective January 1, 2013.

ARSD 20:06:08:40 Repealed

Exemptions.** Repealed.

History

Source: 15 SDR 143, effective March 29, 1989; 16 SDR 208, effective June 3, 1990; 30 SDR 89, effective December 9, 2003; 33 SDR 230, effective July 2, 2007; 34 SDR 200, effective January 28, 2008; 39 SDR 55, effective October 4, 2012; repealed, 39 SDR 55, effective January 1, 2013.

ARSD 20:06:08:41 Repealed

Contents of replacement notice.** Repealed.

History

Source: 15 SDR 143, effective March 29, 1989; 33 SDR 230, effective July 2, 2007; 39 SDR 55, effective October 4, 2012; repealed, 39 SDR 55, effective January 1, 2013.

ARSD 20:06:08:42 Uniform forms for cash surrender, maximum policy loan, and 1035 exchange

For the purposes of SDCL 58-15-82 the following are the uniform forms:

(1) For a maximum policy loan, Appendix A;

(2) For cash surrender, Appendix B; and

(3) For a 1035 exchange, Appendix C.

History

Source: 29 SDR 48, effective October 10, 2002; 29 SDR 84, effective December 15, 2002.
General Authority: SDCL 58-15-82.
Law Implemented: SDCL 58-15-82.

ARSD 20:06:08:43 Permissible exclusions

A life insurance policy may exclude the following:

(1) Foreign travel outside the North American continent if the policy specifically lists the countries for which benefits are excluded when traveling thereto. This exclusion may not include any state, territory, or possession of the United States. The foreign travel exclusion is only permissible for policies with a face value of at least 2 million dollars or for policyholders who qualify as an accredited investor pursuant to 17 C.F.R. § 230.501 (April 1, 2003) or for policyholders who qualify as a qualified purchaser pursuant to 15 U.S.C. § 80a-2(a)(51); and

(2) Death as a result of the insured committing a felony.

History

Source: 30 SDR 89, effective December 9, 2003; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-15-45.
Law Implemented: SDCL 58-15-45.

ARSD 20:06:08:43.01 Permissible exclusions for accidental death coverage

For policies or riders that limit coverage to accidental death, in addition to the exclusions listed in SDCL 58-15-45, the following may be excluded:

(1) Suicide, if sane;

(2) Intentional self-injury; and

(3) Death due to sickness or disease.

History

Source: 32 SDR 53, effective October 10, 2005.
General Authority: SDCL 58-15-45.
Law Implemented: SDCL 58-15-45.

ARSD 20:06:08:43.02 Permissible exclusions for accidental death and dismemberment policies issued as a supplemental benefit

An accidental death and dismemberment policy that is issued as a supplemental benefit with a life insurance policy may exclude, in addition to those excluded in SDCL 58-15-45, death or loss as follows:

(1) Death caused directly or indirectly by disease or infirmity of body, or medical or surgical treatment for such disease or infirmity;

(2) An infection not occurring as a direct result or consequence of the accidental bodily injury;

(3) Caused by any device used for testing or experimental purposes by or for any military authority or used for travel beyond the earth's atmosphere;

(4) Caused directly or indirectly by active participation in a riot, insurrection, or terrorist activity. An exclusion for riot or insurrection is limited to instigators and does not include civil commotion, disorder, injury as an innocent bystander, or injury for self defense;

(5) Occurring while the proposed insured is incarcerated if the incarceration is during a period of legal incarceration in a penal or correctional institution of more than seven days or during a period of legal detainment of more than seven days;

(6) Caused directly or indirectly by committing a felony;

(7) Caused directly or indirectly by riding or driving on land, air, or water if participating in a speed or endurance contest;

(8) Caused directly or indirectly by bungee jumping or rock or mountain climbing; or

(9) Occurring before the insured reaches the age of one.

History

Source: 33 SDR 107, effective December 26, 2006.
General Authority: SDCL 58-15-45.
Law Implemented: SDCL 58-15-45, 58-15-52.

ARSD 20:06:08:44 2001 CSO Mortality Table effective date

The 2001 CSO Mortality Table may be used as the minimum standard for policies issued after December 31, 2003, and shall be used in determining minimum standards for policies issued after December 31, 2008, to which SDCL 58-15-31 to 58-15-43, inclusive, and 58-26-57 apply. If the insurer elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and nonforfeiture purposes.

History

Source: 30 SDR 189, effective June 7, 2004.
General Authority: SDCL 58-26-57.
Law Implemented: SDCL 58-26-57.

ARSD 20:06:08:45 Conditions of use

The 2001 CSO Mortality Table shall be used in the following manner:

(1) For each plan of insurance with separate rates for smokers and nonsmokers an insurer may use:

(a) Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;

(b) Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by SDCL 58-26-81 and 58-26-82 and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or

(c) Smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;

(2) For plans of insurance without separate rates for smokers and nonsmokers the composite mortality table shall be used;

(3) For the purpose of determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of the insurer for each plan of insurance, be used in the insurer's ultimate or select and ultimate form.

If the 2001 CSO Mortality Table is the minimum reserve standard for any plan for an insurer, the actuarial opinion in the annual statement filed with the director shall be based on an asset adequacy analysis pursuant to SDCL 58-26-46. An insurer is exempt from this requirement if the insurer only does business in this state and no other state.

History

Source: 30 SDR 189, effective June 7, 2004.
General Authority: SDCL 58-26-57.
Law Implemented: SDCL 58-26-57.

ARSD 20:06:08:46 Use of gender-blended tables

For any ordinary life insurance policy delivered or issued for delivery in South Dakota after December 31, 2003, that utilizes that same premium rates and charges for male and female lives or is issued in circumstances where applicable law does not permit distinctions on the basis of gender, a mortality table that is a blend of the 2001 CSO Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of the insurer for each plan of insurance, be substituted for the 2001 CSO Mortality Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits. No change in minimum valuation standards is implied by this rule. The insurer may choose from among the blended tables comprising the 2001 CSO Mortality Table. It is not, in and of itself, a violation of SDCL 58-33-12 for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.

History

Source: 30 SDR 189, effective June 7, 2004.
General Authority: SDCL 58-26-57.
Law Implemented: SDCL 58-26-57.

ARSD 20:06:08:47 Exclusions or restrictions after life insurance policy or certificate issued

Any exclusion or restriction on a life insurance policy or certificate, which is permitted by law to be part of a life insurance policy and which is to be added after policy or certificate date of issuance, must contain the written consent of the policyholder on the endorsement to the policy or certificate. Any endorsement excluding or restricting coverage must be filed and approved pursuant to SDCL 58-11-12 to 58-11-22, inclusive. Any endorsement sent to the insured must be accompanied by an explanation of the endorsement and must be a full and fair disclosure of the effect of signing the endorsement including that the signing of the endorsement is optional. Any written information accompanying the endorsement for signature by the policyholder or certificateholder must be filed with the director along with the endorsement.

This section applies to any provision that seeks to modify or amend a policy or certificate after the date of issuance, including any provision which seeks to modify or amend the incontestability clause of a policy or certificate. This rule applies to any amendment or modification to a policy or certificate in effect as of the effective date of this section as well as to any policy or certificate issued after the effective date of this section.

History

Source: 37 SDR 13, effective August 9, 2010.
General Authority: SDCL 58-11-63(4), 58-15-45(5), 58-33A-7(8).
Law Implemented: SDCL 58-11-39, 58-15-45, 58-33A-2, 58-33A-7, 58-33A-7(8), 58-33A-8.

ARSD 20:06:08:48 Exception to signed endorsement

An endorsement is not required to have the written consent of the policyholder as required by § 20:06:08:47 provided that the endorsement is required by law, or the endorsement does not increase premiums and either increases benefits in the policy or does not adversely affect the insured.

History

Source: 37 SDR 13, effective August 9, 2010.
General Authority: SDCL 58-11-63(4), 58-15-45(5).
Law Implemented: SDCL 58-11-39, 58-15-45.

ARSD 20:06:08:49 Applicability of life and annuity replacement rules

Unless otherwise specifically included, the provisions in §§ 20:06:08:49 to 20:06:08:65, inclusive, do not apply to transactions involving:

(1) Credit life insurance;

(2) Group life insurance or group annuities where there is no direct solicitation of individuals by an insurance producer. Direct solicitation does not include any group meeting held by an insurance producer solely for the purpose of educating or enrolling individuals or, when initiated by an individual member of the group, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual. Group life insurance or group annuity certificates marketed through direct response solicitation are subject to the provisions of § 20:06:08:63;

(3) Group life insurance and annuities used to fund prearranged funeral contracts;

(4) An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the director; or, when a term conversion privilege is exercised among corporate affiliates;

(5) Proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same company;

(6) Policies or contracts used to fund:

(i) an employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

(ii) a plan described by Sections 401(a), 401(k), or 403(b) of the Internal Revenue Code, where the plan, for purposes of ERISA, is established or maintained by an employer;

(iii) a governmental or church plan defined in Section 414, a governmental or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the Internal Revenue Code; or

(iv) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor. However, §§ 20:06:08:49 to 20:06:08:65, inclusive, applies to policies or contracts used to fund any plan or arrangement that is funded solely by contributions an employer elects to make, whether on a pre-tax or after-tax basis, and where the insurer has been notified that plan participants may choose from among two or more insurers and there is a direct solicitation of an individual employee by an insurance producer for the purchase of a contract or policy. As used in this subdivision, direct solicitation does not include any group meeting held by an insurance producer solely for the purpose of educating individuals about the plan arrangement or enrolling individuals in the plan or arrangement or, when initiated by an individual employee, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual employee;

(7) Where new coverage is provided under a life insurance policy or contract and the cost is borne wholly by the insured's employer or by an association of which the insured is a member;

(8) Existing life insurance that is a non-convertible term life insurance policy that will expire in five years or less and cannot be renewed;

(9) Immediate annuities purchased with proceeds from an existing contract. Immediate annuities purchased with proceeds from an existing policy are not exempt from the requirements of §§ 20:06:08:49 to 20:06:08:65, inclusive; or

(10) Structured settlements.

Registered contracts are exempt from the requirements of subdivisions 20:06:08:60(2) and 20:06:08:62(2) with respect to the provision of illustrations or policy summaries; however, premium or contract contribution amounts and identification of the appropriate prospectus or offering circular are required instead.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:49.01 Prima facie intent of policyholder

For purposes of a regulatory review of an individual transaction only, if a withdrawal, surrender, or borrowing involving the policy values of an existing policy is used to pay premiums on a new policy owned by the same policyholder and issued by the same company within four (4) months before or thirteen (13) months after the effective date of the new policy, it is prima facie evidence of the policyholder's intent to finance the purchase of the new policy with existing policy values. This prima facie standard is not intended to increase or decrease the monitoring obligations contained in §§ 20:06:08:49 to 20:06:08:65, inclusive.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:50 Duties of producers

A producer who initiates an application shall submit to the insurer, with or as part of the application, a statement signed by both the applicant and the producer as to whether the applicant has existing policies or contracts.

If the applicant answers "no," the producer's duties with respect to replacement are complete.

If the applicant answers "yes," the producer shall present and read to the applicant, not later than at the time of taking the application, a notice regarding replacements in the form as described in Appendix D or other substantially similar form approved by the director. However, no approval is required when amendments to the notice are limited to the omission of references not applicable to the product being sold or replaced. The notice must be signed by both the applicant and the producer attesting that the notice has been read aloud by the producer or that the applicant did not wish the notice to be read aloud, in which case the producer need not have read the notice aloud, and left the notice with the applicant.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:51 Notice requirements

The notice required by § 20:06:08:50 must list all life insurance policies or annuities proposed to be replaced, properly identified by name of insurer, the insured or annuitant, and policy or contract number if available; and must include a statement as to whether each policy or contract will be replaced or whether a policy will be used as a source of financing for the new policy or contract. If a policy or contract number has not been issued by the existing insurer, alternative identification, such as an application or receipt number, must be listed.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:52 Producer sales materials

In connection with a replacement transaction, the producer shall leave the original or a copy of sales material with the applicant at the time the application for a new policy or contract is completed. With respect to electronically presented sales material, the provider shall provide the material to the policy or contract owner in printed form no later than at the time of policy or contract delivery.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:53 Producer submission to insurers

Except a provided in § 20:06:08:61, in connection with a replacement transaction the producer shall submit to the insurer to which an application for a policy or contract is presented, a copy of each document required by §§ 20:06:08:50 to 20:06:08:52, inclusive, a statement identifying any preprinted or electronically presented company approved sales materials used, and copies of any individualized sales materials, including any illustrations related to the specific policy or contract purchased.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:54 Insurer system of supervision and control

Each insurer shall maintain a system of supervision and control to insure compliance with the requirements of §§ 20:06:08:49 to 20:06:08:65, inclusive, that shall include at least the following:

(1) Inform its producers of the requirements of §§ 20:06:08:49 to 20:06:08:65, inclusive, and incorporate the requirements of §§ 20:06:08:49 to 20:06:08:65, inclusive, into all relevant producer training manuals prepared by the insurer;

(2) Provide each producer with a written statement of the company's position with respect to the acceptability of replacements, providing guidance to its producer as to the appropriateness of these transactions;

(3) A system to review the appropriateness of each replacement transaction that the producer does not indicate is in accord with subdivision 20:06:08:54(2);

(4) Procedures to confirm that the requirements of §§ 20:06:08:49 to 20:06:08:65, inclusive, have been met; and

(5) Procedures to detect transactions that are replacements of existing policies or contracts by the existing insurer, but that have not been reported as such by the applicant or producer.

Compliance with §§ 20:06:08:49 to 20:06:08:65, inclusive, may include, but is not limited to, systematic customer surveys, interviews, confirmation letters, or programs of internal monitoring.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:55 Insurer record keeping requirements

Each insurer must have the capacity to monitor each producer's life insurance policy and annuity contract replacements for that insurer, and must produce, upon request, and make such records available to the director. The capacity to monitor must include the ability to produce records for each producer's:

(1) Life replacements, including financed purchases, as a percentage of the producer's total annual sales for life insurance;

(2) Number of lapses of policies by the producer as a percentage of the producer's total annual sales for life insurance;

(3) Annuity contract replacements as a percentage of the producer's total annual annuity contract sales;

(4) Number of transactions that are unreported replacements of existing policies or contracts by the existing insurer detected by the company's monitoring system as required by subdivision 20:06:08:54(5); and

(5) Replacements, indexed by replacing producer and existing insurer.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:56 Signed statement requirements

Each insurer shall require with or as a part of each application for life insurance or an annuity a signed statement by both the applicant and the producer as to whether the applicant has existing policies or contracts. Each insurer shall require a completed notice regarding replacements as contained in Appendix D with each application for life insurance or an annuity that indicates an existing policy or contract.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-1, 58-33A-2.

ARSD 20:06:08:57 Required documents

When the applicant has existing policies or contracts, each insurer shall produce on request copies of any sales material required by § 20:06:08:53, the basic illustration and any supplemental illustrations related to the specific policy or contract that is purchased, and the producer's and applicant's signed statements with respect to financing and replacement for at least five years after the termination or expiration of the proposed policy or contract. Each insurer must ascertain that the sales material and illustrations required by § 20:06:08:53 meet the requirements of this chapter and are complete and accurate for the proposed policy or contract.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:58 Insurer notifications

If an application does not meet the requirements of §§ 20:06:08:49 to 20:06:08:65, inclusive, the insurer must notify the producer and applicant and fulfill the outstanding requirements.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:59 Record format

Each insurer shall maintain records in paper, photograph, microprocess, magnetic, mechanical or electronic media, or by any process that accurately reproduces the actual document.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:60 Duties of replacing insurers using producers

Where a replacement is involved in the transaction, the replacing insurer shall:

(1) Verify the required forms are received and are in compliance with §§ 20:06:08:49 to 20:06:08:65, inclusive;

(2) Notify any other existing insurer that may be affected by the proposed replacement within five business days of receipt of a completed application indicating replacement or when the replacement is identified if not indicated on the application. The replacing insurer must mail a copy of the available illustration or policy summary for the proposed policy or available disclosure document for the proposed contract within five business days of a request from an existing insurer:

(3) Be able to produce copies of the notification regarding replacement required in § 20:06:08:50, indexed by producer, for at least five years or until the next regular examination by the insurance department of a company's state of domicile, whichever is later; and

(4) Provide to the policy or contract owner notice of the right to return the policy or contract within 30 days of the delivery of the contract and receive an unconditional full refund of all premiums or considerations paid on it, including any policy fees or charges or, in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender value provided under the policy or contract plus the fees and other charges deducted from the gross premiums or considerations or imposed under such policy or contract; such notice may be included in Appendix D or F.

In transactions where the replacing insurer and the existing insurer are the same or subsidiaries or affiliates under common ownership or control, allow credit for the period of time that has elapsed under the replaced policy's or contract's incontestability and suicide period up to the face amount of the existing policy or contract. With regard to financed purchases, the credit may be limited to the amount the face amount of the existing policy is reduced by the use of existing policy values to fund the new policy or contract.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:61 Duties of replacing insurer using producers when company approved sales material required

If an insurer prohibits the use of sales material other than that approved by the company, as an alternative to the requirements made of an insurer pursuant to § 20:06:08:53, the insurer may:

(1) Require with each application a statement signed by the producer that:

(a) Represents that the producer used only company-approved sales material; and

(b) States that copies of all sales material were left with the applicant in accordance with § 20:06:08:52;

(2) Within ten days of the issuance of the policy or contract:

(a) Notify the applicant by sending a letter or by verbal communication with the applicant by a person whose duties are separate from the marketing area of the insurer, that the producer has represented that copies of all sales material have been left with the applicant in accordance with § 20:06:08:52;

(b) Provide the applicant with a toll free number to contact company personnel involved in the compliance function if such is not the case; and

(3) Be able to produce a copy of the letter or other verification in the policy file for at least five years after the termination or expiration of the policy or contract.

This section only applies when a replacing insurer uses a producer and the use of company sales material is required.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:62 Duties of existing insurer

Where a replacement is involved in the transaction, the existing insurer shall:

(1) Retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least five years or until the conclusion of the next regular examination conducted by the Insurance Department of its state of domicile, whichever is later;

(2) Send a letter to the policy or contract owner within five business days of receipt of a notice that an existing policy or contract is being replaced, notifying the owner of the right to receive information regarding the existing policy or contract values including, if available, an in-force illustration or policy summary if an in-force illustration cannot be produced. The insurer shall provide this information within five business days of receipt of the request from the policy or contract owner; and

(3) Upon receipt of a request to borrow, surrender, or withdraw any policy values, send a notice, advising the policy owner that the release of policy values may affect the guaranteed elements, non-guaranteed elements, face amount, or surrender value of the policy from which the values are released. The notice shall be sent separate from the check if the check is sent to anyone other than the policy owner. In the case of consecutive automatic premium loans, the insurer is only required to send the notice at the time of the first loan.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:63 Requirements for direct response solicitation

In the case of an application that is initiated as a result of a direct response solicitation, the insurer shall require, with or as part of each completed application for a policy or contract, a statement asking whether the applicant, by applying for the proposed policy or contract, intends to replace, discontinue, or change an existing policy or contract. If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer shall send the applicant, with the policy or contract, a notice regarding replacement in Appendix E, or other substantially similar form approved by the director.

If the insurer has proposed the replacement or if the applicant indicates a replacement is intended and the insurer continues with the replacement, the insurer shall:

(1) Provide the applicant or prospective applicant a notice, as described in Appendix F, or other substantially similar form approved by the director. The notice must be provided with the policy or contract. In this instance the insurer may delete the references to the producer, including the producer's signature, and references not applicable to the product being sold or replaced, without having to obtain approval of the form from the director. The insurer's obligation to obtain the applicant's signature is satisfied if the insurer can demonstrate that the insurer made a diligent effort to secure a signed copy of the notice referred to in this subdivision. The requirement to make a diligent effort is satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed notice referred to in this subdivision; and

(2) Comply with the requirements of subdivision 20:06:08:60(2), if the applicant furnishes the names of the existing insurers, and the requirements of § 20:06:08:60.

This section only applies to insurers with respect to direct response solicitations.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:64 Compliance

The following constitute impermissible standards of conduct pursuant to SDCL 58-33A-2 and do not comply with the provisions of this chapter:

(1) Any deceptive or misleading information set forth in sales material;

(2) Failing to ask the applicant in completing the application the pertinent questions regarding the possibility of financing or replacement;

(3) The intentional incorrect recording of an answer;

(4) Advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer; or

(5) Advising a policy or contract owner to write directly to the company in such a way as to attempt to obscure the identity of the replacing producer or company.

Policy and contract owners have the right to replace existing life insurance policies or annuity contracts after indicating in or as a part of applications for new coverage that replacement is not their intention; however, patterns of such action by policy or contract owners of the same producer is prima facie evidence of the producer's knowledge that replacement was intended in connection with the identified transactions, and these patterns of action shall be deemed prima facie evidence of the producer's intent to violate §§ 20:06:08:49 to 20:06:08:65, inclusive.

Where it is determined that the requirements of this regulation have not been met, the replacing insurer shall provide the policy owner with an in-force illustration if available or policy summary for the replacement policy or available disclosure document for the replacement contract and the appropriate notice regarding replacements in Appendix D or F.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:08:65 Effective date

The effective date of §§ 20:06:08:49 to 20:06:08:65 is January 1, 2013. §§ 20:06:08:39, 20:06:08:40, and 20:06:08:41 are effective through December 31, 2012.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-33A-7(10).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

Chapter 20:06:09 Insurance holding companies

ARSD 20:06:09:01 Repealed

Definitions.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:02 Repealed

Acquisition of domestic insurers.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:03 Repealed

Exemptions.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:04 Repealed

Amendments to registration statements.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:05 Repealed

Alternative and consolidated registrations.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:06 Repealed

Exemptions to registration requirements.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:07 Repealed

Disclaimers and termination of registration.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:08 Repealed

Extraordinary dividends and other distributions.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:09 Repealed

Limitation on extraordinary dividends.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:10 Repealed

Adequacy of surplus.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 20 SDR 36, effective September 19, 1993.

ARSD 20:06:09:11 Definitions

Terms used in this chapter mean:

(1) "Executive officer," chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under whatever title;

(2) "Statement," Forms A, B, C, D, E, and F; and

(3) "Ultimate controlling person," a person which is not controlled by any other person.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:12 Form filings

All insurers or persons subject to SDCL chapter 58-5A, except as provided in SDCL 58-5A-20, shall file the following forms with the director:

(1) Form A, statement regarding the acquisition of control of or merger with a domestic insurer, pursuant to SDCL 58-5A-4;

(2) Form B, insurance holding company system annual registration statement, pursuant to SDCL 58-5A-21;

(3) Form C, summary of changes to the previous year's registration statement, pursuant to SDCL 58-5A-21 or, changes to the current year's registration statement, pursuant to SDCL 58-5A-24;

(4) Form D, prior notice of a transaction, pursuant to SDCL 58-5A-56;

(5) Form E, pre-acquisition notification, pursuant to SDCL 58-5A-45; and

(6) Form F, enterprise risk report, pursuant to SDCL 58-5A-29.1.

The information required for those statements is set forth in §§ 20:06:09:29 to 20:06:09:45, inclusive.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-4, 58-5A-21, 58-5A-45, 58-5A-56, 58-5A-29.1, 58-5A-70.

ARSD 20:06:09:13 General requirements for Forms A, B, C, D, E, and F

Forms A, B, C, D, E, and F are intended to be guides in the preparation of the statements filed pursuant to SDCL chapter 58-5A and are not intended to be blank forms which are to be filled in. The filed statements shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers to them are prepared in such a manner as to indicate clearly the scope and coverage of the items. All instructions are to be omitted. If any item is inapplicable or the answer is in the negative, a statement to that effect must be made unless expressly provided otherwise.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:14 Filing forms with director

One complete copy of each statement in § 20:06:09:13, including exhibits and all other papers and documents filed as a part of the statement, shall be filed with the director electronically, by personal delivery, or mail. The statement must be signed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of the power of attorney or other authority must also be filed with the statement.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:15 Filing Form C or Form E with other states

If the insurance department or agency of a state in which the insurer is authorized to do business requests in writing that the insurer file Form C or Form E, the insurer shall file the Form C or Form E with that state within 15 days from receipt of the notice.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:16 Preparation of statements and supporting documents

Statements must be prepared electronically. Statements must be easily readable and suitable for review and reproduction. Debits in credit categories and credits in debit categories must be designated so as to be clearly distinguishable on photocopies. Statements must be in English and monetary values must be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it must be accompanied by a translation into English and any monetary value normally shown in a foreign currency must be converted into United States currency.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:16.01 Filing with the National Association of Insurance Commissioners

If an applicant requests a hearing on a consolidated basis pursuant to SDCL 58-5A-10.1, in addition to filing the Form A with the director, the applicant shall file a copy of Form A with the National Association of Insurance Commissioners in electronic form.

History

Source: 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:17 Incorporation by reference to Forms A, B, D, E, or F

Information required by any item of Forms A, B, D, E, or F may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of Form A, Form B, Form D, Form E, or Form F if the document or paper is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the director which were filed within the previous three years need not be attached as exhibits. References to information contained in exhibits or in documents already on file must clearly identify the material and must specifically indicate that the material is to be incorporated by reference in answer to the item. Information may not be incorporated by reference in any instance in which incorporation would render the statement incomplete, unclear, or misleading.

If an item requires a summary or outline of the provisions of any document, a brief statement must be made as to the pertinent provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the director which was filed within the previous three years and may be qualified in its entirety by the reference. If two or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties, the dates of execution, or other details, a copy of only one of the documents may be filed with a schedule identifying the omitted documents and setting forth the material details in which the omitted documents differ from the filed documents.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:18 Repealed

Information unknown or unavailable.** Repealed.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.

ARSD 20:06:09:19 Impracticality of furnishing information

If the person making the filing finds it impractical to furnish the required information, document, or report at the time it is to be filed, the person shall file a separate document with the director:

(1) Identifying the information, document, or report in question;

(2) Stating why the filing is impractical; and

(3) Requesting an extension of time for filing the information, document, or report at a specified date.

The request for extension may be considered granted unless the director denies the request in writing within 60 days after its receipt.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:20 Additional information and exhibits

In addition to the information expressly required to be included in Forms, A, B, C, D, E, and F, the person filing the form shall add any information that is necessary to make the required information not misleading. The person filing may also file exhibits in addition to those expressly required by the statement. Any exhibits must be marked to indicate clearly the subject matters to which they refer. Changes to Forms A, B, C, D, E, or F shall include on the top of the cover page of the form the phrase: "Change No. (insert number) to ________ (identify the item changed)" and a date which is the date of the change and not the date of the original filing.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-4, 58-5A-20, 58-5A-21, 58-5A-24, 58-5A-56, 58-5A-29.1, 58-5A-70.

ARSD 20:06:09:21 Reference to domestic insurer in acquisition

If the person being acquired is considered a "domestic insurer" solely because of the provisions of SDCL 58-5A-2, the name of the domestic insurer on the cover page must be indicated as follows: "ABC Insurance Company, a subsidiary of XYZ Holding Company."

If an insurer pursuant to SDCL 59-5A-2 is being acquired, references to "the insurer" contained in Form A must refer to both the domestic subsidiary insurer and the person being acquired.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:22 Amendments to Form B

Amendments to Form B must be filed in the Form B format, reporting only those items which are being amended. Each amendment must include at the top of the cover page, "Amendment No. (insert number) to Form B for (insert year)" and a date which is the date of the amendment and not the date of the original filing.

An amendment to Form B shall be filed within fifteen days after the end of any month in which there is a material change to the information provided in the annual registration statement.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-20, 58-5A-21, 58-5A-24, 58-5A-70.

ARSD 20:06:09:23 Consolidated registrations -- Authorized insurers

Any authorized insurer may file Form B, the registration statement, on behalf of any affiliated insurer or insurers which are required to register under SDCL 58-5A-20, 58-5A-21, 58-5A-23, 58-5A-25 to 58-5A-30, inclusive, and 58-5A-54. A registration statement may include information not required by SDCL chapter 58-5A regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this state. In lieu of filing a registration statement on Form B, the authorized insurer may file a copy of the registration statement or a similar report which it is required to file in its state of domicile, if the statement or report contains substantially similar information to that required to be furnished on Form B and the filing insurer is the principal insurance company in the insurance holding company system.

The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact, and an insurer filing a registration statement or report in lieu of Form B on behalf of an affiliated insurer must set forth a brief statement of facts which substantiates the filing insurer's claim that it is the principal insurer in the insurance holding company system.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:24 Consolidated registrations -- Unauthorized insurers

With the prior approval of the director, an unauthorized insurer may follow the procedures which could be done by an authorized insurer under § 20:06:09:23.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:25 Consolidation or alternative registration of statements without approval

Any insurer may take advantage of the provisions of SDCL 58-5A-26, consolidation, and SDCL 58-5A-27, registration on behalf of affiliated insurers, without obtaining the prior approval of the director. The director, however, may require individual filings in the interest of clarity, ease of administration, or the public good.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:26 Disclaimers and termination of registration

Disclaimer and termination of registration.** A person may file a disclaimer of affiliation or a request for termination of registration claiming that it does not, or will not upon the taking of some proposed action, control another person, referred to in this section as the "subject." The disclaimer or request for termination must contain the following information:

(1) The number of authorized, issued, and outstanding voting securities of the subject;

(2) For the person whose control is denied and all affiliates of that person, the number and percentage of shares of the subject's voting securities which are held of record or known to be beneficially owned and the number of the shares for which there is a right to acquire, directly or indirectly;

(3) All material relationships and bases for affiliation between the subject and the person whose control is denied and all affiliates of that person; and

(4) A statement explaining why the person should not be considered to control the subject.

A request for termination of registration is considered to be granted unless the director denies the request in writing within 30 days after the receipt of the request.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:27 Information required for extraordinary dividends or other distributions

Information required of extraordinary dividends or other distributions.** Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders must include the following:

(1) The amount of the proposed dividend;

(2) The information required by SDCL 58-5A-35 and 58-5A-36;

(3) A copy of the calculations determining that the proposed dividend is extraordinary which must include the following information:

(a) The amounts, dates, and form of payment of all dividends or distributions, including regular dividends but excluding distributions of the insurer's own securities, paid within the period of 12 consecutive months ending on the date fixed for payment of the proposed dividend for which approval is sought and starting on the day after the same day of the same month in the preceding year;

(b) Surplus as regards policyholders, including total capital and surplus as of the last December 31;

(c) Earned surplus, excluding surplus arising from unrealized capital gains or revaluation of assets as of the last December 31;

(d) If the insurer is a life insurer, the net gain from operations for the 12-month period ending the last December 31, including net realized capital gains in an amount not to exceed 20 percent of net unrealized capital gains;

(e) If the insurer is not a life insurer, the net income less realized capital gains in an amount not to exceed 20 percent of net unrealized capital gains for the 12 month period ending the last December 31 and the two preceding calendar years; and

(f) Evidence that the dividends paid to stockholders do not include pro rata distributions of any class of the insurer's own securities;

(4) A balance sheet and statement of income for the period intervening from the last annual statement filed with the director and the end of the month preceding the month in which the request for the dividend approval is submitted; and

(5) A brief statement as to the effect of the proposed dividend upon the insurer's surplus and the reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.

Each registered insurer must file the information in this section pursuant to SDCL 58-5A-35 and 58-5A-36 with the director within 15 business days following the declaration of a dividend.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-35, 58-5A-36, 58-5A-54, 58-5A-70.

ARSD 20:06:09:28 Determining adequacy of surplus

In applying the factors in SDCL 58-5A-34, adequacy of surplus, the director shall consider the net effect of all of those factors plus other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by each insurer, the director shall consider the extent to which each of these factors varies from company to company. In determining the quality and liquidity of investments in subsidiaries, the director shall consider the individual subsidiary and discount or disallow its valuation in accordance with SDCL 58-5A-34.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-34, 58-5A-70, 58-5A-77.

ARSD 20:06:09:29 Form A filing

A Form A must be certified. The information required for a Form A filing includes the following:

(1) That set forth in SDCL 58-5A-4, 58-5A-5, and 58-5A-6;

(2) A brief description of how control is to be acquired;

(3) A chart indicating the interrelationships between the applicant and affiliates of the applicant; the percentage of voting securities of each person owned or controlled by the applicant or by any other person; the legal entity of the applicant or affiliate; the state of domicile of the applicant and each affiliate; and whether the applicant or affiliate is subject to delinquency or reorganization proceedings, what the proceedings are, the court of jurisdiction, and the date begun. If the control of an affiliate is maintained by other than voting securities, the applicant must indicate the basis of the control. No affiliate need be identified if its total assets are equal to less than one-half of one percent of the total assets of the ultimate controlling person affiliated with the applicant;

(4) If the consideration used for acquisition is borrowed, a description of the relationship between the borrower and the lender; the amounts to be borrowed; copies of all agreements, promissory notes, and security arrangements; and an explanation of the criteria used in determining the nature and amount of the consideration;

(5) A list of the financial statements and exhibits that are attached in an appendix;

(6) Any proposed employment, consultation, advisory, lease, or management contracts concerning the insurer and annual reports to the stockholders of the insurer and the applicant for the last two years; and

(7) A description of any plans for declaring any extraordinary dividends, to liquidate the insurer, to sell its assets to or merge it with any person to make any material change in its business operations or corporate structure or management.

Note: A copy of Form A may be obtained from the Division of Insurance, 124 South Euclid Avenue, 2nd Floor, Pierre, South Dakota 57501, (605) 773-3563, free of charge.

History

Source: 20 SDR 36, effective September 19, 1993; 25 SDR 13, effective August 9, 1998; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-4, 58-5A-5, 58-5A-6, 58-5A-70.

ARSD 20:06:09:29.01 Amendments to Form A

The applicant must promptly advise the director of any changes in the information furnished on the Form A arising subsequent to the date upon which the information was furnished but prior to the director's disposition of the application.

History

Source: 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:30 Disclosure of background of applicant or persons associated with applicant

The Form A filing must disclose background information on the applicant or persons associated with the applicant through a biographical affidavit that includes a third party background check by a vendor approved by the director. The information must include the following for individual applicants or persons who are directors, executive officers, or owners of ten percent or more of the voting securities of the applicant if the applicant is not an individual:

(1) Name and business address;

(2) Present principal business activity, occupation, or employment, including position and office held, and the name, principal business, and address of any corporation or other organization in which the employment is carried on;

(3) Material occupations, positions, offices, or employment during the last five years, giving the starting and ending dates of each and the name, principal business, and address of any business corporation or other organization in which each occupation, position, office, or employment was carried on. If any occupation, position, office, or employment required licensing by or registration with any federal, state, or municipal governmental agency, indicate that fact, the current status of the license or registration, and an explanation of any surrender, revocation, suspension, or disciplinary proceedings in connection with the license or registration; and

(4) Excluding minor traffic violations, whether or not the person has been convicted of a crime during the ten years preceding the date of filing and the date, nature of conviction, name and location of court, and the penalty imposed or other disposition of the case.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:31 Filing of financial statements with Form A

The financial statement when filed with Form A must include, if available, information similar to SDCL 58-5A-4. Financial statements, exhibits, and three-year financial projections of each insurer must be attached to the Form A as an appendix, and list the items attached under the financial statements and exhibits section of Form A.

The financial statements shall include the annual statements of the person identified in § 20:06:09:29(3) for the preceding five fiscal years, or if the applicant and its affiliates and any predecessors thereof have been in existence for less than five years, for such lessor period, and similar information covering the period from the end of such person's last fiscal year, if the information is available. The statements may be prepared individually or may be consolidated if consolidated statements are prepared in the usual course of business, unless the director requires otherwise.

The annual financial statements of the applicant must be accompanied by the certificate of an independent public accountant to the effect that the statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified if they are based on the annual statement of the person filed with the insurance department of the person's domiciliary state and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of that state.

Cross-References: Valuation of assets, liabilities, and reserves, SDCL chapter 58-26; Annual statement of financial conditions of insurer, filing with director, form and contents, timeliness of filing, SDCL 58-6-75; Accounting principles, ARSD article 20:75.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-4, 58-5A-70.

ARSD 20:06:09:32 Form B filing

A Form B must be certified. Information which is not material for purposes of SDCL 58-5A-21 need not be disclosed. The information required for a Form B filing includes the following:

(1) That set forth in SDCL 58-5A-21;

(2) That set forth in § 20:06:09:29(3);

(3) That set forth in § 20:06:09:29(4);

(4) The name of each insurer registering or being registered and the home office address and principal executive offices of each, the date on which each insurer became part of the holding company system, and the method by which control of each insurer was acquired and is maintained;

(5) Description of reinsurance agreements;

(6) A brief description of the following types of proceedings to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any of those persons is or was the subject:

(a) Criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party to the prosecutions or proceedings; and

(b) Proceedings which may have a material effect on the solvency or capital structure of the ultimate holding company, including bankruptcy, receivership, or other corporate reorganizations.

The insurer shall report those actions pending or concluded within the preceding fiscal year. For each action the names of the parties and the name of the court or agency must be given; and

(7) A statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur; and

(8) A Form C filing when summarizing changes to a previous year's registration statement or a statement setting forth changes to a current year's registration statement.

Note: A copy of Form B may be obtained from the Division of Insurance, 124 South Euclid Avenue, 2nd Floor, Pierre, South Dakota 57501. (605) 773-3563, free of charge.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-20, 58-5A-21, 58-5A-23, 58-5A-24, 58-5A-70.

ARSD 20:06:09:33 Description of transactions and agreements

In submitting the materials for SDCL 58-5A-21 and § 20:06:09:32, the person filing must include the following:

(1) The nature and purpose of the transaction;

(2) The nature and amounts of any payments or transfers of assets between the parties;

(3) The identity of all parties to the transaction; and

(4) The relationship of the affiliated parties to the insurer.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-21, 58-5A-70.

ARSD 20:06:09:34 Information on ultimate controlling person

The following information on the ultimate controlling person in the insurance holding company system must be filed with Form B:

(1) If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, furnish the following information for the directors and executive officers of the ultimate controlling person: the person's name and address, the person's principal occupation and all offices and positions held during the past five years, and any conviction of a crime other than a minor traffic violation. If the ultimate controlling person is an individual, furnish the individual's name and address, the individual's principal occupation and all offices and positions held during the past five years, and any conviction of a crime other than a minor traffic violation;

(2) For the ultimate controlling person in the holding company system, the following information must be furnished:

(a) The name, home office address, and principal executive office address;

(b) The organizational structure of the person, such as corporation, partnership, individual, trust, or other legal entity;

(d) The name and address of any person who holds or owns 10 percent or more of any class of voting security, the class of the security, the number of shares held of record or known to be beneficially owned, and the percentage of the class so held or owned; and

(e) If court proceedings involving a reorganization or liquidation are pending, the title and location of the court, the nature of the proceedings, and the date the proceeding began.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-21, 58-5A-70.

ARSD 20:06:09:35 Financial statements and exhibits for Form B filing

Financial statements and exhibits must be attached to a Form B filing as an appendix. The financial statements and exhibits so attached must be listed on Form B.

If the ultimate controlling person is a corporation, an organization, a limited liability company, or other legal entity, the financial statements must include the annual financial statement of the ultimate controlling person in the insurance holding company system as of the end of the person's latest fiscal year as well as the holding company's most recent financial statement.

If at the time of the initial registration the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed. Similar financial information must be filed for the subsequent period to the extent that such information is available. The financial statements may be prepared individually or may be consolidated if the consolidated statements are prepared in the usual course of business, unless the director requires otherwise.

Financial statements shall be filed in a standard form and format adopted by the National Association of Insurance Commissioners, unless an alternative form is accepted by the director. Documentation and financial statements filed with the Securities and Exchange Commission or audited GAAP financial statements are an appropriate form and format.

Unless the director permits otherwise, the annual financial statements must be accompanied by the certificate of an independent public accountant to the effect that the statements present fairly the financial position of the ultimate controlling person and the results of its operations for the year then ended and are in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, if they are based on the annual statement of the insurer's domiciliary state and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of such state.

Any ultimate controlling person who is an individual may file personal financial statements that are reviewed rather than audited by an independent public accountant. The review shall be conducted in accordance with the standards set by the American Institute of Certified Public Accountants for the review of personal financial statements. Personal financial statements must be accompanied by the independent public accountant's standard review report stating that the accountant is not aware of any material modifications that should be made to the financial statements in order for the statements to be in conformity with generally accepted accounting principles.

Exhibits must include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person and any additional documentation or papers required by Form B or §§ 20:06:09:13 to 20:06:09:16, inclusive, and §§ 20:06:09:18 and 20:06:09:19.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-21, 58-5A-70.

ARSD 20:06:09:36 Form C filing

A Form C filing, summary of changes to registration statement, must be certified and must accompany the annual registration statement. The Form C must include the following information:

(1) A brief description of all items in the current annual registration statement which represent changes from the prior year's annual registration statement;

(2) Changes to subdivision 20:06:09:29(3). Changes in the percentage of each class of voting securities held by each affiliate need only be included if the changes result in ownership or holdings of 10 percent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest;

(3) Changes to SDCL 58-5A-4(2) and 58-5A-22(3) if an individual is made a director, executive officer, or president of the ultimate controlling person or a director or executive officer terminates responsibilities with the ultimate controlling person;

(4) The nature of any changes to a transaction disclosed on the prior year's annual registration statement. If a transaction disclosed on the prior year's annual registration statement has been effectuated, the mode of completion and any flow of funds between affiliates resulting from the transaction must be furnished; and

(5) The insurer must furnish a statement that transactions entered into since the filing of the prior year's registration statement are not designed to and will not avoid statutory threshold amounts and the review of those transactions and amounts.

Note: A copy of Form C may be obtained from the Division of Insurance, 124 South Euclid Avenue, 2nd Floor, Pierre, South Dakota 57501. (605) 773-3563, free of charge.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-20, 58-5A-21, 58-5A-24, 58-5A-70.

ARSD 20:06:09:37 Form D filing

An insurer required to give notice of a proposed transaction pursuant to SDCL 58-5A-56 shall furnish the required information on Form D. A Form D filing must be certified and must include the following information:

(1) That set forth in SDCL 58-5A-56; and

(2) For each party to the transaction:

(a) The name, home office address, and principal executive office address;

(b) The organizational structure, such as corporation, partnership, individual, trust, or other legal entity;

(d) The relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval or by the insurer filing the notice in the affiliated parties;

(e) If the transaction is with a nonaffiliate, the name of the affiliate which will receive, in whole or in substantial part, the proceeds of the transaction.

Note: A copy of Form D may be obtained from the Division of Insurance, 124 South Euclid Avenue, 2nd Floor, Pierre, South Dakota 57501, (605) 773-3563, free of charge.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-56, 58-5A-70.

ARSD 20:06:09:37.01 Cost sharing services and management services reported on Form D

Agreements for cost sharing services and management services shall at a minimum and as applicable:

(1) Identify the person providing services and the nature of the services;

(2) Set forth the methods to allocate costs;

(3) Require timely settlement, not less frequently than on a quarterly basis, and compliance with the requirements in the Accounting Practices and Procedures Manual;

(4) Prohibit advancement of funds by the insurer to the affiliate except to pay for services defined in the agreement;

(5) State that the insurer will maintain oversight for functions provided to the insurer by the affiliate and that the insurer will monitor services annually for quality assurance;

(6) Define books and records of the insurer to include all books and records developed or maintained under or related to the agreement;

(7) Specify that all books and records of the insurer are and remain the property of the insurer and are subject to control of the insurer;

(8) State that all funds and invested assets of the insurer are the exclusive property of the insurer, held for the benefit of the insurer and are subject to the control of the insurer;

(9) Include standards for termination of the agreement with and without cause;

(10) Include provisions for indemnification of the insurer in the event of gross negligence or willful misconduct on the part of the affiliate providing the services;

(11) Specify that, if the insurer is placed in receivership or seized by the director under SDCL chapter 58-29B:

(a) All of the rights of the insurer under the agreement extend to the receiver or director; and

(b) All books and records will immediately be made available to the receiver or the director, and shall be turned over to the receiver or director immediately upon the receiver or the director's request;

(12) Specify that the affiliate has no automatic right to terminate the agreement if the insurer is placed in receivership pursuant to SDCL chapter 58-29B; and

(13) Specify that the affiliate will continue to maintain any systems, programs, or other infrastructure notwithstanding a seizure by the director under SDCL chapter 58-29B, and will make them available to the receiver, for so long as the affiliate continues to receive timely payment for services rendered.

History

Source: 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-56, 58-5A-70.

ARSD 20:06:09:38 Description of transactions for Form D filing

The person filing the Form D must furnish the following information for each transaction for which notice is being given:

(1) A statement as to whether notice is being given under SDCL 58-5A-56;

(2) A statement of the nature of the transaction;

(3) The proposed effective date of the transaction;

(4) A statement of how the transaction meets the standards of SDCL 58-5A-32(1);

(5) A brief description of the amount and source of funds, securities, property, or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment and whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice;

(6) A description of the terms of any securities being received and a description of any other agreements relating to the transaction, such as contracts or agreements for services, consulting agreements, and the like;

(7) If the transaction involves other than cash, a description of the consideration, its costs, and its fair market value, together with an explanation of the basis for evaluation;

(8) If the transaction involves a loan, extension of credit, or a guarantee, a description of the maximum amount which the insurer will be obligated to make available under the loan, extension of credit, or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of or deferral of interest;

(9) If the transaction involves an investment, guarantee, or other arrangement, the time period during which the investment, guarantee, or other arrangement will remain in effect, together with any provisions for extensions or renewals of such investments, guarantees, or arrangements and a brief statement of the effect of the transaction on the insurer's surplus; and

(10) The information required by SDCL 58-5A-56.

No notice need be given if the maximum amount which can at any time be outstanding or for which the insurer can be legally obligated under the loan, extension of credit or guarantee is less than, in the case of non-life insurers, the lesser of three percent of the insurer's admitted assets or 25% of the surplus as regards policyholders, or in the case of life insurers, three percent of the insurer's admitted assets, each as of December 31st of the previous year.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-56, 58-5A-70.

ARSD 20:06:09:39 Form D -- Loans or extensions of credit to a nonaffiliate

If the transaction involves a loan or extension of credit to any person who is not an affiliate, the person making the Form D filing must furnish a brief description of the agreement or understanding whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase the assets of, or to make investments in any affiliate of the insurer making the loans or extensions of credit and specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of, or make investments in any affiliate. The person must also describe the amount and source of funds, securities, property, or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, a description of its cost and its fair market value, together with an explanation of the basis for evaluation. The person must furnish a brief statement of the effect of the transaction on the insurer's surplus.

History

Source: 20 SDR 36, effective September 19, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-56, 58-5A-70.

ARSD 20:06:09:40 Form D -- Reinsurance transactions

If the transaction is a reinsurance agreement or a modification to a reinsurance agreement, as described by SDCL 58-5A-56(3)(b) or a reinsurance pooling agreement or modification as described by SDCL 58-5A-56(3)(a), the person making a Form D filing must furnish a description of the known or estimated amount of liability to be ceded or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and nonaffiliate to the effect that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer's affiliates. The person must also furnish a brief description of the consideration involved in the transaction and a brief statement of the effect of the transaction on the insurer's surplus.

No notice need be given for reinsurance agreements or modifications to them if the reinsurance premium or a change in the insurer's liabilities, or the projected reinsurance premium or change in the insurer's liabilities in any of the next three years, in connection with the reinsurance agreement or modification is less than five percent of the insurer's surplus as regards policyholders as of the last December 31. Notice shall be given for all reinsurance pooling agreements including modifications thereto.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:41 Form D -- Management agreements, service agreements, and cost-sharing agreements

The person making the Form D filing must provide the following information for management and service agreements and for cost-sharing arrangements:

(1) For management and service agreements:

(a) A brief description of the managerial responsibilities or the services to be performed;

(b) A brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made;

(2) For cost-sharing arrangements:

(a) A brief description of the purpose of the agreement;

(b) A description of the period of time during which the agreement is to be in effect;

(d) A brief description of the accounting basis to be used in calculating each party's costs under the agreement;

(e) A brief statement as to the effect of the transaction upon the insurer's policyholder surplus;

(f) A statement regarding the cost allocation methods that specifies whether proposed charges are based on cost or market. If market based, rationale for using market instead of cost, including justification for the company's determination that amounts to fair and reasonable; and

(g) A statement regarding compliance with the National Association of Insurance Commissioner Accounting Practices and Procedure Manual regarding expense allocation as adopted by § 20:06:25:01.

History

Source: 20 SDR 36, effective September 19, 1993; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-56, 58-5A-70.

ARSD 20:06:09:42 Pre-acquisition notification

If a domestic insurer, including any person controlling a domestic insurer, is proposing a merger or acquisition pursuant to SDCL 58-5A-3, that person shall file a pre-acquisition notification form, Form E. Additionally, if a non-domiciliary insurer licensed to do business in this state is proposing a merger or acquisition, that person shall file a pre-acquisition notification form, Form E. No pre-acquisition notification form need be filed if the acquisition is beyond the scope of SDCL 58-5A-47. In addition to the information required by Form E, the director may hire a consultant for expert opinion as to the competitive impact of the proposed acquisition.

History

Source: 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-45, 58-5A-48, 58-5A-70.

ARSD 20:06:09:43 Form E filing

The pre-acquisition notification form, Form E, shall state the names and addresses of the persons who are providing notice of their involvement in a pending acquisition or change in corporate control. The Form E shall state the names and addresses of affiliated persons, and describe their affiliations. The Form E shall state the nature and purpose of the proposed merger or acquisition, and state the nature of the business performed by each person identified.

A Form E filing must state specifically what market and market share in each relevant insurance market each person identified in Form E currently enjoy in this state. Provide historical market and market share data for each person identified in Form E for the past five years and identify the source of such data. Provide a determination as to whether the proposed acquisition or merger, if consummated, would violate the competitive standards of the state as stated in SDCL chapter 58-5A. If the proposed acquisition or merger violates competitive standards, provide justification of why the acquisition or merger would not substantially lessen competition or create a monopoly in this state. For purposes of this section, market means direct written insurance premium in this state for a line of business as contained in the annual statement required to be filed by insurers licensed to do business in this state.

Note: A copy of Form E may be obtained from the Division of Insurance, 124 South Euclid Avenue, 2nd Floor, Pierre, South Dakota 57501. (605) 773-3563, free of charge.

History

Source: 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-45, 58-5A-48, 58-5A-70.

ARSD 20:06:09:44 Enterprise risk report

The ultimate controlling person of an insurer required to file an enterprise risk report pursuant to SDCL 58-5A-29.1 shall furnish the required information on Form F by July 1st of each year.

Note: A copy of Form F may be obtained from the Division of Insurance, 124 South Euclid Avenue, 2nd Floor, Pierre, South Dakota 57501. (605) 773-3563, free of charge.

History

Source: 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-29.1, 58-5A-70.

ARSD 20:06:09:45 Form F filing

The registrant or applicant, to the best of the registrant's or applicant's knowledge and belief, must provide information regarding the following areas that could produce enterprise risk as defined in SDCL subdivision 58-5A-1(3), unless the information is disclosed in the insurance holding company system annual registration statement filed on behalf of itself or another insurer for which it is the ultimate controlling person:

(1) Any material developments regarding strategy, internal audit findings, compliance, or risk management affecting the insurance holding company system;

(2) Acquisition or disposal of insurance entities and reallocating of existing financial or insurance entities within the insurance holding company system;

(3) Any changes of shareholders of the insurance holding company system exceeding ten percent or more of voting securities;

(4) Developments in various investigations, regulatory activities, or litigation that may have a significant bearing or impact on the insurance holding company system;

(5) The business plan of the insurance holding company system and summarized strategies for next twelve months;

(6) Identification of material concerns of the insurance holding company system raised by supervisory college, if any, in the last year;

(7) Identification of insurance holding company system capital resources and material distribution patterns;

(8) Identification of any negative movement, or discussions with rating agencies which may have caused, or may cause, potential negative movement in the credit ratings and individual insurer financial strength ratings assessment of the insurance holding company system, including both the rating score and outlook;

(9) Information on corporate or parental guarantees throughout the holding company and the expected source of liquidity should the guarantees be called upon; and

(10) Identification of any material activity or development of the insurance holding company system that, in the opinion of senior management, could adversely affect the insurance holding company system.

The registrant or applicant may attach the appropriate form most recently filed with the U.S. Securities and Exchange Commission, provided the registrant or applicant includes specific references to those areas listed above for which the form provides responsive information. If the registrant or applicant is not domiciled in the U.S., it may attach its most recent public audited financial statement filed in its country of domicile, provided the registrant or applicant includes specific references to those areas listed above for which the financial statement provides responsive information.

History

Source: 42 SDR 83, effective December 3, 2015; 50 SDR 157, effective July 1, 2024.
General Authority: SDCL 58-5A-29.1, 8-5A-70.
Law Implemented: SDCL 58-5A-29.1.

ARSD 20:06:09:46 Obligation to report

If the registrant has not disclosed any information pursuant to § 20:06:09:45, a statement shall be included affirming that, to the best of the registrant's knowledge and belief, the registrant has not identified enterprise risk subject to disclosure pursuant to § 20:06:09:45.

History

Source: 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-29.1, 58-5A-70.

ARSD 20:06:09:47 Confidentiality

All materials submitted pursuant to this chapter are subject to the confidentiality provisions of SDCL chapter 58-5A.

History

Source: 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:09:48 ORSA guidance manual

The own risk and solvency assessment (ORSA) shall be conducted in accordance with the standards and requirements set forth in the National Association of Insurance Commissioners Own Risk and Solvency Assessment (ORSA) Guidance Manual, 2022 edition.

Reference: National Association of Insurance Commissioners Own Risk and Solvency Assessment (ORSA) Guidance Manual, 2022 edition. Copies may be obtained from NAIC, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197, (816) 783-8300; http://naic.org. Cost: $0.

History

Source: 44 SDR 71, effective October 23, 2017; 45 SDR 45, effective October 10, 2018; 50 SDR 13, effective August 10, 2023.
General Authority: SDCL 58-5A-93.
Law Implemented: SDCL 58-5A-1(10), 58-5A-82 to 58-5A-84, inclusive, 58-5A-93.

ARSD 20:06:09:49 Exemptions for filing the group capital calculation

The lead state director or commissioner may exempt the ultimate controlling person from filing the annual group capital calculation if the lead state director or commissioner determines, based upon that filing, that the insurance holding company system meets all of the following criteria:

(1) The holding company has an annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than one billion dollars;

(2) The holding company has no insurers within its holding company structure that are domiciled outside of the United States or territories thereof;

(3) The holding company has no banking, depository, or other financial entity that is subject to an identified regulatory capital framework within its holding company structure;

(4) The holding company system attests that there are no material changes in the transactions between insurers and non-insurers in the group that have occurred since the last filing of the annual group capital calculation; and

(5) The non-insurers within the holding company system do not pose a material financial risk to the insurer’s ability to honor policyholder obligations.

History

Source: 50 SDR 157, effective July 1, 2024.
General Authority: SDCL 58-5A-94, 58-5A-95.
Law Implemented: SDCL 58-5A-94, 58-5A-95.

ARSD 20:06:09:50 Limited group capital calculation filings

The lead state director or commissioner may accept a limited group capital filing, in lieu of the group capital calculation, if:

(1) The insurance holding company system has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, of less than one billion dollars; and the insurance holding company system:

(a) Has no insurers within its holding company structure that are domiciled outside of the United States or territories thereof;

(b) Does not include a banking, depository, or other financial entity that is subject to an identified regulatory capital framework; and

(c) Attests that there are no material changes in transactions between insurers and non-insurers in the group that have occurred since the last filing of the report to the lead state director or commissioner and the non-insurers within the holding company system do not pose a material financial risk to the insurer’s ability to honor policyholder obligations.

History

Source: 50 SDR 157, effective July 1, 2024.
General Authority: SDCL 58-5A-94, 58-5A-95.
Law Implemented: SDCL 58-5A-94, 58-5A-95.

ARSD 20:06:09:51 Criteria for requiring the group capital calculation

Notwithstanding an exemption granted under § 20:06:09:49, the lead state director or commissioner may require at any time the ultimate controlling person to file an annual group capital calculation, completed in accordance with the National Association of Insurance Commissioners Group Capital Calculation Instructions, 2022 edition, if any of the following criteria are met:

(1) Any insurer within the insurance holding company system is in a Risk-Based Capital action level event as set forth in §§ 20:06:36:07, 20:06:36:13, 20:06:36:17, and 20:06:36:19, inclusive, or a similar standard for a non-U.S. insurer;

(2) Any insurer within the insurance holding company system meets one or more of the standards of an insurer deemed to be in hazardous financial condition as set forth in § 20:06:23:02; or

(3) Any insurer within the insurance holding company system otherwise exhibits qualities of a troubled insurer as determined by the lead state director or commissioner based on unique circumstances.

Example: (3) The “unique circumstances” referenced include the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.

Reference: Group Capital Calculation Instructions, 2022 edition, National Association of Insurance Commissioners (NAIC). Copies may be obtained from the NAIC, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197, (816) 783-8300; http://www.naic.org. Cost: $0.

History

Source: 50 SDR 157, effective July 1, 2024.
General Authority: SDCL 58-5A-94, 58-5A-95.
Law Implemented: SDCL SDCL 58-5A-94, 58-5A-95.

ARSD 20:06:09:52 Non-U.S. jurisdictions recognized for group capital calculation

A non-U.S. jurisdiction is considered to recognize and accept the group capital calculation if the non-U.S. jurisdiction satisfies the following criteria:

(1) With respect to SDCL 58-5A-95:

(a) The non-U.S. jurisdiction recognizes the U.S. state regulatory approach to group supervision and group capital by providing confirmation by a competent regulatory authority, in the jurisdiction, that insurers and insurance groups whose lead state is accredited by the National Association of Insurance Commissioners under the National Association of Insurance Commissioners Accreditation Program are subject only to worldwide prudential insurance group supervision, including worldwide group governance, solvency, capital, and reporting, as applicable, by the lead state and will not be subject to group supervision, including worldwide group governance, solvency, capital, and reporting, at the level of the worldwide parent undertaking of the insurance or reinsurance group by the non-U.S. jurisdiction; or

(b) Where no U.S. insurance group operates in the non-U.S. jurisdiction, the non-U.S. jurisdiction indicates formally in writing to the lead state with a copy to the International Association of Insurance Supervisors that the group capital calculation is an acceptable international capital standard. This will serve as the documentation otherwise required in subsection (1)(a) of this section; and

(2) The non-U.S. jurisdiction provides confirmation by a competent regulatory authority in the jurisdiction that information regarding insurers and their parent, subsidiary, or affiliated entities, if applicable, must be provided to the lead state director or commissioner in accordance with a memorandum of understanding or similar document between the commissioner and the jurisdiction, the International Association of Insurance Supervisors Multilateral Memorandum of Understanding or other multilateral memoranda of understanding coordinated by the National Association of Insurance Commissioners. The commissioner shall determine, in consultation with the National Association of Insurance Commissioners committee process, if the requirements of the information sharing agreements are in force.

History

Source: 50 SDR 157, effective July 1, 2024.
General Authority: SDCL 58-5A-94, 58-5A-95.
Law Implemented: SDCL 58-5A-94, 58-5A-95.

ARSD 20:06:09:53 List of non-U.S. jurisdictions determinations

A list of non-U.S. jurisdictions that recognize and accept the group capital calculation will be published as follows:

(1) A list of jurisdictions that recognize and accept the group capital calculation, pursuant to SDCL 58-5A-95, is published through the National Association of Insurance Commissioners committee process to assist the lead state director or commissioner in determining which insurers shall file an annual group capital calculation. The list will clarify those situations in which a jurisdiction is exempted from filing under SDCL 58-5A-95. To assist with a determination under SDCL 58-5A-96, the list will also identify whether a jurisdiction that is exempted under SDCL 58-5A-95 requires a group capital filing for any U.S. based insurance group’s operations in that non-U.S. jurisdiction; and

(2) For a non-U.S. jurisdiction where no U.S. insurance groups operate, the confirmation provided to meet the requirement of subsection 20:06:09:52(1)(b) will serve as support for a recommendation to be published as a jurisdiction that recognizes and accepts the group capital calculation through the National Association of Insurance Commissioners committee process.

If the lead state director or commissioner makes a determination, pursuant to SDCL 58-5A-95, that differs from the National Association of Insurance Commissioners’ list of non-U.S. jurisdictions that recognize and accept the group capital calculation, the lead state director or commissioner must provide documented, fact-based justification to the National Association of Insurance Commissioners and other states.

Upon determination by the lead state director or commissioner that a non-U.S. jurisdiction no longer meets one or more of the requirements to recognize and accept the group capital calculation, the lead state director or commissioner may provide a recommendation to the National Association of Insurance Commissioners that the non-U.S. jurisdiction be removed from the list of jurisdictions that recognizes and accepts the group capital calculation.

History

Source: 50 SDR 157, effective July 1, 2024.
General Authority: SDCL 58-5A-94, 58-5A-95.
Law Implemented: SDCL 58-5A-94 to 58-5A-96, inclusive.

Chapter 20:06:10 Advertisements and solicitations of health and life insurance

ARSD 20:06:10:01 Definitions

Terms used in this chapter are defined as follows:

(1) "Advertisement," as defined in SDCL 58-33A-3;

(2) "Buyer's guide," an explanation which accompanies a policy;

(3) "Cash dividend," the current illustrated dividend which can be applied toward payment of the gross premium;

(4) "Exception," a provision in a policy that eliminates or does not assume coverage for a specified hazard or risk;

(5) "Generic name," a short title which is descriptive of the premium and benefit patterns of a policy or a rider;

(6) "Limitation," a provision which restricts coverage under the policy other than an exception or reduction;

(7) "Policy," a plan, certificate, contract, agreement, statement of coverage, rider, or endorsement which provides benefits or payments on an indemnity, reimbursement, service, or prepaid basis;

(8) "Reduction," a provision which reduces the amount of the benefit or payment or the period covered.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-3.

ARSD 20:06:10:02 Advertisements and solicitations subject to regulations

This chapter applies to any health or life insurance advertisement or solicitation, unless otherwise indicated, intended for presentation, distribution, or dissemination in this state when the presentation, distribution, or dissemination is made either directly or indirectly by or on behalf of an insurer, agent, broker, or solicitor. Each insurer shall establish and maintain a system of control over the content, form, and method of dissemination of all advertisements and solicitations of its policies. The insurer is responsible for all advertisements or solicitations, regardless of who writes, creates, designs, or presents them.

This chapter also applies to any solicitation, negotiation, or procurement of health or life insurance occurring within this state by an issuer of health or life insurance contracts, including fraternal benefit societies, with the exception of those contracts outlined in SDCL 58-33A-1.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33A-1, 58-33A-2.

ARSD 20:06:10:02.01 General requirements

The following are general requirements for health and life insurance advertisements and solicitations:

(1) Each insurer must maintain at its home office or principal office a complete file containing one copy of each form authorized by the insurer for use pursuant to this chapter. Each authorized form must be kept in the file for five years following the date of its last authorized use;

(2) In recommending the purchase of a policy to a consumer, an agent must determine at the time of sale that the placement of the policy is not inappropriate for the consumer. The agent shall determine the appropriateness of a recommended purchase of insurance by examination of the totality of the particular consumer's circumstances, including the following:

(a) The consumer's financial condition, i.e., if a person is on a fixed income, premium costs;

(b) The consumer's need for insurance at the time of sale, i.e., existing policies, insured's finances;

(c) The values, benefits, and costs of the consumer's existing insurance program, if any, when compared to the values, benefits, and cost of the recommended policy or policies.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-17A-2, 58-33A-7.
Law Implemented: SDCL 58-17A-2, 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33-10.

ARSD 20:06:10:03 Method of disclosure of required information

20:06:10 :03. Method of disclosure of required information. All information required to be disclosed by this chapter must be set out conspicuously and in close conjunction with the statements to which the information relates or under appropriate prominent captions. The information may not be minimized, rendered obscure, presented in an ambiguous fashion, or intermingled with the context of the advertisement so as to confuse or mislead.

If an advertisement or solicitation refers to an insurer, it shall clearly and prominently provide the full name of the insurance company being advertised or solicited. If an advertisement refers to a policy, it shall clearly and prominently describe the type of policy discussed or advertised. The name, title, or description of a policy may not deceive or mislead a person as to the true nature of the policy or the benefits provided.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:04 Form and content of health and life insurance advertisements or solicitations

Advertisements and solicitations must be truthful and not misleading in fact or by implication. Words or phrases, the meaning of which is clear only by implication or by familiarity with insurance terminology, may not be used.

A display of guaranteed and nonguaranteed benefits in an advertisement or solicitation for a life insurance policy must be identified and must be placed adjacent to each other.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6; 58-33A-8, 58-33A-10.

ARSD 20:06:10:04.01 Form and content of life insurance advertisements and solicitations

In addition to the information required in § 20:06:10:04, the form and content requirements of life insurance advertisements and solicitations are as follows:

(1) The terms "investment plan," "founder's plan," "charter plan," "expansion plan," "profit," "profit sharing," "interest plan," "savings," "savings plan," "vanishing," "vanishing premiums," "vanishing payments," or other similar terms may not be used in connection with a life insurance policy in a context or under such circumstances or conditions that they mislead or tend to mislead a purchaser or prospective purchaser of the policy into believing that the purchaser or prospective purchaser will receive, or that it is possible that the purchaser or prospective purchaser will receive, some benefit not available to other persons or something other than a policy;

(2) The terms "financial planner," "investment advisor," "financial consultant," or "financial counseling," or other similar terms may not be used to imply that an insurance company or its agents are engaged in an advisory business in which compensation is unrelated to sales unless that is actually the case;

(3) A reference to policy dividends must include a statement that dividends are not guaranteed;

(4) An advertisement or solicitation which does not recognize the time value of money through the use of appropriate interest adjustments may not be used for comparing the cost of two or more life insurance policies. An advertisement or solicitation which does not recognize the time value of money may be used for the purpose of demonstrating the cash flow pattern of a policy if the presentation is accompanied by a clear and prominent statement disclosing that the presentation does not recognize that a dollar beginning to earn interest at some time in the future will have less value than a dollar beginning to earn interest today;

(5) If life insurance cost indexes are used, an explanation must be included to the effect that the indexes are useful only for the comparison of the relative costs of similar policies. A life insurance cost index which gives dividends or an equivalent level annual dividend must be accompanied by a clear and prominent statement disclosing that it is based on the company's current dividend scale and is not guaranteed; and

(6) A reference to a policy with variable premiums must include a clear and prominent statement disclosing the maximum annual premium and the minimum annual premium.

History

Source: 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:05 Advertisements or solicitations of benefits payable, losses covered, or premiums payable

No health or life insurance advertisement or solicitation may omit information or use words, phrases, statements, references, or illustrations if the omission of such information or use of such words, phrases, statements, references, or illustrations misleads or deceives or tends to mislead or deceive purchasers or prospective purchasers as to the nature or extent of a policy benefit payable, loss covered, or premium payable. The fact that the policy offered is made available to a prospective insurer for inspection prior to consummation of the sale or that an offer is made to refund the premium if the purchaser is not satisfied does not remedy omissions or deceptive or misleading statements.

An advertisement or solicitation of a direct response health or life insurance product may not imply that because "no insurance agent will call and no commissions will be paid to agents," it is "a low cost plan" or use similar words or phrases.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:05.01 Health insurance advertisements or solicitations of benefits payable, losses covered, or premiums payable

In addition to the requirements of § 20:06:10:05, health insurance advertisements or solicitations must meet the following requirements:

(1) No advertisement or solicitation may contain or use words or phrases such as "all," "full," "complete," "comprehensive," "unlimited," "up to," "as high as," "this policy will help pay your hospital and surgical bills," "this policy will help fill some of the gaps that Medicare and your present insurance leave out," "this policy will help to replace your income (when used to express loss of time benefits)," or similar words and phrases in a manner which exaggerates any benefits beyond the terms of the policy;

(2) An advertisement or solicitation may not contain descriptions of a policy limitation, exception, or reduction worded in a positive manner to imply that it is a benefit, such as describing a waiting period as a "benefit builder" or stating "even preexisting conditions are covered after two years." Words and phrases used in an advertisement to describe such policy limitations, exceptions, and reductions must fairly and accurately describe the negative features of such limitations, exceptions, and reductions of the policy offered;

(3) No advertisements or solicitations of a benefit for which payment is conditional on confinement in a hospital or similar facility may use words or phrases such as "tax free," "extra cash," extra income," "extra pay," or substantially similar words or phrases which may mislead the public into believing that the policy advertised will, in some way, enable them to make a profit from being hospitalized;

(4) No advertisement or solicitation of a benefit for confinement in a hospital or similar facility may advertise that the amount of the benefit is payable monthly or weekly when, in fact, the amount of the benefit payable is calculated daily and is based on the number of days of confinement, unless the monthly or weekly benefit amount is immediately adjacent to and in equal prominence with the daily benefit amount. If the policy contains a limit on the number of days of coverage provided, the limit must clearly and prominently appear in the advertisement or solicitation;

(5) No advertisement or solicitation of a policy covering only one disease or a list of specified diseases may imply coverage beyond the terms of the policy or imply that current coverage will not indemnify the specific disease so covered. Synonymous terms may not be used to refer to any disease so as to imply broader coverage than is the fact;

(6) An advertisement or solicitation for a policy providing benefits for specified illnesses only, such as cancer, or for specified accidents only, such as automobile accidents, must clearly and conspicuously in prominent type state the limited nature of the policy. The statement must be worded in language identical to or substantially similar to the following: "THIS IS A LIMITED POLICY"; "THIS IS A CANCER ONLY POLICY"; "THIS IS AN AUTOMOBILE ACCIDENT ONLY POLICY."

Failure to comply with any of the provisions of this section creates a presumption that an advertisement or solicitation is deceptive, misrepresentative, or misleading.

History

Source: 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:06 Exceptions, reductions, and limitations

The exceptions, reductions, and limitations permitted are:

(1) When an advertisement or solicitation refers to either a dollar amount, or a period of time for which any benefit is payable, or the cost of the policy, or specific policy benefit, or the loss for which such benefit is payable, it shall also disclose those exceptions, reductions, and limitations affecting the basic provisions of the policy;

(2) If a policy contains a waiting, elimination, probationary, or similar time period between the effective date of the policy and the effective date of coverage under the policy or a time period between the date a loss occurs and the date benefits begin to accrue for such loss, an advertisement or solicitation which is subject to the requirements of § 20:06:10:06 shall disclose the existence of such periods;

(3) An advertisement or solicitation may not use the words "only", "just", "merely", "minimum" or similar words or phrases to describe the applicability of any exceptions and reductions, such as: "This policy is subject to the following minimum exceptions and reductions";

(4) A solicitation may not contain descriptions of a policy limitation, exception, or reduction worded in a positive manner to imply that it is a benefit, such as describing a waiting period as a "benefit builder" or stating "even preexisting conditions are covered after two years." Words and phrases used in a solicitation to describe such policy limitations, exceptions, and reductions must fairly and accurately describe the negative features of such limitations, exceptions, and reductions of the policy offered.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:07 Preexisting conditions in health insurance policies

Preexisting conditions in health insurance policies are treated as follows:

(1) An advertisement or solicitation of health insurance which is subject to the requirements of this chapter shall, in negative terms, disclose the extent to which any loss is not covered if the cause of the loss is traceable to a condition existing prior to the effective date of the policy. The term "preexisting condition" without a definition or description may not be used;

(2) If a policy does not cover losses resulting from preexisting conditions, no advertisement or solicitation of the policy may state or imply that the applicant's physical condition or medical history will not affect the issuance of the policy or payment of a claim under it. This subdivision prohibits the use of the phrase "no medical examination required" and similar phrases, but does not prohibit explaining "automatic issue." If an insurer requires a medical examination for a specified policy, the advertisement or solicitation must disclose that a medical examination is required;

(3) If an advertisement or solicitation contains an application form to be completed by the applicant and returned by mail for a direct response insurance product, the application form must contain a question or statement which reflects the preexisting condition provisions of the policy immediately preceding the blank space for the applicant's signature. The question or statement must be substantially as follows:

(a) "Do you understand that this policy will not pay benefits during the first _____ year(s) after the issue date for a preexisting medical condition which you now have or have had in the past?"

_____YES; or

(b) "I understand that the policy applied for will not pay benefits for any loss incurred during the first _____ year(s) after the issue date because of a preexisting medical condition which I now have or have had in the past."

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7; 58-33A-8, 58-33A-10.

ARSD 20:06:10:08 Necessity for disclosing policy provisions relating to renewability, cancelability, and termination

When an advertisement or solicitation refers to either a dollar amount or a period of time for which any benefit is payable, or the cost of the policy, or specific policy benefit, or the loss for which such benefit is payable, it shall disclose general policy exceptions, reductions, and limitations, in a manner which does not minimize or render obscure the qualifying conditions.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:08.01 Health insurance advertisement rate disclosures

Unless the disclosure as required by § 20:06:10:08.02 is provided, no individual or group health insurance policy or certificate may in its advertisements or solicitations include statements that directly or indirectly indicate that:

(1) Premiums or rates do not increase with age;

(2) Premiums or rates do not increase because of health conditions; or

(3) An insured will not be singled out for a rate or premium increase.

Policies for which no rate increase may be applied for any reason are exempt from the provisions of this section.

History

Source: 32 SDR 128, effective January 29, 2006; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33A-2, 58-33A-8.

ARSD 20:06:10:08.02 Health insurance advertisement or solicitation disclosure statements

Any health insurance advertisement or solicitation that includes a statement for which disclosure is required pursuant to § 20:06:10:08.01 must contain in close proximity to any such statement and in an at least as conspicuous a form as the statement itself, the following disclosure or an alternative as may be approved by the director:

Premiums or rates may increase for other reasons such as an increase applicable to all persons covered under this type of policy or certificate in this state.

Failure to comply with any provision of this section creates a presumption that an advertisement or solicitation is deceptive, misrepresentative, or misleading.

History

Source: 32 SDR 128, effective January 29, 2006; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7(13)(14)(15).
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33A-2, 58-33A-8.

ARSD 20:06:10:08.03 Short term major medical advertising disclosure

No advertisement or solicitation of short term major medical insurance may be used in this state unless the following disclosure statement is prominently displayed in that advertisement or solicitation: "This short term major medical policy is [nonrenewable/renewable]."

No short term major medical policy may be sold in this state unless the following separate disclosure in bold 14 point type is signed and acknowledged by the applicant:

"This short term major medical policy is [nonrenewable/renewable]. This policy provides coverage for [number of days or months that is less than 12 months]. A renewal or extension of this policy or additional policies must have a combined duration of no more than 36 months in total. This policy has exclusions such as preexisting conditions and does not provide all coverage required by the Patient Protection and Affordable Care Act."

If the application is taken by an agent, the agent is responsible for forwarding this signed disclosure to the insurer. For direct marketed solicitations, the insurer must provide this disclosure with the application. No insurer may issue a short term major medical policy unless a signed disclosure, as required by this section, is received. If the transaction involves a replacement, the agent or, if forwarded by the agent to the insurer, the insurer shall, in accordance with SDCL 58-1-26 keep documentation indicating compliance with § 20:06:10:08.02.

History

Source: 33 SDR 107, effective December 26, 2006; 38 SDR 116, effective January 10, 2012; 40 SDR 102, effective December 3, 2013; 47 SDR 68, effective December 7, 2020.
General Authority: SDCL 58-33A-7(14).
Law Implemented: SDCL 58-33A-8, 58-33A-10.

ARSD 20:06:10:09 Testimonials or endorsements by third parties

20:06:10 :09. Testimonials or endorsements by third parties. Requirements for testimonials or endorsements by third parties are as follows:

(1) Testimonials used in advertisements or solicitations must be genuine, represent the current opinion of the author, be applicable to the policy advertised, and be accurately reproduced. The insurer, in using a testimonial, makes as its own all of the statements contained in it;

(2) If the person making a testimonial, an endorsement, or an appraisal has a financial interest in the insurer or a related entity as a stockholder, director, officer, employee, or otherwise, that fact must be disclosed in the advertisement or solicitation. If a person is compensated for making a testimonial, endorsement, or appraisal, that fact must be disclosed in the advertisement or solicitation by language substantially as follows: "Paid Endorsement." This section does not require disclosure of union scale wages required by union rules if the payment is actually made at the union scale rate for television or radio performances. The payment of substantial amounts, directly or indirectly, for "travel and entertainment" for filming or recording of television or radio advertisements remove the filming or recording from the category of an unsolicited testimonial and require disclosure of the compensation;

(3) An advertisement or solicitation may not state or imply that an insurer or a policy has been approved or endorsed by an individual, group of individuals, society, association, or other organizations unless that is the fact and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial has been formed by the insurer or is owned or controlled by the insurer or the person or persons who own or control the insurer, that fact must be disclosed in the advertisement or solicitation;

(4) If a testimonial refers to benefits received under a policy, the specific claim data, including claim number, date of loss, and other pertinent information must be retained by the insurer for inspection for five years.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-1-26, 58-3-1, 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:10 Use of statistics

Statistics shall be used as follows:

(1) An advertisement or solicitation relating to the dollar amounts of claims paid, the number of persons insured, or similar statistical information relating to any insurer or policy may not use irrelevant facts, and may not be used unless it accurately reflects all of the relevant facts. Such an advertisement or solicitation may not imply that such statistics are derived from the policy advertised unless such is the fact, and when applicable to other policies or plans shall specifically so state;

(2) An advertisement or solicitation may not represent or imply that claim settlements by the insurer are "liberal" or "generous", or use words of similar import, or that claim settlements are or will be beyond the actual terms of the contract. An unusual amount paid for a unique claim for the policy advertised is misleading and may not be used;

(3) The source of any statistics used in an advertisement or solicitation shall be identified in such advertisement or solicitation.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:11 Identification of plan or number of policies

When a choice of the amount of benefits is referred to, an advertisement or solicitation shall disclose that the amount of benefits provided depends upon the plan selected and that the premium will vary with the amount of the benefits selected. When an advertisement or solicitation refers to various benefits which may be contained in two or more policies, other than group master policies, the advertisement or solicitation shall disclose that such benefits are provided only through a combination of such policies.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:12 Disparaging comparisons and statements

An advertisement or solicitation may not directly or indirectly make unfair or incomplete comparisons of policies or benefits or comparisons of noncomparable policies of other insurers, and may not disparage competitors, their policies, services or business methods, and may not disparage or unfairly minimize competing methods of marketing insurance.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-6, 58-33-7, 58-33-8, 58-33-10, 58-33A-8, 58-33A-10.

ARSD 20:06:10:13 Jurisdictional licensing and status of insurer

An advertisement which is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed may not imply licensing beyond those limits. An advertisement may not create the impression directly or indirectly that the insurer, its financial condition or status, the payment of its claims, or the merits, desirability, or advisability of its policy forms or kinds of plans of insurance are approved, endorsed, or accredited by a division or agency of local government, the state, or the federal government.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:14 Identity of insurer and agent

Health and life insurers or agents must be identified in advertisements or solicitations as follows:

(1) The name of the actual insurer or the agent, if any, and the form number of policies specifically advertised must be clearly identified in all advertisements or solicitations. An advertisement or solicitation may not use a trade name, insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, service mark, slogan, symbol, or other device which would mislead or deceive or tend to mislead or deceive as to the true identity of the insurer;

(2) No advertisement or solicitation may use any combination of words, symbols, or physical materials which by their content, phraseology, shape, color, or other characteristics are so similar to combinations of words, symbols, or physical materials used by agencies of the federal government, this state, or local government or confuse or mislead prospective insured's into believing that the advertisement or solicitation is in some manner connected with an agency of local government, the state, or the federal government;

(3) An agent shall inform the prospective purchaser, before beginning a health or life insurance sales presentation, that the agent is acting as a health or life insurance agent and shall identify, in writing, the agent and the complete name of the insurer which the agent is representing. An agent's business card is acceptable if it complies with this subdivision and this chapter. In sales situations in which an agent is not involved, the insurer shall inform the prospective purchaser of its complete name in writing;

(4) An advertisement or solicitation may not create the impression directly or indirectly that the insurer, its financial condition or status, or the payment of its claims or the merits, desirability, or advisability of its policy forms or kinds of plans of insurance are approved, endorsed, or accredited by a division or agency of a municipality, the state, or the federal government.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 28, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:15 Group or quasi-group implications

An advertisement or solicitation of a particular policy may not state or imply that prospective insured's become group or quasi-group members covered under a group policy and as such enjoy special rates or underwriting privileges, unless such is the fact.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33-28, 58-33A-8, 58-33A-10.

ARSD 20:06:10:16 Introductory, initial, or special offers

Requirements for introductory, initial, or special offers for health and life insurance are as follows:

(1) An advertisement or solicitation of an individual policy may not directly or by implication represent that a contract or combination of contracts is an introductory, initial, or special offer; that applicants will receive substantial advantages not available at a later date; or that the offer is available only to a specified group of individuals, unless that is the fact. An advertisement or solicitation may not contain words describing an enrollment period as "special" or "limited" or use similar words or phrases when the insurer uses such enrollment periods as the usual method of advertising health or life insurance;

(2) An advertisement or solicitation may not state or imply that only a specific number of policies will be sold or that a time is fixed for the discontinuance of the sale of the particular policy advertised because of special advantages available in the policy unless that is the fact;

(3) Different terms of renewability, an increase or decrease in the dollar amounts of benefits, or an increase or decrease in an elimination period for another policy are not sufficient to constitute the product being offered as a different product eligible for concurrent or overlapping enrollment periods;

(4) An advertisement or solicitation may not offer a policy which utilizes a reduced initial premium rate in a manner which overemphasizes the availability and the amount of the initial reduced premium. If an insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, the advertisement or solicitation may not display the amount of the reduced initial premium either more frequently or more prominently than the renewal premium, and both the initial reduced premium and the renewal premium must be stated in juxtaposition in each portion of the advertisement or solicitation where the initial reduced premium appears;

(5) Health advertisements or solicitations may not include special awards, such as a "safe driver's award," in connection with advertisements or solicitations of accident or accident and sickness insurance.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7, 58-33A-8, 58-33A-10.

ARSD 20:06:10:17 Statements about an insurer

An advertisement or solicitation may not contain statements which are untrue in fact, or by implication misleading, with respect to the assets, corporate structure, financial standing, age, or relative position of the insurer in the insurance business. An advertisement or solicitation may not contain a recommendation by a commercial rating system unless it clearly indicates the purpose of the recommendation and the limitations of the scope and extent of the recommendation.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-7, 58-33-8, 58-33-10, 58-33A-8, 58-33A-10.

ARSD 20:06:10:18 Repealed

Enforcement procedures.** Repealed.

History

Source: 4 SDR 6, effective August, 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; repealed, 34 SDR 297, effective June 4, 2008.

ARSD 20:06:10:19 Repealed

Severability provision.** Repealed.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 15 SDR 143, effective March 29, 1989.

ARSD 20:06:10:20 Penalty

Any insurer failing to comply with the requirements of this chapter shall file for approval, prior to its use, any advertisement or solicitation used in connection with the solicitation of a contract of insurance in the state of South Dakota. The standard for approval is this chapter. Unless disapproved within 30 days, the filing shall be deemed approved.

History

Source: 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 27 SDR 54, effective December 4, 2000; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-l, 58-33-2, 58-33-5, 58-33-6, 58-33-7, 58-33-8, 58-33-38, 58-33A-11, 58-33A-12.

ARSD 20:06:10:21 Disclosure requirements

The disclosure requirements for life insurance policies are as follows:

(1) The buyer's guide and any policy summary, shall be provided either prior to accepting an applicant's initial premium or premium deposit, or be delivered with the policy or prior to delivery of the policy. The policy summary must be provided to prospective purchasers only where the insurer has identified the policy form as one that will not be marketed with an illustration. The policy summary shall show guarantees only; and

(2) If a solicitation refers to either a dollar amount or a period of time for which a benefit is payable, to the cost of the policy, to a specific policy benefit, or to the loss for which the benefit is payable, it must disclose the provisions relating to renewal, cancellation, termination and modification of benefits; losses covered; or premiums, because of age or for other reasons in a manner which does not minimize or render obscure the qualifying conditions.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6, 58-33-7.

ARSD 20:06:10:22 Equivalent level annual dividend of a life insurance policy

The equivalent level annual dividend of a life insurance policy shall be calculated as follows:

(1) Accumulate the annual cash dividends at five percent interest compounded annually to the end of the tenth and twentieth policy years;

(2) Divide each accumulation in subdivision 20:06:10:22(1) by an interest factor that converts it into one equivalent level annual amount that, if paid at the beginning of each year, would accrue to the values in subdivision 20:06:10:22(1) over 10 or 20 years. If the period is 10 years, the factor is 13.207; and if the period is 20 years, the factor is 34.719; and

(3) Divide the results of subdivision 20:06:10:22(2) by the number of thousands of the equivalent level death benefit to arrive at the equivalent level annual dividend.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:10:23 Equivalent level death benefit of a life insurance policy

The equivalent level death benefit for a life insurance policy or term life insurance rider shall be calculated as follows:

(1) Accumulate the guaranteed amount payable upon death, regardless of the cause of death, at the beginning of each policy year for 10 and 20 years at five percent interest compounded annually to the end of the tenth and twentieth policy years respectively; and

(2) Divide each accumulation of subdivision 20:06:14:06(1) by an interest factor that converts it into one equivalent level annual amount that, if paid at the beginning of each year, would accrue to the value in subdivision 20:06:10:23(1) over 10 or 20 years. If the period is 10 years, the factor is 13.207; and if the period is 20 years, the factor is 34.719.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:10:24 Life insurance surrender cost index

The life insurance surrender cost index shall be calculated as follows:

(1) Determine any guaranteed cash surrender value available at the end of the tenth and twentieth policy years;

(2) For participating policies, add any terminal dividend payable upon surrender to the accumulation of the annual cash dividends at 5 percent interest compounded annually to the end of the period selected and add this sum to the amount determined in subdivision 20:06:10:24(1).

(3) Divide the result of subdivision 20:06:10:24(2) {subdivision 20:06:10:24(1) for guaranteed cost policies} by an interest factor that converts it into an equivalent level annual amount that, if paid at the beginning of each year, would accrue to the value in subdivision 20:06:10:24(2) {subdivision 20:06:10:24(1) for guaranteed cost policies} over 10 to 20 years. If the period is 10 years, the factor is 13.207 and if the period is 20 years, the factor is 34.719;

(4) Determine the equivalent level premium by accumulating each annual premium payable for the basic policy or rider at 5 percent interest compounded annually to the end of 10 or 20 years and dividing the results by 13.207 or 34.719, respectively. This amount is the annual premium payable for a level premium plan;

(5) Subtract the result of subdivision 20:06:10:24(3) from subdivision 20:06:10:24(4); and

(6) Divide the results of subdivision 20:06:10:24(5) by the number of thousands of the equivalent level death benefit to arrive at the life insurance surrender cost index.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:10:25 Life insurance net payment cost index

The net payment cost index is calculated in the same manner as the comparable life insurance surrender cost index except that the cash surrender value and any terminal dividend are set at zero.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:10:26 Life insurance policy summary

The life insurance policy summary must contain, but is not limited to, the following:

(1) A prominently placed title as follows: STATEMENT OF POLICY COST AND BENEFIT INFORMATION ;

(2) The name and address of the insurance agent, or, if no agent is involved, a statement of the inquiry procedure to be followed;

(3) The full name and home office or administrative office address of the company which writes the life insurance policy;

(4) The generic name of the basic policy and each rider;

(5) A clear illustration of the premium and benefit patterns which contains the following applicable amounts in total, not on a per thousand or per unit basis, for the first five policy years and representative policy years thereafter including, but not limited to, the years for which life insurance cost indexes are displayed and at least one age from 60 through 65 or policy maturity whichever is earlier:

(a) The annual premium for the basic policy;

(b) The annual premium for each optional rider;

(c) The guaranteed amount payable, at the beginning of the policy year, upon death for any cause other than suicide or any other specifically enumerated exclusion, which is provided by the basic policy and each optional rider. The benefits provided under the basic policy and each rider must be shown separately;

(d) The total guaranteed cash surrender values at the end of the year with values shown separately for the basic policy and each rider;

(e) The cash dividends payable at the end of the year with values shown separately for the basic policy and each rider. Dividends need not be displayed beyond the twentieth policy year;

(f) The guaranteed endowment amounts payable under the policy which are not included under guaranteed cash surrender values in subsection 20:06:10:25(5)(d);

(6) The effective policy loan annual percentage interest rate, if the policy contains this provision, specifying whether this rate is applied in advance or in arrears. If the policy loan interest rate is variable, the policy summary must include the maximum annual percentage rate;

(7) Life insurance cost indexes for 10 and 20 years but in no case beyond the premium paying period. Separate indexes must be displayed for the basic policy and for each optional term life insurance rider. Such indexes need not be included for optional riders which are limited to benefits such as accidental death, disability waiver of premium, preliminary term life insurance coverage of less than 12 months, and guaranteed insurability benefits nor for the basic policies or optional riders covering more than one life;

(8) For participating policies and participating optional term life insurance riders, the equivalent level annual dividend, under the same circumstances and for the same durations as life insurance cost indexes;

(9) For policy summaries which include dividends, a statement that dividends are based on the company's current dividend scale and are not guaranteed. In addition, there must be a statement in close proximity to the equivalent level annual dividend which reads as follows: An explanation of the intended use of the equivalent level annual dividend is included in the life insurance buyer's guide;

(10) A statement in close proximity to the life insurance cost indexes as follows: An explanation of the intended use of these indexes is provided in the life insurance buyer's guide; and

(11) The date on which the life insurance policy summary is prepared.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:10:27 Life insurance policy summary requirements

The life insurance policy summary must be a separate document and all information required to be disclosed must be set out in such a manner that no portion is minimized or made obscure. Any amounts which remain level for two or more years of the policy may be represented by a single number if it is clearly indicated which amounts are applicable for each policy year. If more than one insured is covered under one policy or rider, guaranteed death benefits must be displayed separately for each insured or for each class of insureds if death benefits do not differ within the class. Zero amounts must be displayed as zero and may not be displayed as a blank space.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:10:28 Failure to comply

Failure of an insurer to provide or deliver a buyer's guide or a policy summary shall constitute an omission which misrepresents the benefits, advantages, conditions, or terms of an insurance policy and may be a violation of SDCL 58-33-5.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:10:29 Effective date

This chapter applies to all solicitations of life insurance commencing on or after April 15, 1980.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:10:30 Life insurance buyer's guide

An insurer must use the National Association of Insurance Commissioners Life Insurance Buyer's Guide.

Reference: Life Insurance Buyer’s Guide, 2018 edition. Copies may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197, (816) 783-8300; https://content.naic.org/sites/default/files/publication-lig-lp-consumer-life.pdf. Cost: $0.

History

Source: 38 SDR 116, effective January 10, 2012; 52 SDR 66, effective January 1, 2025.
General Authority: SDCL 58-33A-7, 58-33A-9.
Law Implemented: SDCL 58-33A-9.

Chapter 20:06:11 Restrictions on insiders' interests

ARSD 20:06:11:01 Exemptions from restrictions on insiders' interests, board of directors

Subject to the provisions of § 20:06:11:04, SDCL 58-5-61 shall not prevent the receipt of any fee, brokerage, commission or other consideration by a director, or by a corporation or partnership in which such director has a beneficial interest, on account of services rendered to an insurer as a securities broker, lawyer, licensed practitioner of a healing art or licensed insurance agent of the insurer provided such director is not otherwise an officer or employee of the insurer. The fee, brokerage, commission or other consideration shall not exceed the usual or customary compensation for similar services by members, not directors, of the same profession or business.

History

Source: 1 SDR 53, effective January 27, 1975; 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-65.
Law Implemented: SDCL 58-5-61.

ARSD 20:06:11:02 Exemptions from restrictions on insiders' interests, officers

SDCL 58-5-61 shall not prevent the receipt of any fee, commission or other consideration by an officer, or by a corporation or partnership in which such officer has a beneficial interest, on account of services rendered to an insurer as a lawyer or licensed practitioner of a healing art provided the conditions specified in § 20:06:11:01 are met.

History

Source: 1 SDR 53, effective January 27, 1975, 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-65.
Law Implemented: SDCL 58-5-61.

ARSD 20:06:11:03 Definition of "pecuniarily interested"

Any officer or director, any member of any committee, or any employee charged with the duty of investing an insurer's funds shall be deemed not to be pecuniarily interested in any particular transaction of the insurer because of the receipt of:

(1) Compensation for regular services rendered in employment by the insurer; or

(2) Payments, under a contract, for which services were rendered to the insurer prior to such person becoming an officer, director, member of a committee, or employee charged with the duty of investing the insurer's funds.

History

Source: 1 SDR 53, effective January 27, 1975; 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-65.
Law Implemented: SDCL 58-5-61.

ARSD 20:06:11:04 Exceptions

Section 20:06:11:01 shall not apply if the number of directors who would be in violation of SDCL 58-5-61, were it not for the exemptions provided by § 20:06:11:01, exceeds two-fifths of the total elected membership of the board of directors.

History

Source: 1 SDR 53, effective January 27, 1975; 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-65.
Law Implemented: SDCL 58-5-61.

ARSD 20:06:11:05 Application for exemptions

20:06:11 :05. Application for exemptions. Any transaction or series of transactions not otherwise provided for under § 20:06:11:01 may be declared exempt from the application of SDCL 58-5-61, solely to enable the payment of reasonable compensation to a director, officer or employee, upon application by the insurer and approval of the director. The fee, brokerage, commission or other consideration shall not exceed the usual or customary compensation for similar services by members, not directors, officers or employees of the same profession or business. Said application shall include:

(1) A specific description of the particular transaction or transactions for which approval is sought;

(2) Copies of all contracts and other legal documents involved or to be involved in the transaction;

(3) A description of all assets involved in the transaction;

(4) The names, titles, capacities and business relationships of all persons in any way involved in the transaction who are connected with the insurer or any of its affiliates, officers, directors, managers, or controlling persons or entities in any of the capacities described in SDCL 58-5-61;

(5) A description of any and all consideration on either or any side of the transaction;

(6) Evidence that its governing board has specifically authorized the filing of the application; and

(7) Such other information, opinions or matters as the director may require.

History

Source: 1 SDR 53, effective January 27, 1975; 4 SDR 6, effective August 9, 1977; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-5-65.
Law Implemented: SDCL 58-5-61.

Chapter 20:06:12 Examinations

ARSD 20:06:12:01 Repealed

Compensation.** Repealed.

History

Source: 5 SDR 79, effective March 29, 1979; 7 SDR 99, effective April 26, 1981; 9 SDR 122, effective March 31, 1983; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 19 SDR 160, effective April 27, 1993.

ARSD 20:06:12:02 Repealed

Guidelines for compensation.** Repealed.

History

Source: 5 SDR 79, effective March 29, 1979; 6 SDR 28, effective September 30, 1979; 7 SDR 99, effective April 26, 1981; 9 SDR 122, effective March 31, 1983; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 19 SDR 160, effective April 27, 1993; 21 SDR 144, effective February 19, 1995; 23 SDR 43, effective October 1, 1996; 23 SDR 202, effective June 1, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 29 SDR 84, effective December 15, 2002; repealed, 33 SDR 59, effective October 5, 2006.

ARSD 20:06:12:03 Examiner I qualifications

An examiner I shall have the following education or experience:

(1) A bachelor's degree from an accredited college or university with at least 15 college credits in accounting and a major in either accounting, finance, insurance, statistics, general business administration or economics; or

(2) Public or private accounting experience for a minimum of two years and at least 15 college credits in accounting; or

(3) Accounting experience for a minimum of three years in the capacity of treasurer, assistant treasurer, controller, assistant controller or auditor for an insurance company's home office or autonomous branch office; or

(4) A combination of education and experience considered by the director of insurance to be a satisfactory equivalent.

History

Source: 5 SDR 79, effective March 29, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-3-26.
Law Implemented: SDCL 58-3-1, 58-3-3.3, 58-3-15.

ARSD 20:06:12:04 Examiner II qualifications

An examiner II shall have the following education or experience:

(1) A bachelor's degree from an accredited college or university with a major in either accounting, finance, insurance, statistics, general business administration or economics and a minimum of 15 college credits in accounting, plus at least 4 years of reasonable insurance department examination experience; or

(2) Public or private insurance experience in accounting for a minimum of 5 years and at least 15 college credits in accounting; or

(3) Accounting experience for at least 8 years in the capacity of treasurer, assistant treasurer, controller, assistant controller or auditor for an insurance company's home office or autonomous branch office; or

(4) An advanced college degree in business administration, accounting, finance, insurance, statistics, economics or another related field or a law degree, which may be substituted for 3 years of the required experience; or

(5) A combination of education and experience considered by the director of insurance to be a satisfactory equivalent.

History

Source: 5 SDR 79, effective March 29, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-3-26.
Law Implemented: SDCL 58-3-1, 58-3-3.3, 58-3-15.

ARSD 20:06:12:05 Examiner III qualifications

An examiner III shall have the following education and experience:

(1) A bachelor's degree from an accredited college or university with a major in accounting, finance, insurance, statistics, general business administration or economics and a minimum of 15 college credits in accounting, plus at least 6 years of responsible insurance department examination experience; or

(2) Public or private insurance accounting experience for a minimum of six years and at least 15 college credits in accounting; or

(3) Accounting experience for at least 10 years in the capacity of treasurer, assistant treasurer, controller, assistant controller or auditor in an insurance company's home office or autonomous branch office; or

(5) A combination of education and experience considered by the director of insurance to be a satisfactory equivalent.

History

Source: 5 SDR 79, effective March 29, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-3-26.
Law Implemented: SDCL 58-3-1, 58-3-3.3, 58-3-15.

ARSD 20:06:12:06 Classification of examiners appointed prior to effective date of this chapter

Examiners appointed prior to the effective date of this chapter may retain the classifications to which they were appointed without meeting the requirements of this chapter.

History

Source: 5 SDR 79, effective March 29, 1979; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-3-26.
Law Implemented: SDCL 58-3-1, 58-3-3.3, 58-3-15.

ARSD 20:06:12:07 Guidelines for examination reports

The insurer's examination report must be prepared in accordance with standards adopted by the National Association of Insurance Commissioners in the Financial Condition Examiners Handbook, 2026 edition.

Reference: Financial Condition Examiners Handbook, 2026 edition, National Association of Insurance Commissioners (NAIC). Copies may be obtained from the NAIC, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197; (816) 783-8300; http://www.naic.org. Cost: $0.

History

Source: 21 SDR 144, effective February 19, 1995; 23 SDR 43, effective October 1, 1996; 23 SDR 202, effective June 1, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 29 SDR 84, effective December 15, 2002; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 42 SDR 52, effective October 13, 2015; 42 SDR 177, effective June 28, 2016; 43 SDR 181, effective July 7, 2017; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-3-11, 58-3-26.
Law Implemented: SDCL 58-3-11.

ARSD 20:06:12:08 Applicability

Sections 20:06:12:01 to 20:06:12:07, inclusive, apply to financial examinations and do not apply to market conduct examinations.

History

Source: 29 SDR 84, effective December 15, 2002.
General Authority: SDCL 58-3-11, 58-3-26.
Law Implemented: SDCL 58-3-11.

ARSD 20:06:12:09 Examination facilitation

Facilitation for purposes of SDCL 58-3-7 for any examination, including financial, market conduct, and agency examinations, includes prompt and accurate production of accounts, records, documents, files and other relevant information as well as cooperation during the examination process. Failure by the persons being examined to supply accounts, records, documents, files or other relevant information in a timely manner constitutes a violation of SDCL 58-3-7.

History

Source: 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-33A-7.
Law Implemented: SDCL 58-33A-5, 58-33-6.

Chapter 20:06:13 Medicare supplement insurance

ARSD 20:06:13:01 Repealed

Disclosure form required.** Repealed.

History

Source: 5 SDR 108, effective June 27, 1979; repealed, 8 SDR 174, effective July 1, 1982.

ARSD 20:06:13:02 Definitions

Terms defined in SDCL 58-17A-1 have the same meaning when used in this chapter. In addition, terms used in this chapter mean:

(1) "1990 Standardized Medicare supplement benefit plan," a group or individual policy of Medicare supplement insurance issued after July 16, 1992, and prior to June 1, 2010, and includes Medicare supplement insurance policies and certificates renewed during that period which are not replaced by the issuer at the request of the insured;

(2) "2010 Standardized Medicare supplement benefit plan," a group or individual policy of Medicare supplement insurance issued after May 31, 2010;

(3) "Bankruptcy," when a Medicare Advantage organization that is not an issuer has filed, or has had filed against it, a petition for declaration of bankruptcy and has ceased doing business in the state;

(4) "Benefit period" or "Medicare benefit period," as defined in the Medicare program, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1992;

(5) "Buyer's guide," the informational brochure as approved by the director;

(6) "Complaint," dissatisfaction expressed by an individual concerning a Medicare select issuer or its network providers;

(7) "Continuous period of creditable coverage," the period during which an individual was covered by creditable coverage, if during the period of the coverage the individual had no breaks in coverage greater than 63 days;

(8) "Convalescent nursing home," "extended care facility," or "skilled nursing facility," as defined in the Medicare program, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1992;

(9) "Employee welfare benefit plan," a plan, fund, or program of employee benefits as defined in 29 U.S.C. § 1002 (Employee Retirement Income Security Act), as in effect on September 1, 1998;

(10) "Grievance," dissatisfaction with the administration, claims practices, or provision of services by a Medicare select issuer or its network providers that is expressed in writing by an individual insured under a Medicare select policy or certificate;

(11) "Health care expenses," expenses of a health maintenance organization associated with the delivery of health care services, and which are analogous to the incurred losses of insurers;

(12) "Hospital," as defined in the Medicare program, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1992;

(13) "Insolvency," when an issuer, licensed to transact the business of insurance in this state, has had a final order of liquidation entered against it with a finding of insolvency by a court of competent jurisdiction in the issuer's state of domicile;

(14) "Medicare Advantage plan," a plan of coverage for health benefits under Medicare Part C as defined in the Medicare program, 42 U.S.C. § 1395 et seq and includes:

(a) Coordinated care plans that provide health care services, including health maintenance organization plans, plans offered by provider-sponsored organizations, and preferred provider organization plans;

(b) Medical savings account plans coupled with a contribution into a Medicare Advantage plan medical savings account; and

(15) "Medicare select issuer," an issuer offering or seeking to offer a Medicare select policy or certificate;

(16) "Medicare select policy" or "Medicare select certificate," a Medicare supplement policy or a Medicare supplement certificate that contains restricted network provisions;

(17) "NAIC," National Association of Insurance Commissioners;

(18) "Network provider," a provider of health care or a group of providers of health care which has entered into a written agreement with the issuer to provide benefits insured under a Medicare select policy;

(19) "Physician," may not be defined more restrictively than as defined in the Medicare program;

(20) "Pre-standardized Medicare supplement benefit plan," a group or individual policy of Medicare supplement insurance issued prior to July 17, 1992;

(21) "Restricted network provision," any provision which conditions the payment of benefits, in whole or in part, on the use of network providers;

(22) "Secretary of Health and Human Services," the secretary of the United States Department of Health and Human Services;

(23) "Service area," the geographic area within which an issuer is authorized to offer a Medicare select policy;

(24) "Sickness," illness or disease of an insured person which first manifests itself after the effective date of insurance and while the insurance is in force;

(25) "Type," an individual policy or a group policy;

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 16 SDR 174, effective May 2, 1990; 18 SDR 225, effective July 17, 1992; 22 SDR 107, effective February 18, 1996; 23 SDR 236, effective July 13, 1997; 25 SDR 44, effective September 30, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 53, 27 SDR 54, effective December 4, 2000; 28 SDR 157, effective May 19, 2002; 31 SDR 214, effective July 6, 2005; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2(9).
Law Implemented: SDCL 58-17A-2(9).

ARSD 20:06:13:02.01 Requirements for definition of "accident" and similar words in policies

"Accidental injury" or "accidental means" shall be defined in a Medicare supplement policy by employing results language and may not include words which establish an accidental means test or use words such as "external," "violent," or "visible wounds" or similar words of description or characterization.

The definition may not be more restrictive than the following "Injury or injuries for which benefits are provided" means accidental bodily injury sustained by the insured person which is the direct result of an accident, which is independent of disease or bodily infirmity or any other cause, and which occurs while insurance coverage is in force.

The definition may provide that injuries do not include injuries for which benefits are provided or available under any workers' compensation, employer's liability, or similar law or any motor vehicle no-fault plan, unless prohibited by law.

History

Source: 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:02.02 Requirements for definitions in policies

No policy or certificate may be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy or certificate unless the policy or certificate contains definitions or terms which conform to SDCL chapter 58-17A and this chapter.

A hospital may be defined in relation to its status, facilities, and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals, but not more restrictively than as in the Medicare program, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1992.

History

Source: 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:03 Applicability

This chapter applies to all Medicare supplement policies advertised, solicited, delivered, or issued in this state, to all Medicare supplement certificates issued under group Medicare supplement policies, contracts issued for delivery in this state, nonprofit Medicare supplement plans, health maintenance organization contracts, and Medicare supplement coverage sold by fraternals. This chapter also applies to policies and certificates which are not Medicare supplements but are sold to people eligible for Medicare. This chapter does not apply to any policy exempted by SDCL 58-17A-1.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 23 SDR 236, effective July 13, 1997; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:04 Repealed

Allowed restrictions on coverage of accidents.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:05 Repealed

Effects of other insurance and coverage of accidents.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:06 Repealed

Restrictions for accidents while employed.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 16 SDR 174, effective May 2, 1990.

ARSD 20:06:13:07 Repealed

Denial of benefits to persons in skilled nursing facilities prohibited.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:08 Repealed

Skilled nursing facility -- Exclusions.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:09 Repealed

Hospital reimbursement by nonprofit plans.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:10 Repealed

Mental or emotional disorders -- Limitations and exclusions.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:11 Repealed

Nurse -- Description of classes.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:12 Repealed

Coverage of sickness -- Allowed restrictions.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 15 SDR 143, effective March 29, 1989.

ARSD 20:06:13:13 Repealed

Coverage of sickness -- Other insurance.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 36 SDR 209, effective July 1, 2010.

ARSD 20:06:13:14 Eligible expenses under Medicare

Eligible expenses under Medicare means medical expenses that are covered by Medicare to the extent recognized as reasonable and customary by Medicare. Payments, benefits, benefit periods, medical necessity, policy limitations, or exclusions may not be more restrictive than as used by Medicare.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 174, effective May 2, 1990.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:14.01 Repealed

Health care expenses defined -- Exclusions.** Repealed.

History

Source: 15 SDR 143, effective March 29, 1989; repealed, 31 SDR 214, effective July 6, 2005.

ARSD 20:06:13:15 Repealed

Permitted policy limitations and exclusions.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:16 Waiver of coverage not allowed

No Medicare supplement policy may use a waiver to exclude, limit, or reduce benefits for a specifically named or described preexisting sickness or physical condition.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17 Applicability of benefit standards

The following benefit standards described in §§ 20:06:13:17.02 and 20:06:13:17.03 are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state after July 16, 1992, and prior to June 1, 2010, and no policy or certificate may be advertised, solicited, delivered, or issued for delivery in this state as a Medicare supplement policy or certificate unless it complies with these benefit standards.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 16 SDR 174, effective May 2, 1990; standards transferred to § 20:06:13:17.02, 18 SDR 225, effective July 17, 1992; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.01 Repealed

Benefits restored.** Repealed.

History

Source: 16 SDR 174, effective May 2, 1990; repealed, 35 SDR 183, effective February 2, 2009.

ARSD 20:06:13:17.02 General standards for 1990 standardized Medicare supplement benefit plans

The following standards apply to Medicare supplement policies issued for delivery after July 16, 1992, and prior to June 1, 2010, and certificates and are in addition to all other requirements of this chapter:

(1) Indemnity for losses resulting from sickness must be on the same basis as losses resulting from an accident;

(2) Benefits designed to cover cost-sharing amounts under Medicare must be changed to coincide with changes in applicable Medicare deductible, copayment, or coinsurance amounts. Premiums may be modified to correspond with such changes.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 16 SDR 174, effective May 2, 1990; transferred from § 20:16:13:17, 18 SDR 225, effective July 17, 1992; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.03 Standards for basic core benefits for 1990 standardized Medicare supplemen plans

Standards for basic core benefits for 1990 standardized Medicare supplement benefit plans.** Each insurer shall make available a policy or certificate including only the following basic core package of benefits to each prospective insured. In addition to the basic core package, an issuer may make available to prospective insureds any of the other Medicare supplement insurance plans as provided in §§ 20:06:13:17.05 and 20:06:13:17.06. The additional plans may not be offered in lieu of the basic core plan. The basic core benefits required for all benefit plans issued for delivery after July 16, 1992, and prior to June 1, 2010, are as follows:

(1) Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day to the 90th day, inclusive, in any Medicare benefit period;

(2) Coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;

(3) Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer's payment as payment in full and may not bill the insured for any balance;

(4) Coverage under Medicare Parts A and B for the reasonable cost of the first 3 pints of blood, or equivalent quantities of packed red blood cells, as defined under federal regulations, 42 C.F.R. § 409.87(a)(1) (October 1, 1991), unless replaced in accordance with federal regulations, 42 C.F.R. § 409.87(d);

(5) Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare-eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1999.

History

Source: 18 SDR 225, effective July 17, 1992; 26 SDR 26, effective September 1, 1999; 28 SDR 157, effective May 19, 2002; 31 SDR 214, effective July 6, 2005; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.04 Standards for additional benefits for 1990 standardized Medicare supplement plans

Standards for additional benefits for 1990 standardized Medicare supplement benefit plans.** The following additional benefits must be included in Medicare supplement benefit Plans B to J, inclusive, as described in § 20:06:13:17.06, issued for delivery after July 16, 1992, and prior to June 1, 2010:

(1) Medicare Part A deductible: Coverage for all of the Medicare Part A inpatient hospital deductible amount for each benefit period;

(2) Skilled nursing facility care: Coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for posthospital skilled nursing facility care eligible under Medicare Part A;

(3) Medicare Part B deductible: Coverage for all of the Medicare Part B deductible amount for each calendar year regardless of hospital confinement;

(4) Eighty percent of the Medicare Part B excess charges: Coverage for 80 percent of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1999, and the Medicare-approved Part B charge, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1999;

(5) One hundred percent of the Medicare Part B excess charges: Coverage for all of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1999, and the Medicare-approved Part B charge, 42 U.S.C. § 1395 et seq, as in effect on July 1, 1999;

(6) Basic outpatient prescription drug benefit: Coverage for 50 percent of outpatient prescription drug charges, after a deductible for each calendar year of $250, to a maximum of $1,250 in benefits received by the insured for each calendar year to the extent not covered by Medicare. The basic outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006;

(7) Extended outpatient prescription drug benefit: Coverage for 50 percent of outpatient prescription drug charges, after a deductible for each calendar year of $250, to a maximum of $3,000 in benefits received by the insured for each calendar year to the extent not covered by Medicare. The extended outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006;

(8) Medically necessary emergency care in a foreign country: Coverage to the extent not covered by Medicare for 80 percent of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician, and medical care received in a foreign country, if the care would have been covered by Medicare if provided in the United States and if the care began during the first 60 consecutive days of each trip outside the United States, subject to a deductible for each calendar year of $250 and a lifetime maximum benefit of $50,000. For purposes of this benefit, the term, emergency care, means care needed immediately because of an injury or an illness of sudden and unexpected onset;

(9) Preventive medical care benefit: Coverage for the following preventive health services not covered by Medicare:

(a) An annual clinical preventive medical history and physical examination that may include tests and services from subdivision (9)(b) of this section and patient education to address preventive health care measures;

(b) Preventive screening tests or preventive services, the selection and frequency of which is considered medically appropriate by the attending physician.

Reimbursement shall be for the actual charges to 100 percent of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in Current Procedural Coding Expert, 2008 , as published by the American Medical Association, to a maximum of $120 annually under this benefit. This benefit may not include payment for any procedure covered by Medicare;

(10) At-home recovery benefit: Coverage for services to provide short-term, at-home assistance with activities of daily living for those recovering from an illness, injury, or surgery. Requirements for this benefit are as follows:

(a) For purposes of this benefit, the following definitions apply:

(i) "Activities of daily living," including bathing, dressing, personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally self-administered, and changing bandages or other dressings;

(ii) "Care provider," qualified or licensed home health aide/homemaker, personal care aide, or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurses registry. A home health aide/homemaker, personal care aide, or nurse provided through a licensed home health care agency, referral agency, or nurses' registry is considered licensed pursuant to this section if qualified for Medicare reimbursement pursuant to 42 U.S.C. § 1395 et seq, as in effect on July 1, 1999;

(iii) "Home," any place used by the insured as a place of residence, if that place would qualify as a residence for home health care services covered by Medicare. A hospital or skilled nursing facility is not considered the insured's place of residence, 42 U.S.C. § 1395, et seq, as in effect on July 1, 1999;

(iv) "At-home recovery visit," the period of a visit required to provide at-home recovery care, without limit on the duration of the visit, except that each consecutive four hours in a 24-hour period of services provided by a care provider is one visit;

(b) Coverage requirements for this benefit are as follows:

(i) At-home recovery services provided must be primarily services which assist in activities of daily living;

(ii) The insured's attending physician must certify that the specific type and frequency of at-home recovery services are necessary because of a condition for which a home care plan of treatment was approved by Medicare;

(i) No more than the number and type of at-home recovery visits certified as necessary by the insured's attending physician. The total number of at-home recovery visits may not exceed the number of Medicare-approved home health care visits under a Medicare-approved home care plan of treatment;

(ii) The actual charges for each visit up to a maximum reimbursement of $40 a visit;

(iii) One thousand six hundred dollars for each calendar year;

(iv) Seven visits in any one week;

(v) Care furnished on a visiting basis in the insured's home;

(vi) Services provided by a care provider as defined in this section;

(vii) At-home recovery visits while the insured is covered under the policy or certificate and not otherwise excluded; and

(viii) At-home recovery visits received during the period the insured is receiving Medicare-approved home care services or no more than eight weeks after the service date of the last Medicare-approved home health care visit;

(d) Coverage is excluded for the following:

(i) Home care visits paid for by Medicare or other government programs; and

(ii) Care provided by family members, unpaid volunteers, or providers who are not care providers;

(11) New or innovative benefits: An issuer may, with the prior approval of the director, offer policies or certificates with new or innovative benefits in addition to the benefits provided in a policy or certificate that otherwise complies with the applicable standards. Such new or innovative benefits may include benefits that are applicable to Medicare supplement insurance, new or innovative, not otherwise available, cost-effective, and offered in a manner which is consistent with the goal of simplification of Medicare supplement policies. After December 31, 2005, the innovative benefit may not include an outpatient prescription drug benefit.

Reference: Current Procedural Coding Expert, 2008, American Medical Association. Copies may be obtained from Medicode, 5225 Wiley Post Way, Suite 500, Salt Lake City, UT 84116-2889; 1-800-999-4600; www.ingenixonline.com. Cost: $97.95.

History

Source: 18 SDR 225, effective July 17, 1992; 19 SDR 160, effective April 27, 1993; 22 SDR 107, effective February 18, 1996; 26 SDR 26, effective September 1, 1999; 27 SDR 53, 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 31 SDR 214, effective July 6, 2005; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.05 Requirements for standard Medicare supplement benefit plans

An issuer shall make available to each prospective policyholder and certificateholder a policy form or certificate form containing only the basic core benefits, as defined in § 20:06:13:17.03.

No groups, packages, or combinations of Medicare supplement benefits other than those listed in § 20:06:13:17.06 may be offered for sale in this state, except as permitted in §§ 20:06:13:17.02 to 20:06:13:17.04, inclusive, and §§ 20:06:13:63 to 20:06:13:76, inclusive.

Benefit plans must be uniform in structure, language, designation, and format to the standard benefit Plans A to L, inclusive, listed in § 20:06:13:17.06 and must conform to the definitions in SDCL chapter 58-17A and §§ 20:06:13:17.02 to 20:06:13:17.04, inclusive. Each benefit must be structured in accordance with the format provided in §§ 20:06:13:17.02 to 20:06:13:17.04, inclusive, and must list the benefits in the order shown in § 20:06:13:17.06. For purposes of this section, the phrase, structure, language, and format, means style, arrangement, and overall content of a benefit.

An issuer may use, in addition to the benefit plan designations required in this section, other designations to the extent permitted by this chapter.

History

Source: 18 SDR 225, effective July 17, 1992; 31 SDR 214, effective July 6, 2005; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.06 Make-up of standardized benefit plans

The requirements for the make-up of standardized Medicare supplement benefit plans issued for delivery after July 16, 1992, and prior to June 1, 2010, A to L, inclusive, are as follows:

(1) Standardized Medicare supplement benefit Plan A is limited to the basic core benefits common to all benefit plans, as defined in § 20:06:13:17.03;

(2) Standardized Medicare supplement benefit Plan B may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible as defined in § 20:06:13:17.04;

(3) Standardized Medicare supplement benefit Plan C may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.04;

(4) Standardized Medicare supplement benefit Plan D may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, medically necessary emergency care in a foreign country, and the at-home recovery benefit as defined in § 20:06:13:17.04;

(5) Standardized Medicare supplement benefit Plan E may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, medically necessary emergency care in a foreign country, and preventive medical care as defined in § 20:06:13:17.04;

(6) Standardized Medicare supplement benefit Plan F may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, the skilled nursing facility care, the Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.04;

(7) Standardized Medicare supplement benefit high deductible Plan F may include only the following: One hundred percent of covered expenses following the payment of the annual high deductible Plan F deductible. The covered expenses include the core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, the Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.04. The annual high deductible Plan F deductible consists of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement Plan F policy, and are in addition to any other specific benefit deductibles. The annual high deductible Plan F deductible is $1500 for 1998 and 1999, and is based on the calendar year. It is adjusted annually by the secretary to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars.

(8) Standardized Medicare supplement benefit Plan G may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, 80 percent of the Medicare Part B excess charges, medically necessary emergency care in a foreign country, and that at-home recovery benefit as defined in § 20:06:13:17.04;

(9) Standardized Medicare supplement benefit Plan H may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, basic prescription drug benefit, and medically necessary emergency care in a foreign country as defined § 20:06:13:17.04. The outpatient prescription drug benefit may not be included in a Medicare supplement policy sold after December 31, 2005;

(10) Standardized Medicare supplement benefit Plan I may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, 100 percent of the Medicare Part B excess charges, basic prescription drug benefit, medically necessary emergency care in a foreign country, and at-home recovery benefit as defined in § 20:06:13:17.04. The outpatient prescription drug benefit may not be included in a Medicare supplement policy sold after December 31, 2005;

(11) Standardized Medicare supplement benefit Plan J may include only the following: The core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, extended prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care, and at-home recovery benefit as defined in § 20:06:13:17.04. The outpatient prescription drug benefit may not be included in a Medicare supplement policy sold after December 31, 2005;

(12) Standardized Medicare supplement benefit high deductible Plan J consists of only the following: One hundred percent of covered expenses following the payment of the annual high deductible Plan J deductible. The covered expenses include the core benefit as defined in § 20:06:13:17.03, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, extended outpatient prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care benefit, and at-home recovery benefit as defined in § 20:06:13:17.04. The annual high deductible Plan J deductible consists of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement Plan J policy, and is in addition to any other specific benefit deductibles. The annual deductible is $1500 for 1998 and 1999, and shall be based on a calendar year. It is adjusted annually by the Secretary of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars. The outpatient prescription drug benefit may not be included in a Medicare supplement policy sold after December 31, 2005;

(13) Standardized Medicare supplement benefit Plan K shall consist of the following:

(a) Coverage of 100 percent of the Part A hospital coinsurance amount for each day used from the 61^st through the 90^th day in any Medicare benefit period;

(b) Coverage of 100 percent of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91^st through the 150^th day in any Medicare benefit period;

(c) Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer's payment as payment in full and may not bill the insured for any balance;

(d) Medicare Part A deductible: Coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in subdivision (j);

(e) Skilled nursing facility care: Coverage for 50 percent of the coinsurance amount for each day used from the 21^st day through the 100^th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in subdivision (j);

(f) Hospice care: Coverage for 50 percent of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in subdivision (j);

(g) Coverage for 50 percent, under Medicare Part A or B, or the reasonable cost of the first three pints of blood, or equivalent quantities of packed red blood cells, unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in subdivision (j);

(h) Except for coverage provided in subdivision (i) below, coverage for 50 percent of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in subdivision (j);

(i) Coverage of 100 percent of the cost sharing for Medicare Part B preventative services after the policyholder pays the Part B deductible; and

(j) Coverage of 100 percent of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of $4000 in 2006, indexed each year by the appropriate inflation adjustment specified by the secretary;

(14) Standardized Medicare supplement benefit Plan L shall consist of the following:

(a) The benefits described in subdivisions 20:06:13:17.06(13)(a), (13)(b), (13)(c), and (13)(i);

(b) The benefits described in subdivisions 20:06:13:17.06(13)(d), (13)(e), (13)(f), (13)(g), and (13)(h), with 75 percent substituted for 50 percent; and

History

Source: 18 SDR 225, effective July 17, 1992; 19 SDR 160, effective April 27, 1993; 25 SDR 44, effective September 30, 1998; 31 SDR 214, effective July 6, 2005; 35 SDR 183, effective February 2, 2009; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17A-2(9).
Law Implemented: SDCL 58-17A-2(9).

ARSD 20:06:13:17.07 Suspension of coverage during period of eligibility for Medicaid

A Medicare supplement policy or certificate must provide that benefits and premiums under the policy be suspended at the request of the policyholder or certificateholder for not more than 24 months if the policyholder or certificateholder applies for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act (Medicaid) and if the policyholder or certificateholder notifies the issuer of the policy or certificate within 90 days after the date the individual becomes entitled to Medicaid assistance. Upon receipt of timely notice, the issuer shall return to the policyholder or certificateholder that portion of the premium attributable to the period of Medicaid eligibility, subject to adjustment for paid claims. This section applies to 1990 standardized Medicare supplement benefit plans as well as 2010 standardized Medicare supplement benefit plans.

Cross-Reference: Medicaid eligibility, art 67:16.

History

Source: 18 SDR 225, effective July 17, 1992; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.08 Reinstitution of coverage following loss of eligibility for Medicaid

If suspension of Medicare supplement coverage occurs for a period of eligibility for Medicaid and if the policyholder or certificateholder loses entitlement to Medicaid, the policy or certificate shall be automatically reinstituted effective as of the date of termination of entitlement if the policyholder or certificateholder provides notice of loss of entitlement to Medicaid within 90 days after the date of the loss and pays the premium attributable to the period, effective as of the date of termination of entitlement.

Reinstitution of Medicare supplement coverage must comply with the following requirements:

(1) The coverage may not provide for any waiting period for treatment of preexisting conditions;

(2) The coverage must be substantially equivalent to coverage in effect before the date of suspension. If the suspended policy or certificate provided coverage for outpatient prescription drugs, reinstitution of the policy or certificate for Medicare part D enrollees shall be without coverage for outpatient prescription drugs and shall otherwise provide substantially equivalent coverage to the coverage in effect before the date of suspension; and

(3) The coverage must provide for classification of premiums on terms at least as favorable to the policyholder or certificateholder as the premium classification terms that would have applied to the policyholder or certificateholder had the coverage not been suspended. This section applies to 1990 standardized Medicare supplement benefit plans as well as 2010 standardized Medicare supplement benefit plans.

History

Source: 18 SDR 225, effective July 17, 1992; 31 SDR 214, effective July 6, 2005; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.09 Suspension requested by policyholder

Each Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended for a period at the request of the policyholder if the policyholder is entitled to benefits under § 226(b) of the Social Security Act and is covered under a group health plan as defined in § 1862(b)(1)(a)(v) of the Social Security Act. The period of suspension shall be for a period as prescribed by the director. The director shall consider any pertinent federal regulations in determining the time period. If suspension occurs and then the policyholder or certificateholder loses coverage under the group health plan, the policy shall be automatically reinstituted, effective as of the date of loss of coverage. However, the policyholder must, in order to have the policy automatically reinstituted, provide to the issuer of the suspended coverage notice of loss of coverage within 90 days after the date of such loss of coverage and pay the premium attributable to the period, effective as of the date of termination of enrollment in the group health plan. If the suspended policy provided coverage for outpatient prescription drugs, reinstitution of the policy or certificate for Medicare Part D enrollees shall be without coverage for outpatient prescription drugs and shall otherwise provide substantially equivalent coverage to the coverage in effect before the date of suspension.

Reinstitution of Medicare supplement coverage must comply with the following requirements:

(1) The coverage may not provide for any waiting period for treatment of preexisting conditions;

(2) The coverage must be substantially equivalent to coverage in effect before the date of suspension. If the suspended policy or certificate provided coverage for outpatient prescription drugs, reinstitution of the policy or certificate for Medicare Part D enrollees shall be without coverage for outpatient prescription drugs and shall otherwise provide substantially equivalent coverage to the coverage in effect before the date of suspension; and

This section applies to 1990 standardized Medicare supplement benefit plans as well as 2010 standardized Medicare supplement benefit plans.

History

Source: 27 SDR 53, effective December 4, 2000; 28 SDR 157, effective May 19, 2002; 31 SDR 214, effective July 6, 2005; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2(18).
Law Implemented: SDCL 58-17A-2(18).

ARSD 20:06:13:17.10 Prescription drug benefits under Medicare supplement plans

The following provisions apply to Medicare supplement plans:

(1) A Medicare supplement plan with benefits for outpatient prescription drugs in existence prior to January 1, 2006, shall be renewed for current policyholders who do not enroll in Medicare Part D at the option of the insured subject to §§ 20:06:13:19, 20:06:13:56, 20:06:13:60 and 20:06:13:60.01;

(2) A Medicare supplement plan with benefits for outpatient prescription drugs may not be issued after December 31, 2005;

(3) After December 31, 2005, a Medicare supplement policy with benefits for outpatient prescription drugs may not be renewed after the policyholder enrolls in Medicare Part D unless:

(a) The policy is modified to eliminate outpatient prescription drug coverage for expenses of outpatient prescription drugs incurred after the effective date of the individual's coverage under a Medicare Part D plan; and

(b) Premiums are adjusted to reflect the elimination of outpatient prescription drug coverage at the time of Medicare Part D enrollment, accounting for any claims paid, if applicable.

This section applies to 1990 standardized Medicare supplement benefit plans.

History

Source: 31 SDR 214, effective July 6, 2005; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.11 General standards for standardized Medicare supplement benefit plan -- Issued for delivery after May 31, 2010

The following standards apply to Medicare supplement policies and certificates issued for delivery after May 31, 2010, and are in addition to all other requirements of this chapter:

(1) A Medicare supplement policy or certificate may not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents;

(2) A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible, copayment, or coinsurance amounts. Premiums may be modified to correspond with such changes;

(3) No Medicare supplement policy or certificate may provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium;

(4) Each Medicare supplement policy shall be guaranteed renewable:

(a) The issuer may not cancel or nonrenew the policy solely on the ground of health status of the individual;

(b) The issuer may not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation;

(c) If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided in subsection e, the issuer shall offer certificateholders an individual Medicare supplement policy which at the option of the certificateholder:

(i) Provides for continuation of the benefits contained in the group policy; or

(ii) Provides for benefits that otherwise meet the requirements of this subsection;

(d) If an individual is a certificateholder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall:

(i) Offer the certificateholder the conversion opportunity described in § 20:06:13:56; or

(ii) At the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy;

(e) If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy does not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced;

(5) Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.12 Standards for basic core benefits common to Medicare supplement insurance benefit Plans A, B, C, D, F, F with High Deductible, G. M. and N

Standards for basic core benefits common to Medicare supplement insurance benefit Plans A, B, C, D, F, F with High Deductible, G, M, and N.** Every issuer of Medicare supplement insurance benefit plans shall make available a policy or certificate including only the following basic core package of benefits to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare Supplement Insurance Benefit Plans in addition to the basic core package, but not in lieu of it. The following benefits must be included in policies or certificates issued for delivery after May 31, 2010:

(1) Coverage of Part A Medicare eligible expenses for hospitalization to the extent not covered by Medicare from the 61^st day through the 90^th day in any Medicare benefit period;

(2) Coverage of Part A Medicare eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used;

(4) Coverage under Medicare Parts A and B for the reasonable cost of the first three pints of blood or equivalent quantities of packed red blood cells, federal regulations 42 C.F.R 409.87(a)(1) unless replaced in accordance with federal regulations 42 C.F.R. § 409.87(d);

(5) Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible;

(6) Coverage of cost sharing for all Part A Medicare eligible hospice care and respite care expenses.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.13 Standards for additional benefits

The following additional benefits shall be included in Medicare supplement benefit Plans B, C, D, F, F with High Deductible, G, M, and N as described in § 20:06:13:17.11:

(1) Medicare Part A Deductible: Coverage for 100 percent of the Medicare Part A inpatient hospital deductible amount per benefit period;

(2) Medicare Part A Deductible: Coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period;

(3) Skilled Nursing Facility Care: Coverage for the actual billed charges up to the coinsurance amount from the 21^st day through the 100^th day in a Medicare benefit period for post-hospital skilled nursing facility care eligible under Medicare Part A;

(4) Medicare Part B Deductible: Coverage for 100 percent of the Medicare Part B deductible amount per calendar year regardless of hospital confinement;

(5) One Hundred Percent of the Medicare Part B excess charges: Coverage for all of the difference between the actual Medicare Part B charges as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge;

(6) Medically Necessary Emergency Care in a Foreign Country: Coverage to the extent not covered by Medicare for 80 percent of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician, and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first 60 consecutive days of each trip outside the United States, subject to a calendar year deductible of $250, and a lifetime maximum benefit of $50,000. For purposes of this benefit, the term, emergency care, means care needed immediately because of an injury or an illness of sudden and unexpected onset.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.14 Requirements for standard Medicare supplement benefit plans -- Plans issued after May 31, 2010

An issuer shall make available to each prospective policyholder and certificateholder a policy form or certificate form containing only the basic core benefits, as defined in § 20:06:13:17.12.

If an issuer makes available any of the additional benefits described in § 20:06:13:17.13, or offers standardized benefit Plans K or L, then the issuer shall make available to each prospective policyholder and certificateholder, in addition to a policy form or certificate form with only the core benefits, a policy form or certificate containing either standardized benefit Plan C or standardized benefit Plan F.

No groups, packages, or combinations of Medicare supplement benefits other than those listed in this chapter shall be offered for sale in this state.

Benefit plans shall be uniform in structure, language, designation, and format to the standard benefit plans listed in this section and conform to the definitions in § 20:06:13:02. Each benefit shall be structured in accordance with the format provided in §§ 20:06:13:17.12 and 20:06:13:17.13. For purposes of this section, structure, language, and format means style, arrangement, and overall content of a benefit.

In addition to the benefit plan designations required in this section, an issuer may use other designations to the extent permitted by law.

History

Source: 35 SDR 183, effective February 2, 2009; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.15 Make-up of standardized benefit plans -- Issued after May 31, 2010

The requirements for the make-up of standardized Medicare supplement benefit Plans A to L, inclusive, are as follows:

(1) Standardized Medicare supplement benefit Plan A shall include only the following: The core benefits as defined in § 20:06:13:17.12;

(2) Standardized Medicare supplement benefit Plan B shall include the following: The basic core benefit as defined in § 20:06:13:17.12, plus 100 percent of the Medicare Part A deductible as defined in § 20:06:13:17.13;

(3) Standardized Medicare supplement benefit Plan C shall include only the following: The basic core benefit as defined in § 20:06:13:17.12, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, one hundred percent of the Medicare Part B deductible, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.13;

(4) Standardized Medicare supplement benefit Part D shall include only the following: The core benefit as defined in § 20:06:13:17.12, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.13;

(5) Standardized Medicare supplement regular Plan F shall include only the following: The core benefit as defined in § 20:06:13:17.12, plus 100 percent of the Medicare Part A deductible, the skilled nursing facility care, one hundred percent of the Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.13;

(6) Standardized Medicare supplement Plan F with High Deductible shall include only the following: 100 percent of covered expenses following the payment of the annual deductible set forth in subsection (b):

(a) The basic core benefit as defined in § 20:06:13:17.12, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, 100 percent of the Medicare Part B deductible, 100 percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.12(1),(3),(4),(5), and (6);

(b) The annual deductible in Plan F with High Deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by regular Plan F, and shall be in addition to any other specific benefit deductibles. The basis for the deductible shall be $1,500 and shall be adjusted annually from 1999 by the Secretary of the U.S. Department of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars;

(7) Standardized Medicare supplement benefit Plan G shall include only the following: The core benefit as defined in § 20:06:13:17.12, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, one hundred percent of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.13. After December 31, 2019, the standardized benefit plans described in § 20:06:13:17.16(4) (redesignated Plan G High Deductible) may be offered to any individual who was eligible for Medicare after December 31, 2019;

(8) Standardized Medicare supplement Plan K, which is mandated by The Medicare Prescription Drug Improvement and Modernization Act of 2003, shall include only the following:

(a) Part A Hospital Coinsurance 61^st through 90^th days: Coverage of 100 percent of the Part A hospital coinsurance amount for each day used from the 61^st to the 90^th day, inclusive, in any Medicare benefit period;

(b) Part A Hospital Coinsurance, 91^st through 150^th days: Coverage of 100 percent of the Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91^st to the 150^th day, inclusive, in any Medicare benefit period;

(c) Part A Hospitalization after Lifetime Reserve Days are exhausted: Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of 100 percent of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer's payment as payment in full and may not bill the insured for any balance;

(d) Medicare Part A Deductible: Coverage for 50 percent of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in subsection (j);

(e) Skilled Nursing Facility Care: Coverage for 50 percent of the coinsurance amount for each day used from the 21^st day to the 100^th day, inclusive, in a Medicare benefit period for posthospital skilled nursing facility care eligible under Medicare Part A, until the out-of-pocket limitation is met as described in subsection (j);

(f) Hospice Care: Coverage for 50 percent of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in subsection (j);

(g) Blood: Coverage for 50 percent, under Medicare Part A or B, of the reasonable cost of the first three pints of blood or equivalent quantities of packed red blood cells, as defined under federal regulations 42 C.F.R. § 409.87(a) unless replaced in accordance with federal regulations 42 C.F.R. § 409.87(d) until the out-of-pocket limitation is met as described in subsection (j);

(h) Part B Cost Sharing: Except for coverage provided in subsection (i), coverage for 50 percent of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in subsection (j);

(i) Part B Preventive Services: Coverage of 100 percent of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and

(j) Cost Sharing after Out-of-Pocket Limits: Coverage of 100 percent of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B or $4000 in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary of the U.S. Department of Health and Human Services;

(9) Standardized Medicare supplement Plan L, which mandated by The Medicare Prescription Drug Improvement and Modernization Act of 2003, and shall include only the following:

(a) The benefits described in § 20:06:13:17.15(8)(a),(b),(c), and (i);

(b) The benefit described in § 20:06:13:17.15(8)(d),(e),(f),(g), and (h), but substituting 75 percent for 50 percent; and

(10) Standardized Medicare supplement Plan M shall include only the following: The core benefit as defined in § 20:06:13:17.12, plus 50 percent of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.13;

(11) Standardized Medicare supplement Plan N shall include only the following: The basic core benefit as defined in § 20:06:13:17.12, plus 100 percent of the Medicare Part A deductible, skilled nursing facility care, and medically necessary emergency care in a foreign country as defined in § 20:06:13:17.13, with copayments in the following amounts:

(a) The lesser of $20 or the Medicare Part B coinsurance or copayment for each covered health care provider office visit, including visits to medical specialists; and (b) the lesser of fifty dollars or the Medicare Part B coinsurance or copayment for each covered emergency room visit. However, this copayment shall be waived if the insured is admitted to any hospital and the emergency visit is subsequently covered as a Medicare Part A expense.

History

Source: 35 SDR 183, effective February 2, 2009; 36 SDR 209, effective July 1, 2010; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:17.16 Standard Medicare supplement benefit plans for 2020 standardized Medicare supplement benefit plan policies or certificates issued for delivery to individuals newly eligible for Medicare after December 31, 2019

20 : 06 : 13 : 17.16 . Standard Medicare supplement benefit plans for 20 2 0 standardized Medicare supplement benefit plan policies or certificates issued for delivery to individuals newly eligible for Medicare after December 31, 2019. No policy or certificate that provides coverage for the Medicare Part B deductible may be advertised, solicited, delivered or issued for delivery in this state as a Medicare supplement policy or certificate to individuals newly eligible for Medicare after December 31, 2019.

An individual who, after December 31, 2019, becomes newly eligible for Medicare upon reaching the age of 65, becomes newly entitled to benefits under Medicare Part A pursuant to section 226(b) or 226A of the Social Security Act, or becomes newly eligible for benefits under section 226(a) of the Social Security Act may only be offered, delivered, or issued for delivery in this state a Medicare supplement policy or certificate that complies with the standards and requirements of §§ 20:06:13:17.14 and 20:06:13:17.15, with the following exceptions:

(1) Standardized Medicare supplement benefit Plan C is redesignated as Plan D and must provide the benefits contained in subdivision 20:06:13:17:15(3) except coverage for any portion of the Medicare Part B deductible;

(2) Standardized Medicare supplement benefit Plan F is redesignated as Plan G and must provide the benefits contained in subdivision 20:06:13:17:15(5) except coverage for any portion of the Medicare Part B deductible;

(3) Standardized Medicare supplement benefit plans C, F, and F with High Deductible may not be offered to individuals newly eligible for Medicare after December 31, 2019;

(4) Standardized Medicare supplement benefit Plan F With High Deductible is redesignated as Plan G With High Deductible and must provide the benefits contained in subdivision 20:06:13:17:15(6), except coverage for the Medicare Part B deductible, and the Medicare Part B deductible paid by the beneficiary must be considered an out-of-pocket expense in meeting the annual high deductible; and

(5) The reference to Plans C or F contained in § 20:06:13:17.14 is a reference to Plans D or G.

After December 31, 2019, the standardized benefit plans described above may be offered to any individual who was eligible for Medicare on or prior to January 1, 2020, in addition to the standardized plans described in § 20:06:13:17.15.

History

Source: 44 SDR 184, effective June 25, 2018; 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:18 Premium adjustments to match Medicare benefit adjustments

Premiums may be adjusted to correspond to changes in Medicare deductible and copayment percentage factors. Before a rate adjustment can be implemented, the rate adjustment must have prior approval from the division. Approval will be based on the percentage of increase requested, prior experience, and an explanation of how the percentage of increase was derived.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-17A-2, 58-17A-5.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:19 Renewability

An insurer may not reserve the right not to renew a policy. A noncancellable, guaranteed renewable, or noncancellable and guaranteed renewable policy may not:

(1) Terminate coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium; or

(2) Be cancelled or nonrenewed by the insurer solely on the grounds of deterioration of health.

If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this section. This section applies to 1990 standardized Medicare supplement benefit plans as well as 2010 standardized Medicare supplement benefit plans.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 17 SDR 58, effective October 29, 1990; 31 SDR 214, effective July 6, 2005; 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:20 Extended benefits on termination of insurance

The payment of benefits shall be continued beyond the termination of insurance if a loss began while the policy was in force and continues past termination. The extension of benefits beyond termination may be predicated on continuous total disability of the insured. Limits on the duration of the policy benefit period or maximum benefit amounts, if any, may be applied to coverage past termination. Receipt of Medicare part D benefits may not be considered in determining a continuous loss.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 17 SDR 58, effective October 29, 1990; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:21 Loss ratio standards

A Medicare supplement policy form or certificate form may not be delivered or issued for delivery in this state unless the policy form or certificate form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return the following to policyholders and certificateholders in the form of aggregate benefits provided under the policy form or certificate form, not including anticipated refunds or credits, at least 75 percent of the aggregate amount of premiums earned in the case of group policies or at least 65 percent of the aggregate amount of premiums earned in the case of individual policies.

The ratios in this section shall be based on incurred claims experience or incurred health care expenses if coverage is provided by a health maintenance organization on a service rather than reimbursement basis and on earned premiums for the period in accordance with accepted actuarial principles and practices. Incurred health care expenses where coverage is provided by a health maintenance organization may not include home office and overhead costs; advertising costs; commissions and other acquisition costs; taxes; capital costs; administrative costs; and claim processing costs.

All filings of rates and rating schedules must demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Filings of rate revisions must also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the applicable loss ratio standards. Policies issued as a result of solicitations of individuals through the mail or by mass media advertising, including both print and broadcast advertising, shall be deemed to be individual policies.

For policies issued before July 17, 1992, expected claims in relation to premiums must meet the following requirements:

(1) The originally filed anticipated loss ratio when combined with the actual experience since inception;

(2) The applicable loss ratio requirement from the first paragraph of this section, when combined with actual experience to date, beginning with the effective date of this amendment; and

(3) The applicable loss ratio requirement from the first paragraph of this section over the entire future period for which the rates are computed to provide coverage.

In meeting these requirements and for the purpose of attaining credibility, an insurer may combine experience under policy forms which provide substantially similar coverage. Once a combined form is adopted, the insurer may not separate the experience except with the approval of the director.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 18 SDR 225, effective July 17, 1992; 19 SDR 160, effective April 27, 1993; 22 SDR 107, effective February 18, 1996; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 53, 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 31 SDR 214, effective July 6, 2005; 33 SDR 59, effective October 5, 2006; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:21.01 Refund or credit calculation

An issuer shall collect and file with the director by May 31 of each year the data required on the forms in Appendix A at the end of this chapter for each type in a standard Medicare supplement benefit plan.

If, on the basis of the experience as reported, the benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), a refund or credit calculation is required. The refund or credit calculation shall be done on a statewide basis for each type in a standard Medicare supplement benefit plan. For purposes of the refund or credit calculation, experience on policies issued with the reporting year shall be excluded.

For purposes of this section, for policies or certificates issued before July 17, 1992, the issuer shall make the refund or credit calculation separately for all individual policies combined, including all group policies subject to an individual loss ratio standard when issued, and all other group policies combined for experience after the effective date of this amendment. The first such report affected by this paragraph is due May 31, 1998.

The issuer may refund or credit only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds the sum of $5. The refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the secretary of health and human services, but it may not be less than the average rate of interest for 13-week treasury notes on the date of refund or credit calculation as established by the federal reserve board and published in the Wall Street Journal. The issuer shall make a refund or credit against premiums due by September 30 following the experience year upon which the refund or credit is based.

Cross-Reference: Combination of experience for calculation of refund or credit, § 20:06:13:22.06.

Notes: As of the effective date of this rule, the secretary of the U.S. Department of Health and Human Services had not specified an interest rate.

Forms may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, SD 57501, (605) 773-3563, free of charge.

History

Source: 18 SDR 225, effective July 17, 1992; 22 SDR 107, effective February 18, 1996; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:22 Annual filing of premium rates

An issuer of Medicare supplement policies and certificates issued either before or after the effective date of this rule must file its rates, rating schedule, and supporting documentation annually, including ratios of incurred losses to earned premiums by policy duration, for approval by the director in accordance with SDCL 58-17A-4, 58-17-4.1, 58-17-4.2, ARSD chapter 20:06:22, and this chapter. The supporting documentation must also demonstrate in accordance with actuarial standards of practice using reasonable assumptions that the applicable loss ratio standards can be expected to be met over the entire period for which rates are computed. The demonstration shall exclude active life reserves. An expected third-year loss ratio which is greater than or equal to the applicable percentage must be demonstrated for policies or certificates in force less than 3 years.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:22.01 Filing of premium adjustments after Medicare benefit change

As soon as practicable, but prior to the effective date of enhancements in Medicare benefits, each issuer of Medicare supplement policies or certificates in this state shall file the following with the director, in accordance with the applicable provisions of SDCL 58-17A-4, 58-17-4.1, 58-17-4.2, ARSD chapter 20:06:22, and this chapter:

(1) The premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or certificates. Supporting documents necessary to justify the adjustment must accompany the filing.

An issuer shall make the premium adjustments necessary to produce an expected loss ratio under the policy or certificate that will conform with minimum loss ratio standards for Medicare supplement policies in § 20:06:13:21 and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for the Medicare supplement policies or certificates. No premium adjustment which would modify the loss ratio experience under the policy other than the adjustments described in this section may be made to a policy at any time other than upon its renewal date or anniversary date.

If an issuer fails to make premium adjustments acceptable to the director, the director may order premium adjustments, refunds, or premium credits considered necessary to achieve the loss ratio required by this section;

(2) Any riders, endorsements, or policy forms needed to accomplish the Medicare supplement policy or certificate modifications necessary to eliminate benefit duplications with Medicare. The riders, endorsements, or policy forms must provide a clear description of the Medicare supplement benefits provided by the policy or certificate.

History

Source: 15 SDR 143, effective March 29, 1989; 16 SDR 174, effective May 2, 1990; 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:22.02 Public hearings

The director may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate for a policy form or certificate form issued either before or after the effective date of this rule if the experience of the form for the previous reporting period is not in compliance with the applicable loss ratio standard. The determination of compliance is made without consideration of any refund or credit for the reporting period. Public notices of the hearing shall be furnished by the director in compliance with SDCL 1-26-16.

History

Source: 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:22.03 Filing and approval of policies and certificates and of premium rates required

An issuer may not deliver or issue for delivery a policy or certificate to a resident of this state unless the policy form or certificate form has been filed with and approved by the director in accordance with SDCL 58-17A-4, 58-17-4.1, 58-17-4.2, ARSD chapter 20:06:22 and this chapter.

An issuer may not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule, and supporting documentation have been filed with and approved by the director in accordance with the applicable provisions of SDCL 58-17A-4, 58-17-4.1, 58-17-4.2, ARSD chapter 20:06:22, and this chapter.

An issuer shall not present for filing or approval a rate structure for its Medicare supplement policies or certificates issued after January 1, 2006, based upon a structure or methodology with any groupings of attained ages greater than one year. The ratio between rates for successive ages shall increase smoothly as age increases.

History

Source: 18 SDR 225, effective July 17, 1992; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-4-1, 58-17A-2, 58-17A-5.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:22.04 One policy or certificate form allowed -- Exceptions

An issuer may not file for approval more than one form of a policy or certificate of each type for each standard Medicare supplement benefit plan except as provided in this section.

An issuer may offer, with the approval of the director, up to four additional policy forms or certificate forms of the same type for the same standard Medicare supplement benefit plan, one for each of the following cases:

(1) The inclusion of new or innovative benefits;

(2) The addition of either direct response or agent marketing methods;

(3) The addition of either guaranteed issue or underwritten coverage; and

(4) The offering of coverage to individuals eligible for Medicare by reasons of disability.

History

Source: 18 SDR 225, effective July 17, 1992; 19 SDR 160, effective April 27, 1993.
General Authority: SDCL 58-4-1, 58-17A-2, 58-17A-5.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:22.05 Discontinuance of availability

An issuer shall continue to make available for purchase any policy form or certificate form issued after the effective date of this rule that has been approved by the director, unless the issuer notifies the director of its discontinuance in accordance with this section. A policy form or certificate form is not considered to be available for purchase unless the issuer has actively offered it for sale in the previous 12 months.

An issuer may discontinue the availability of a policy form or certificate form if the issuer provides notice of its decision to do so to the director in writing at least 30 days prior to discontinuance. After receipt of the notice by the director, the issuer may no longer offer for sale the policy form or certificate form in this state.

An issuer that discontinues the availability of a policy form or certificate form pursuant to the notice procedure in this section may not file for approval a new policy form or certificate form of the same type for the same standard Medicare supplement benefit plan as the discontinued form for five years after the issuer provides notice to the director of the discontinuance. The period of discontinuance may be reduced by the director at the director's discretion.

The sale or other transfer of Medicare supplement business to another issuer is considered a discontinuance for the purposes of this section.

A change in the rating structure or methodology is considered a discontinuance under the first paragraph of this section unless the issuer provides an actuarial memorandum describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and existing rates; and the issuer does not subsequently put into effect a change of rates or rating factors that would cause a change in the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum. The director may approve a change to the differential which is in the public interest.

History

Source: 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-4-1, 58-17A-2, 58-17A-5.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:22.06 Combination of experience for calculation of refund or credit

The experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or credit calculation prescribed in § 20:06:13:21.01. Forms assumed under an assumption reinsurance agreement may not be combined with the experience of other forms for purposes of the refund or credit calculation.

History

Source: 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-4-1, 58-17A-2, 58-17A-5.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:22.07 New or innovative benefits -- Policy or certificate form allowed -- Exceptions -- Issued after May 31, 2010

An issuer may, with the prior approval of the director, offer policies or certificates with new or innovative benefits in addition to the standardized benefits provided in a policy or certificate that otherwise complies with the applicable standards. Such new or innovative benefits shall include only benefits that are applicable to Medicare supplement insurance, are new or innovative, are not otherwise available, and are cost-effective. Approval of new or innovative benefits shall not adversely impact the goal of Medicare supplement simplification. New or innovative benefits shall not include an outpatient prescription drug benefit. New or innovative benefits shall not be used to change or reduce benefits, including a change of any cost-sharing provision, in any standardized plan.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-4-1, 58-17A-2, 58-17A-5.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:23 Repealed

Rate increases.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; repealed, 18 SDR 225, effective July 17, 1992.

ARSD 20:06:13:24 Disclosure of preexisting conditions

A policy containing a preexisting condition limitation shall display the preexisting condition limitation as a separate paragraph labeled "Preexisting Condition Limitations."

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 174, effective May 2, 1990.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:25 Increased benefits after issue

A rider attached to a policy after issue which increases benefits with an increase in premium shall be agreed to in writing and signed by the insured. This section does not apply to increases in benefits required by law, increases to meet changes in Medicare deductibles or copayments, or increases in benefits requested by the insured in writing.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:26 Separate additional premium disclosure

A rider or endorsement requiring an additional premium shall display its premium prominently in the policy. The premium may not be displayed as part of an aggregate premium.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:27 Buyer's guide

Issuers of accident and sickness policies or certificates which provide hospital or medical expense coverage on an expense-incurred or indemnity basis to persons eligible for Medicare shall provide to applicants a copy of the most recent guide as approved by the director in a type size no smaller than 12-point type.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 18 SDR 225, effective July 17, 1992; 19 SDR 160, effective April 27, 1993; 22 SDR 107, effective February 18, 1996; 23 SDR 236, effective July 13, 1997; 26 SDR 26, effective September 1, 1999; 27 SDR 53, 27 SDR 54, effective December 4, 2000; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17A-6.
Law Implemented: SDCL 58-17A-6.

ARSD 20:06:13:28 Delivery of buyer's guide

A policy sold through an agent shall include a buyer's guide at the time of application. The agent shall obtain a signed acknowledgment of receipt from the applicant. The insurer shall maintain the acknowledgment of receipt on file for five years. The insurer shall make the file, in whole or part, accessible to the division on request.

Direct response insurers shall deliver a buyer's guide to the applicant upon request. The offer to provide a buyer's guide to the applicant shall be in writing on the application unless a buyer's guide is delivered to all insured. A requested buyer's guide may not be delivered later than the time of delivery of the policy.

Delivery of the buyer's guide shall be made whether or not such policies or certificates are advertised, solicited, or issued as Medicare supplement policies or certificates as defined in this chapter. Except for direct response issuers, delivery of the buyer's guide shall be made to the applicant at the time of application and acknowledgment of receipt of the buyer's guide shall be obtained by the issuer. Direct response issuers shall deliver the buyer's guide to the applicant upon request, but not later than at the time the policy is delivered.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 18 SDR 225, effective July 17, 1992; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17A-6.
Law Implemented: SDCL 58-17A-6.

ARSD 20:06:13:29 Use of term "Medicare supplement."

A policy or insurance contract not in compliance with this chapter may not use the terms "Medicare supplement," "medigap," "Medicare wrap-around," or words of similar meaning and may not be advertised, solicited, or issued for delivery in this state as a Medicare supplement policy. "Medicare" must be defined in the policy.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:30 Disclosure requirements for policies or subscriber contracts that are not Medicare supplement policies

Any issuer selling an accident and sickness insurance policy or subscriber contract, other than a Medicare supplement policy or a risk-sharing contract or reasonable cost reimbursement contract; a Medicare Advantage policy; disability income policy; or certificates issued under group Medicare supplement policies or subscriber contracts which have been delivered or issued for delivery in this state to persons eligible for Medicare shall notify insureds that the policy, certificate, or subscriber contract is not a Medicare supplement policy.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 17 SDR 58, effective October 29, 1990; 18 SDR 225, effective July 17, 1992; 23 SDR 236, effective July 13, 1997; 27 SDR 53, effective December 4, 2000; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17A-7.
Law Implemented: SDCL 58-17A-7.

ARSD 20:06:13:31 Notice requirements for policies or certificates that are not Medicare supplement policies

The disclosure notice required by § 20:06:13:30 must be in at least twelve-point type. The notice must be printed on or attached to the first page of the policy, subscriber contract, or certificate or the first page of an outline of coverage under a policy, subscriber contract, or certificate if an outline is provided at the time of application. The notice must contain the following language:

"THIS (POLICY OR CERTIFICATE) IS NOT A MEDICARE SUPPLEMENT (POLICY OR CONTRACT). If you are eligible for Medicare, review the [insert the most recent guide as approved by the director] available from the company."

Applications provided to persons eligible for Medicare for the health insurance policies or certificates described in § 20:06:13:30 must disclose, using the applicable statement in Appendix E at the end of this chapter, the extent to which the policy duplicates Medicare. Disclosure used by an issuer must be in substantially the same form and in no less than twelve-point type. For purposes of this section, "form" means the language, format, type size, type proportional spacing, bold character, line spacing, and usage of boxes around text. The issuer shall provide the disclosure statement as a part of, or together with, the application for the policy or certificate.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 17 SDR 58, effective October 29, 1990; 18 SDR 225, effective July 17, 1992; 22 SDR 107, effective February 18, 1996; 23 SDR 236, effective July 13, 1997; 26 SDR 26, effective September 1, 1999; 27 SDR 53, 27 SDR 54, effective December 4, 2000; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17A-7.
Law Implemented: SDCL 58-17A-7.

ARSD 20:06:13:31.01 Disclosure requirements for Medicare supplement policies -- Riders and endorsements

Medicare supplement policies shall include a renewal, continuation, or nonrenewal provision. The language or specifications of the provision must be consistent with the type of contract to be issued. The provision must be captioned as applicable, must appear on the cover page of the policy, and must clearly state the duration, limitations, or terms of renewal, continuation, or nonrenewal of the policy, any reservation by the issuer of the right to change premiums, and any automatic renewal premium increases based on the policyholder's age.

Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured or exercises a specifically reserved right under a Medicare supplement policy, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits, all riders or endorsements added to a Medicare supplement policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require a signed acceptance by the insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing signed by the insured, unless the increased benefits or coverage is required by changes to the minimum benefit standards in § 20:06:13:17 or required by law. If a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium must be set forth in the policy.

History

Source: 15 SDR 143, effective March 29, 1989; 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-17A-7.
Law Implemented: SDCL 58-17A-7.

ARSD 20:06:13:31.02 "Usual," "customary," and "reasonable" requirements prohibited

Medicare supplement policies or certificates may not provide for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or words of similar import.

History

Source: 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-17A-7.
Law Implemented: SDCL 58-17A-7.

ARSD 20:06:13:31.03 Right of return

Medicare supplement policies and certificates shall have a notice prominently printed on the first page of the policy or certificate, or attached thereto, stating in substance that the policyholder or certificateholder has the right to return the policy or certificate within 30 days after its delivery and to have the premium refunded if, after examination of the policy or certificate, the insured person is not satisfied for any reason.

History

Source: 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:32 Requirements concerning application forms and replacement coverage

Application forms must include the following statements and questions which are designed to elicit information as to whether, as of the date of the application, the applicant currently has Medicare supplement, Medicare Advantage, Medicaid coverage, or another health insurance policy or certificate in force, or whether a Medicare supplement policy or certificate is intended to replace any other accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and agent containing such questions and statements may be used. Unless coverage is direct marketed, the agent must ask and record the answers to all questions on the forms. In the case of a direct response issuer, a copy of the application or supplemental form, signed by the applicant and acknowledged by the issuer, must be returned to the applicant by the issuer upon delivery of the policy.

In lieu of the agent's recording all of the applicant's responses, an insurer may record or make contractual arrangements for persons other than agents to record the applicant's responses. Prior to issuance of coverage, the insurer, agent, or contractor involved in the application process must ask all remaining application questions and such persons must accurately record the applicant's responses to each of the applicable questions in the application. The insurer is responsible for any failure to ask and accurately record the applicant's responses to each applicable question. The privacy requirements outlined in chapter 20:06:45 and the Medicare Supplement marketing restrictions outlined in § 20:06:13:58 apply to such arrangements.

Nothing in this section may be construed to prohibit the insurer from denying an incomplete application or to require that further questions be asked of the applicant once the response to a question clearly indicates the applicant is ineligible for coverage.

Nothing in this section in any way modifies the requirement for a person to hold an insurance agent license if that person sells, solicits, or negotiates Medicare Supplement insurance or any other kind of insurance.

While assisting the applicant, a non-licensed person is prohibited from attempting to sell or to interest the applicant in purchasing any product, insurance related or otherwise.

The required statements and questions are as follows:

STATEMENTS

(1) You do not need more than one Medicare supplement policy.

(2) If you purchase this policy or certificate, you may want to evaluate your existing health coverage and decide if you need multiple coverages.

(3) You may be eligible for benefits under Medicaid and may not need a Medicare supplement policy.

(4) If, after purchasing this policy, you become eligible for Medicaid, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, during your entitlement to benefits under Medicaid for 24 months. You must request this suspension within 90 days after becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within 90 days after losing Medicaid eligibility. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension;

(5) If you are eligible for, and have enrolled in a Medicare supplement policy by reason of disability and you later become covered by an employer or union-based group health plan, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, while you are covered under the employer or union-based group health plan. If you suspend your Medicare supplement policy under these circumstances, and later lose your employer or union-based group health plan, your suspended Medicare supplement policy or if that is no longer available, a substantially equivalent policy will be reinstituted if requested within 90 days of losing your employer or union-based group health plan. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

(6) Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the state Medicaid program, including benefits as a qualified Medicare beneficiary (QMB) and a specified low-income Medicare beneficiary (SLMB).

QUESTIONS

If you lost or are losing other health insurance coverage and received a notice from your previous insurer stating that you were eligible for guaranteed issue of a Medicare supplement insurance policy, or that you had certain rights to buy such a policy, you may be guaranteed acceptance in one or more of our Medicare supplement plans. Please include a copy of the notice from your previous insurer with your application. PLEASE ANSWER ALL QUESTIONS.

[Please mark YES or NO below with an "X"]

To the best of your knowledge,

(1) (a) Did you turn age 65 in the last 6 months?

Yes ______ No ______

(b) Did you enroll in Medicare Part B in the last 6 months?

Yes ______ No ______

(2) Are you covered for medical assistance through the state Medicaid program? [NOTE TO APPLICANT: If you are participating in a "spend-down program" and have not met your "share of cost," please answer NO to this question.]

Yes ______ No ______

If yes,

Yes ______ No ______

(d) Do you receive any benefits from Medicaid OTHER THAN payments toward your Medicare part B premium?

Yes ______ No ______

(3) (a) If you had coverage from any Medicare plan other than original Medicare within the past 63 days (for example, a Medicare Advantage plan, or a Medicare HMO or PPO), fill in your start and end dates below. If you are still covered under this plan, leave "END" blank.

START //___ END //___

(b) If you are still covered under the Medicare plan, do you intend to replace your current coverage with this new Medicare supplement policy?

Yes ______ No ______

(d) Did you drop a Medicare supplement policy to enroll in the Medicare plan?

Yes ______ No ______

(4) (a) Do you have another Medicare supplement policy in force?

Yes ______ No ______

(b) If so, with what company, and what plan do you have [optional for direct mailers]?

Yes ______ No ______

(d) If so, what is the paid-to or expiration date of your policy: //___

(5) Have you had coverage under any other health insurance within the past 63 days? (For example, an employer, union, or individual plan?)

(a) If so, with what company and what kind of policy?

(b) What are your dates of coverage under the other policy?

START //___ END //___

(If you are still covered under the other policy, leave "END" blank.)

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 174, effective May 2, 1990; transferred from § 20:06:13:32.01, 18 SDR 225, effective July 17, 1992; 22 SDR 107, effective February 18, 1996; 23 SDR 236, effective July 13, 1997; 28 SDR 157, effective May 19, 2002; 31 SDR 214, effective July 6, 2005; 36 SDR 209, effective July 1, 2010; 37 SDR 215, effective May 31, 2011; 39 SDR 10, effective August 1, 2012.
General Authority: SDCL 58-17A-2(3)(7).
Law Implemented: SDCL 58-17A-2(3)(7).

ARSD 20:06:13:32.01 Transferred

Transferred to § 20:06:13:32.**

ARSD 20:06:13:32.02 Disclosure by agent

On the application or the supplementary application or form, agents shall list any health insurance policies they have sold to the applicant. The list shall contain policies still in force and policies sold in the past five years which are no longer in force.

History

Source: 16 SDR 174, effective May 2, 1990.
General Authority: SDCL 58-17A-2, 58-17A-7.
Law Implemented: SDCL 58-17A-2, 58-17A-7.

ARSD 20:06:13:33 Repealed

Replacement requirements for agents.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 174, effective May 2, 1990; repealed, 35 SDR 306, effective July 1, 2009.

ARSD 20:06:13:34 Replacement requirements for direct response insurers

Direct response insurers shall deliver a notice regarding replacement of coverage to the applicant at the time the policy is issued.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 174, effective May 2, 1990.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:35 Notice of replacement

Upon determining that a sale will involve replacement of Medicare supplement coverage, any issuer, other than a direct response issuer, or its agent, shall furnish the applicant, prior to issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of Medicare supplement coverage. One copy of the notice signed by the applicant and the agent, unless the coverage is sold without an agent, must be provided to the applicant and an additional signed copy must be retained by the issuer. A direct response issuer shall deliver to the applicant at the time of the issuance of the policy the notice regarding replacement of Medicare supplement coverage.

The notice required by this section is in Appendix C at the end of this chapter. Notice used by an issuer must be in substantially the same form and in no less than twelve-point type. For purposes of this section, "form" means the language, format, type size, type proportional spacing, bold character, and line spacing.

Unless the coverage is direct marketed, the agent must ask and record the answers to all questions on the forms.

Note: A copy of the notice that meets the requirements of this section may be obtained by writing or calling the Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, SD 57501 (605-773-3563) or writing NAIC, P.O. Box 38, Kansas City, MO 64183-0108.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 18 SDR 225, effective July 17, 1992; 23 SDR 236, effective July 13, 1997; 37 SDR 215, effective May 31, 2011; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:36 Outline of coverage requirements

An outline of coverage for Medicare supplement policies, as found in Appendix D at the end of this chapter, must be provided. The outline of coverage provided to applicants pursuant to this section consists of four parts: a cover page, premium information, disclosure pages, and charts displaying the features of each benefit plan offered by the issuer. The outline of coverage shall be printed in no less than 12-point type. All plans shall be shown on the cover page, and the plan or plans that are offered by the issuer shall be prominently identified. Premium information for plans that are offered shall be shown on the cover page or immediately following the cover page and shall be prominently displayed. The premium and mode shall be stated for all plans that are offered to the prospective applicant. All possible premiums for the prospective applicant shall be illustrated.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 18 SDR 225, effective July 17, 1992; 19 SDR 160, effective April 27, 1993; 31 SDR 214, effective July 6, 2005; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17A-2, 58-17A-5.
Law Implemented: SDCL 58-17A-5.

ARSD 20:06:13:37 Delivery of outline of coverage

Issuers issuing Medicare supplement policies for delivery in this state shall provide the outline of coverage at the time the application is taken. Except for direct response policies, the issuer shall obtain a written acknowledgment of receipt from the applicant. The issuer shall retain written acknowledgments of receipt for at least four years.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 18 SDR 225, effective July 17, 1992; 22 SDR 107, effective February 18, 1996; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17A-2, 58-17A-7.
Law Implemented: SDCL 58-17A-5.

ARSD 20:06:13:38 Revisions of outline of coverage

If the coverage actually provided is different from the coverage outlined at the time of application, a substitute outline of coverage showing the coverage actually issued shall accompany the policy or certificate at the time of delivery. The substitute outline of coverage must have the following statement: "Notice: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued." The required statement must appear immediately above the company name and must be in at least twelve-point type.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2, 58-17A-7.
Law Implemented: SDCL 58-17A-5.

ARSD 20:06:13:39 Repealed

Outline of coverage requirements for "usual and customary" benefits.** Repealed

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 22 SDR 107, effective February 18, 1996; repealed, 36 SDR 209, effective July 1, 2010.

ARSD 20:06:13:40 Style and arrangement for outline of coverage

The style, arrangement, and overall appearance of a policy may not give undue prominence to any portion of the text. Every portion of the text must be clearly printed in medium-faced type. The size of the type must be uniform. All print must be twelve-point at a minimum. This section does not apply to any policy required to comply with SDCL 58-17-6.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 22 SDR 107, effective February 18, 1996; 23 SDR 236, effective July 13, 1997.
General Authority: SDCL 58-17A-2, 58-17A-7.
Law Implemented: SDCL 58-17A-5.

ARSD 20:06:13:41 Repealed

Supplemental disclosure form.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 22 SDR 107, effective February 18, 1996; repealed, 25 SDR 13, effective August 9, 1998.

ARSD 20:06:13:42 Repealed

Variable information for supplemental disclosure form.** Repealed.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; repealed, 36 SDR 209, effective July 1, 2010.

ARSD 20:06:13:43 Overinsurance

A health insurance policy issued to a Medicaid recipient or to a person who already possesses insurance substantially covering the same risk and paying for the same coverage is overinsurance. If the director determines after investigation that overinsurance exists and provides notice, the duplicating insurer must offer a full refund less benefits paid. Any sale of a Medicare supplement policy or certificate that will provide an individual more than one Medicare supplement policy or certificate is prohibited.

Duplication of Medicare supplement insurance, as prohibited by § 58-17A-15, exists whenever an insured has more than one Medicare supplement policy or certificate in force, regardless of the number of days in which multiple policies or certificates are in force, including any duplication of coverage that is 30 days or less. Any overlap of coverage requires the replacing or subsequent issuer, upon notice from the policyholder, to adjust the dates of coverage and provide credit for premiums paid during the period of duplication. Any such refund or credit shall be reduced by the amount of any claims paid by the replacing or subsequent issuer during the period of duplication. The replacing or subsequent issuer is not in violation of this rule if the effective date of the policy or contract does not precede the paid to or expiration date of the prior policy as shown on the application, provided that upon notice to the issuer of overinsurance, refunds are made or offered pursuant to this section.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 18 SDR 225, effective July 17, 1992; 32 SDR 32, effective August 29, 2005.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2, 58-17A-15, 58-33-5, 58-33-6, 58-33-8.

ARSD 20:06:13:43.01 Misrepresentation -- Unfair or deceptive trade practices

An agent is presumed to have violated SDCL 58-33-5 when the agent knowingly solicits, procures, or sells to any prospective insured who has an existing policy in force a Medicare supplement policy, long term care policy, or other type of health insurance policy designed specifically to be marketed to individuals who qualify for Medicare because of their age unless the agent informs the insured in writing either separately or on the face of the application that the new policy is intended to replace the existing policy. The agent must ensure that the prospective insured understands that the policy is a replacement of an existing policy.

An agent who engages in the sale or solicitation of such policies when the purchase is not reasonable or prudent or is otherwise not in the prospective insured's best interest has engaged in an unfair or deceptive trade practice in violation of SDCL 58-33-2.

History

Source: 15 SDR 143, effective March 29, 1989.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2, 58-33-2, 58-33-5, 58-33-6, 58-33-8.

ARSD 20:06:13:43.02 Determination of suitability

To determine whether the sale or solicitation of policies described in § 20:06:13:43.01 is reasonable, prudent, or in the prospective insured's best interest, the agent, if any, shall examine the totality of the prospective insured's circumstances, including the following:

(1) The prospective insured's financial condition, i.e., is the person on a fixed income, premium cost;

(2) The prospective insured's need for insurance at the time of sale, i.e., existing policies, insured's finances; and

(3) The values, benefits, and costs of the prospective insured's existing insurance program, if any, when compared to the values, benefits, and costs of the recommended policy or policies.

History

Source: 15 SDR 143, effective March 29, 1989.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:43.03 Medicare supplement and Medicare Part C (Medicare Advantage) or Medicare Cost duplication

Duplication of coverage between Medicare supplement insurance and coverage issued pursuant to Medicare Part C or Medicare Cost requires adjustment of the coverage dates by the Medicare supplement issuer regardless of whether the Medicare supplement coverage is replacing Medicare Part C coverage or Medicare Cost or is being replaced by Medicare Part C or Medicare Cost coverage. If the issuer's Medicare supplement coverage is being replaced by Medicare Part C or Medicare Cost, the issuer must, upon receipt of written notice from the policyholder that he or she desires to terminate the policy and of documentation substantiating the Medicare Part C coverage or Medicare Cost, adjust the coverage dates so as to terminate coverage on the date that coincides with the effective date of the Medicare Part C or Medicare Cost coverage and must refund any unearned premium based upon that revised termination date to the insured. The issuer may deduct claims paid from the refund amount for any claims incurred during the adjusted coverage time frame. Nothing in this section requires a refund of premium for any time frame in excess of five years prior to the date of written notice. If the Medicare supplement plan is replacing a Medicare Part C or Medicare Cost plan then the procedures for replacing issuer pursuant to § 20:06:13:43 apply.

History

Source: 35 SDR 48, effective September 8, 2008; 38 SDR 116, effective January 10, 2012.
General Authority: SDCL 58-17A-2(3).
Law Implemented: SDCL 58-17A-2(3).

ARSD 20:06:13:44 Failure to provide required forms

Failure of an insurance agent to provide any forms required by this chapter is a violation of this state's Unfair Trade Practices Act. Failure of a direct response insurer to provide any forms or failure to maintain any files required by this chapter shall be viewed by the division as contrary to the public interest.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:45 Refund in replacement situations

An insurer issuing a Medicare supplement policy replacing a Medicare supplement policy shall allow for a full refund of premium if the refund is requested within 30 days after the insured receives the policy.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:46 Coverage replaced within the same company

An insurer issuing new insurance replacing insurance with the same insurer shall allow the insured 30 days to reinstate the replaced coverage without evidence of insurability if the new insurance is not accepted by the insurer or the insured. The 30-day period shall begin on the date the replaced coverage lapses or the date the insurer refuses to insure, whichever is more beneficial to the insured.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:47 Insurance replaced by the same agent

If an agent replaces insurance originally placed by that agent, the insured shall be allowed to reinstate the replaced coverage if application is made within 30 days after the replaced policy lapses. The right to reinstate shall be made without evidence of insurability. The reinstated coverage may exclude payment for any injury or sickness starting after the policy lapsed and prior to reinstatement or for sickness starting within 10 days after reinstatement.

History

Source: 8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:48 Repealed

Payment and recognition of physicians.** Repealed.

History

Source: 15 SDR 143, effective March 29, 1989; 18 SDR 225, effective July 17, 1992; repealed, 36 SDR 209, effective July 1, 2010.

ARSD 20:06:13:49 Requirements for claims payment

An issuer shall comply with § 1882(c)(3) of the Social Security Act {as enacted by § 4081(b)(2)(C) of the Omnibus Budget Reconciliation Act of 1987 (OBRA) 1987, Pub. L. No. 100-203}, 42 U.S.C. § 1395 etseq, as in effect on July 1, 1992, by:

(1) Accepting a notice from a Medicare carrier on dually assigned claims submitted by participating physicians and suppliers as a claim for benefits in place of any other claim form otherwise required and making a payment determination on the basis of the information contained in that notice;

(2) Notifying the participating physician or supplier and the beneficiary of the payment determination;

(3) Paying the participating physicians or supplier directly;

(4) Furnishing each enrollee at the time of enrollment with a card listing the policy name and number and a central mailing address to which notices from a Medicare carrier may be sent;

(5) Paying user fees for claim notices that are transmitted electronically or otherwise; and

(6) Providing to the secretary of health and human services, at least annually, a central mailing address to which all claims may be sent by Medicare carriers.

The issuer shall certify compliance with the requirements set forth in this section on the Medicare supplement insurance experience reporting form.

History

Source: 15 SDR 143, effective March 29, 1989; 17 SDR 58, effective October 29, 1990; 18 SDR 225, effective July 17, 1992.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:50 Policy classification -- Requirements and limitations

No agent or insurer may classify a Medicare supplement policy as a 100 percent policy or describe any benefit as paying 100 percent unless the policy, without exception, pays 100 percent of the difference between the medical charges incurred and the amount Medicare pays.

History

Source: 15 SDR 143, effective March 29, 1989.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:51 Notice of benefit change

At least 30 days before the annual effective date of Medicare benefit changes each issuer, health care service plan, or other entity providing Medicare supplement insurance or benefits to a resident of this state shall notify its policyholders and certificateholders of modifications it has made to Medicare supplement insurance policies or certificates in a format acceptable to the director or adopted by the NAIC. The notice must contain the following information:

(1) A description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement insurance policy or certificate;

(2) Information for each covered person about when any premium adjustment due to changes in Medicare benefits will be made; and

(3) Benefit modifications and any premium adjustments in outline form stated in clear and simple terms.

The notice may not contain or be accompanied by a solicitation.

Cross-Reference: Policy forms -- Filing with and approved by the director, SDCL 58-11-12.

Note: A copy of a notice that meets the requirements of this section may be obtained from the Division of Insurance, 124 South Euclid Avenue, 3nd Floor, Pierre, SD 57501 (605-773-3563), free of charge.

History

Source: 15 SDR 143, effective March 29, 1989; 16 SDR 174, effective May 2, 1990; 18 SDR 225, effective July 17, 1992; 27 SDR 53, effective December 4, 2000; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:52 Repealed

Filing of policies to comply with Medicare changes.** Repealed.

History

Source: 15 SDR 143, effective March 29, 1989; repealed, 36 SDR 209, effective July 1, 2010.

ARSD 20:06:13:53 Duplication of coverage prohibited

No Medicare supplement insurance policy, contract, or certificate may be issued or issued for delivery in this state which provides benefits which duplicate benefits provided by Medicare.

An issuer may not issue a Medicare supplement policy or certificate to an individual enrolled in Medicare part C unless the effective date of the coverage is after the termination date of the individual's part C coverage.

In addition, issuers must comply with the requirements of § 20:06:13:59 and this section by the annual filing of the form in Appendix B at the end of this chapter each March 1.

History

Source: 15 SDR 143, adopted March 29, 1989, retroactively effective January 1, 1989; 18 SDR 225, effective July 17, 1992; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:54 Repealed

Reinstitution of coverage.** Repealed.

History

Source: 16 SDR 174, effective May 2, 1990; repealed, 36 SDR 209, effective July 1, 2010.

ARSD 20:06:13:55 Exception to reinstitution of coverage

An insurer is not required to make the offer under § 20:06:13:54 to an individual who is a policyholder or certificateholder in another Medicare supplement policy as of January 1, 1990, if the individual is not subject to a waiting period for treatment of a preexisting condition under the other policy.

History

Source: 16 SDR 174, effective May 2, 1990.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:56 Continuation and conversion rights

Group members of a group Medicare supplement insurance policy may continue or convert their rights under the following conditions:

(1) If a group Medicare supplement insurance policy is terminated by the group policyholder and not replaced as provided in subdivision (3) of this section, the issuer shall offer certificateholders an individual Medicare supplement policy. The issuer shall offer certificateholders at least the following choices:

(a) Continuation of benefits contained in the group policy; or

(b) An individual policy which provides for benefits which otherwise meets the requirements of this section;

(2) If membership in a group is terminated, the issuer shall:

(a) Offer the certificateholder the conversion opportunities described in subdivision (1) of this section; or

(b) At the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy;

(3) If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the succeeding issuer shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new group policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

This section applies to 1990 standardized Medicare supplement benefit plans as well as 2010 standardized Medicare supplement benefit plans.

Cross-Reference: Minimum benefit standards, § 20:06:13:17.

History

Source: 16 SDR 174, effective May 2, 1990; 18 SDR 225, effective July 17, 1992; 35 SDR 183, effective February 2, 2009; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2, 58-17A-3.1.

ARSD 20:06:13:57 Standards for marketing

Every issuer, health care service plan, or other entity marketing Medicare supplement insurance coverage in this state, directly or through its agents or representatives, shall:

(1) Establish marketing procedures to assure that any comparison of policies or certificates by its agents or other representatives will be fair and accurate;

(2) Establish marketing procedures to assure that excessive insurance is not sold or issued;

(3) Display prominently by type, stamp, or other means on the first page of the outline of coverage and policy or certificate the following:

"Notice to buyer: This policy may not cover all of your medical expenses" ;

(4) Inquire and otherwise make every effort to identify whether a prospective applicant, certificate holder, or enrollee for Medicare supplement insurance already has accident and sickness insurance and the types and amounts; and

(5) Establish auditable procedures for verifying compliance with this section.

History

Source: 16 SDR 174, effective May 2, 1990; 17 SDR 58, effective October 29, 1990; 18 SDR 225, effective July 17, 1992; 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2, 58-17A-7.

ARSD 20:06:13:58 Marketing practices prohibited

No person may employ any method of marketing to induce the purchase of insurance through force, fright, or threat whether explicit or implied or apply undue pressure to purchase insurance. No person may directly or indirectly use any method of marketing that fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.

The following acts and practices are specifically prohibited in marketing:

(1) "Twisting," knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purposes of inducing or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert an insurance policy or to take out a policy of insurance with another insurer;

(2) ''High pressure tactics," employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance;

(3) "Cold lead advertising," making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.

History

Source: 16 SDR 174, effective May 2, 1990; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2, 58-17A-7.

ARSD 20:06:13:58.01 Health insurance advertisement rate disclosures

Unless the disclosure made as required by § 20:06:13:58.02 is provided, no individual or group health insurance policy or certificate may in its advertisements include statements that directly or indirectly indicate that:

(1) Premiums or rates do not increase with age;

(2) Premiums or rates do not increase because of health conditions; or

(3) An insured will not be singled out for a rate or premium increase.

Policies for which no rate increase may be applied for any reason are exempt from the provisions of this section.

History

Source: 32 SDR 128, effective January 29, 2006.
General Authority: SDCL 58-17A-2(11).
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:13:58.02 Health insurance advertisement disclosure statements

Any health insurance advertisement that includes a statement for which disclosure is required pursuant to § 20:06:13:58.01 must contain in close proximity to any such statement and in an at least as conspicuous a form as the statement itself, the following disclosure or an alternative as may be approved by the director:

Premiums or rates may increase for other reasons such as an increase applicable to all persons covered under this type of policy or certificate in this state.

History

Source: 32 SDR 128, effective January 29, 2006.
General Authority: SDCL 58-17A-2(11).
Law Implemented: SDCL 58-33-5, 58-33-6.

ARSD 20:06:13:59 Reporting of multiple policies

For each individual resident of this state for whom the insurer or entity has in force more than one Medicare supplement insurance policy or certificate, each insurer or other entity providing Medicare supplement insurance coverage in this state shall report to the director by March 1 the policy and certificate numbers and the dates of issuance, grouped by individual policyholder.

History

Source: 16 SDR 174, effective May 2, 1990.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:60 Cancellation or nonrenewal of policies

Except as authorized by the director, an issuer may not cancel or refuse to renew a Medicare supplement policy or certificate for any reason other than nonpayment of premium or material misrepresentation. Each Medicare supplement policy must be guaranteed renewable.

History

Source: 16 SDR 174, effective May 2, 1990; 18 SDR 225, effective July 17, 1992; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:60.01 Guaranteed renewable with benefit changes

An issuer that eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 shall be deemed to satisfy the guaranteed renewable provision of § 20:06:13:60.

History

Source: 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:61 Agent compensation limited

An issuer or other entity may provide a commission or other compensation to an agent or other representative for the sale of a Medicare supplement policy or certificate only if the commission or compensation for the first year is no more than 200 percent of the commission or compensation paid for selling or servicing the policy or certificate in the second year or period.

The commission or other compensation provided in subsequent or renewal years must be the same as that provided in the second year or period and must be provided for at least five renewal years.

An issuer or other entity may not provide compensation to its agents or other producers and an agent or producer may not receive compensation greater than the renewal compensation payable by the replacing issuer on renewal policies or certificates if an existing policy or certificate is replaced.

For purposes of this section, the term, compensation, includes pecuniary and nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate, including bonuses, gifts, prizes, awards, and finder's fees.

Any commission advance or commission loan or other compensation by whatever named called, whether measured alone or in conjunction with other commissions, provided by an issuer or other entity, may not exceed the monetary threshold for a first year commission as required by this section. The fact that a commission loan or commission advance may be required to be repaid later or reduced if the insurance is terminated does not allow for compensation at any time to be in excess of the first year limitations required by this section.

History

Source: 17 SDR 58, effective October 29, 1990; 18 SDR 225, effective July 17, 1992; 22 SDR 107, effective February 18, 1996; 31 SDR 214, effective July 6, 2005; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-4-1, 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:62 Repealed

Requirements of insurers.** Repealed.

History

Source: 17 SDR 58, effective October 29, 1990; repealed, 36 SDR 209, effective July 1, 2010.

ARSD 20:06:13:63 Medicare select policies and certificates

Sections 20:06:13:63 to 20:06:13:76, inclusive, apply to Medicare select policies and certificates, as defined in § 20:06:13:02.

A policy or certificate may not be advertised as a Medicare select policy or certificate unless it meets the requirements of § 20:06:13:63 to 20:06:13:76, inclusive.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(11).
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:64 Medicare select authorization

The director may authorize an issuer to offer a Medicare select policy or certificate pursuant to § 20:06:13:63 to 20:06:13:76, inclusive, and § 4358 of the Omnibus Budget Reconciliation Act (OBRA) of 1990 if the director finds that the issuer has satisfied all of the requirements of these sections.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(10), 58-17A-2(12).
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:65 Approval required for issuance

A Medicare select issuer may not issue a Medicare select policy or certificate in this state until its plan of operation has been approved by the director, pursuant to SDCL 58-17A-2.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(10), 58-17A-2(12).
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:66 Filing plan of operation

A Medicare select issuer shall file a proposed plan of operation with the director in a format prescribed by the director. The plan of operation must contain at least the following information:

(1) Evidence that all covered services that are subject to restricted network provisions are available and accessible through network providers, including a demonstration that:

(a) Such services can be provided by network providers with reasonable promptness regarding geographic location, hours of operation, and after-hour care. The hours of operation and availability of after-hour care must reflect the usual practice in the local area. Geographic availability must reflect the usual travel times within the community;

(b) The number of network providers in the service area is sufficient for current and expected policyholders either to deliver adequately all services that are subject to a restricted network provision or to make appropriate referrals.

(d) Emergency care is available 24 hours a day and 7 days a week;

(e) In the case of covered services that are subject to a restricted network provision and are provided on a prepaid basis, there are written agreements with network providers prohibiting such providers from billing or otherwise seeking reimbursement from or recourse against any individual insured under a Medicare select policy or certificate. This subsection does not apply to supplemental charges or coinsurance amounts as stated in the Medicare select policy or certificate;

(2) A statement or map providing a clear description of the service area;

(3) A description of the grievance procedure to be used;

(4) A description of the quality assurance program, including:

(a) The formal organizational structure;

(b) The written criteria for selection, retention, and removal of network providers; and

(c) The procedures for evaluating quality of care provided by network providers and the process to initiate corrective action when warranted;

(5) A list and description, by specialty, of the network providers;

(6) Copies of the written information proposed to be used by the issuer to comply with § 20:06:13:70; and

(7) Any other information requested by the director.

History

Source: 22 SDR 107, effective February 18, 1996; 23 SDR 236, effective July 13, 1997.
General Authority: SDCL 58-17A-2(12), 58-17A-2, 58-17A-7.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:67 Filing of changes

A Medicare select issuer shall file any proposed changes to the plan of operation, except for changes to the list of network providers, with the director before implementing the changes. The changes are considered to be approved by the director after 30 days unless they are specifically disapproved.

An updated list of network providers must be filed with the director at least quarterly.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(12), 58-17A-2, 58-17A-7.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:68 Network restrictions

A Medicare select policy or certificate may not restrict payment for covered services provided by providers outside the network if:

(1) The services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury, or a condition; and

(2) It is not appropriate given specific circumstances, such as time or distance, to obtain such services through a network provider.

History

Source: 22 SDR 107, effective February 18, 1996; 23 SDR 236, effective July 13, 1997.
General Authority: SDCL 58-17A-2(5), 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:69 Coverage for unavailable services

A Medicare select policy or certificate shall provide payment for full coverage under the policy for covered services that are not available through network providers.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(5), 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:70 Disclosure and outline of coverage requirements

A Medicare select issuer shall make full disclosure in writing of the provisions, restrictions, and limitations of the Medicare select policy or certificate to each applicant. This disclosure must include at least the following:

(1) An outline of coverage sufficient to permit the applicant to compare the coverage and premiums of the Medicare select policy or certificate with other Medicare supplement policies or certificates offered by the issuer and other Medicare select policies or certificates;

(2) A description of the network providers, including primary care physicians, specialty physicians, hospitals, and other providers. At a minimum, the description must include each provider's address, telephone number, and hours of operation;

(3) A description of the restricted network provisions, including payments for coinsurance and deductibles when providers other than network providers are utilized. Except to the extent specified in the policy or certificate, expenses incurred when using out-of-network providers do not count toward the out-of-pocket annual limit contained in plans K and L;

(4) A description of coverage for emergency and urgently needed care and other out-of-service area coverage;

(5) A description of limitations on referrals to restricted network providers and to other providers;

(6) A description of the policyholders' rights to purchase any other Medicare supplement policy or certificate otherwise offered by the issuer; and

(7) A description of the Medicare select issuer's quality assurance program and grievance procedure.

History

Source: 22 SDR 107, effective February 18, 1996; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17A-2(11), 58-17A-2(14), 58-17A-6, 58-17A-7.
Law Implemented: SDCL 58-17A-2, 58-17A-5.

ARSD 20:06:13:71 Applicant signature required

Prior to the sale of a Medicare select policy or certificate, a Medicare select issuer must obtain from the applicant a signed and dated form stating that the applicant has received the information provided, pursuant to § 20:06:13:70, and that the applicant understands the restrictions of the Medicare select policy or certificate.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(11), 58-17A-2(14), 58-17A-7.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:72 Complaints and grievances

A Medicare select issuer must have and use procedures for hearing complaints and resolving written grievances from subscribers. Such procedures must be aimed at mutual agreement for settlement and may include arbitration procedures. Grievance procedures must meet the following requirements:

(1) The grievance procedure must be described in the policy and certificate and in the outline of coverage;

(2) At the time the policy or certificate is issued, the issuer must provide detailed information to the policyholder describing how a grievance may be registered with the issuer;

(3) The issuer must consider grievances in a timely manner and transmit them to decision-makers who have authority to investigate the issue fully and take corrective action;

(4) If a grievance is found to be valid, the issuer must take corrective action promptly;

(5) The issuer must notify all concerned parties about the results of a grievance;

(6) The issuer must report no later than March 31 each year to the director regarding its grievance procedure in a format provided by the director. The report must contain the number of grievances filed in the past year and a summary of the subject, nature, and resolution of the grievances.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(5), 58-17A-2(12), 58-17A-2, 58-17A-7.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:73 Required offer of other Medicare supplement coverage

At the time of initial purchase, a Medicare select issuer must make available to each applicant for a Medicare select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate otherwise offered by the issuer.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(2), 58-17A-2(11), 58-17A-2(14).
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:74 Required offer of replacement coverage without a restricted network provision

At the request of an individual insured under a Medicare select policy or certificate, a Medicare select issuer must make available to the individual insured the opportunity to purchase a Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer must make such policies or certificates available without requiring evidence of insurability after the Medicare select policy or certificate has been in force for six months.

For the purpose of this section, a Medicare supplement policy or certificate is considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare select policy or certificate being replaced. For the purpose of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for prescription drugs, coverage for at-home recovery services, or coverage for Part B excess charges.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(2), 58-17A-2(11), 58-17A-2(14).
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:75 Continuation

Medicare select policies and certificates must provide for continuation coverage if the secretary of health and human services determines that Medicare select policies and certificates issued pursuant to §§ 20:06:13:63 to 20:06:13:76, inclusive, should be discontinued because the Medicare select program was not reauthorized under law or it was substantially amended.

Each Medicare select issuer must make available to each individual insured under a Medicare select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer must make such policies and certificates available without requiring evidence of insurability.

For the purpose of this section, a Medicare supplement policy or certificate is considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare select policy or certificate being replaced. For the purposes of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for prescription drugs, coverage for at-home recovery services, or coverage for Part B excess charges.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(2), 58-17A-2(7), 58-17A-2(16).
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:76 Compliance with data requests

A Medicare select issuer must comply with requests for data made by state or federal agencies, including the United States Department of Health and Human Services, for the purpose of evaluating the Medicare select program.

History

Source: 22 SDR 107, effective February 18, 1996.
General Authority: SDCL 58-17A-2(12).
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:77 Creditable coverage

For purposes of this chapter, creditable coverage is defined as follows:

(1) "Creditable coverage," with respect to an individual, coverage of the individual provided under any of the following:

(a) A group health plan;

(b) Health insurance coverage;

(d) Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of benefits under § 1928;

(e) Chapter 55 of Title, 10 United States Code (CHAMPUS);

(f) A medical care program of the Indian Health Service or of a tribal organization;

(g) A state health benefits risk pool;

(h) A health plan offered under chapter 89 of Title 5, United States Code (Federal Employees Health Benefits Program);

(i) A public health plan as defined in federal regulation; and

(j) A health benefit plan under § 5(e) of the Peace Corps Act (22 U.S.C. § 2504(e));

(2) "Creditable coverage” may not include one or more, or any combination, of the following:

(a) Coverage only for accident or disability income insurance, or any combination;

(b) Coverage issued as a supplement to liability insurance;

(d) Workers' compensation or similar insurance;

(e) Automobile medical payment insurance;

(f) Credit-only insurance;

(g) Coverage for on-site medical clinics; and

(h) Other similar insurance coverage, specified in federal regulations, under which benefits for medical care are secondary or incidental to other insurance benefits;

(3) "Creditable coverage," may not include the following benefits if they are provided under a separate policy, certificate, or contract of insurance or are otherwise not an integral part of the plan:

(a) Limited scope dental or vision benefits;

(b) Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof; and

(4) "Creditable coverage," may not include the following benefits if offered as independent, noncoordinated benefits:

(a) Coverage only for a specified disease or illness; and

(b) Hospital indemnity or other fixed indemnity insurance;

(5) "Creditable coverage" may not include the following if it is offered as a separate policy, certificate, or contract of insurance:

(a) Medicare supplemental health insurance as defined under § 1882(g)(1) of the Social Security Act;

(b) Coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code; and

History

Source: 25 SDR 44, effective September 30, 1998.
General Authority: SDCL 58-17A-2(9).
Law Implemented: SDCL 58-17A-2(9).

ARSD 20:06:13:78 Medicare Advantage plan

For purposes of this chapter, Medicare Advantage plan means a plan of coverage for health benefits under Medicare Part C as defined in 42 U.S.C. 1395w-28(b)(1), as in effect on January 1, 2004, and includes:

(1) Coordinated care plans which provide health care services, including health maintenance organization plans, with or without a point-of-service option, plans offered by provider-sponsored organizations, and preferred provider organization plans;

(2) Medicare medical savings account plans coupled with a contribution into a Medicare Advantage medical savings account; and

(3) Medicare Advantage private fee-for-service plans.

History

Source: 25 SDR 44, effective September 30, 1998; 26 SDR 26, effective September 1, 1999; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17A-2(9).
Law Implemented: SDCL 58-17A-2(9).

ARSD 20:06:13:79 Guaranteed issue

With respect to an eligible person, an issuer may not deny or condition the issuance or effectiveness of a Medicare supplement policy described in § 20:06:13:81 that is offered and is available for issuance to a new enrollee by the issuer, may not discriminate in the pricing of a Medicare supplement policy because of the eligible person's health status, claims experience, receipt of health care, or medical condition, and may not impose an exclusion of benefits based on a preexisting condition under a Medicare supplement policy.

History

Source: 25 SDR 44, effective September 30, 1998.
General Authority: SDCL 58-17A-2(2)(5)(11).
Law Implemented: SDCL 58-17A-2(2)(5)(11), 58-17A-17.

ARSD 20:06:13:80 Guaranteed issue -- Eligible persons

An eligible person is one who seeks to enroll under the policy during the period specified in § 20:06:13:80.01 and who submits evidence of the date of termination, disenrollment, or Medicare part D enrollment with the application for a Medicare supplement policy, and who is described in any of the following paragraphs:

(1) The person is enrolled under an employee welfare benefit plan or an employer-based health insurance plan that provides health benefits, and coverage under the plan terminates for that person;

(2) The person is 65 years of age or older and is enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider under § 1894 of the Social Security Act, and there are circumstances similar to those described below that would permit discontinuance of the person's enrollment with such provider if the person were enrolled in a Medicare Advantage plan, or the person is enrolled with a Medicare Advantage organization under a Medicare Advantage plan under part C of Medicare, and any of the following circumstances apply:

(a) The certification of the organization or plan under this part has been terminated;

(b) The organization has terminated or otherwise discontinued providing the plan in the area in which the person resides;

(c) The person is no longer eligible to elect the plan because of a change in the person's place of residence or other change in circumstances specified by the secretary, but not including termination of the person's enrollment on the basis described in § 1851(g)(3)(B) of the federal Social Security Act, if the person has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under § 1856, or the plan is terminated for all individuals within a residence area;

(d) The person demonstrates, in accordance with guidelines established by the secretary, that:

(i) The organization offering the plan substantially violated a material provision of the organization's contract under part C of Medicare in relation to the person, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide the covered care in accordance with applicable quality standards; or

(ii) The organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the person; or

(e) The person meets any other exceptional conditions as the secretary may provide;

(3)(a) The person is enrolled with:

(i) An eligible organization under a contract under § 1876 of the Social Security Act, Medicare cost;

(ii) A similar organization operating under demonstration project authority, effective for periods before April 1, 1999;

(iii) An organization under an agreement under § 1833(a)(1)(A) of the Social Security Act, health care prepayment plan; or

(iv) An organization under a Medicare select policy; and

(b) The enrollment ceases under the same circumstances that would permit discontinuance of a person's election of coverage under subdivision 2;

(4)(a) The person is enrolled under a Medicare supplement policy and the enrollment ceases because:

(i) Of the insolvency of the issuer or bankruptcy of the nonissuer organization; or

(ii) Of other involuntary termination of coverage or enrollment under the policy;

(b) The issuer of the policy substantially violated a material provision of the policy; or

(c) The issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the person;

(5)(a) The person was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time, with any Medicare Advantage organization under a Medicare Advantage plan under part C of Medicare, any eligible organization under a contract under § 1876 of the Social Security Act (Medicare cost), any similar organization operating under demonstration project authority, any PACE provider under § 1894 of the Social Security Act or a Medicare Select policy;

(b) The subsequent enrollment under subparagraph (a) is terminated by the enrollee during any period within the first 12 months of the subsequent enrollment, during which the enrollee is permitted to terminate the subsequent enrollment under § 1851(e) of the federal Social Security Act;

(6) The person, upon first becoming eligible for benefits under part A of Medicare at age 65, enrolls in a Medicare Advantage plan under part C of Medicare, or with a PACE provider under § 1894 of the Social Security Act, and disenrolls from the plan by not later than 12 months after the effective date of enrollment; or

(7) The person enrolls in a Medicare part D plan during the initial enrollment period and, at the time of enrollment in part D, was enrolled under a Medicare supplement policy that covers outpatient prescription drugs and the individual terminates enrollment in the Medicare supplement policy and submits evidence of enrollment in Medicare part D along with the application for a policy described in subdivision 20:06:13:81(4).

History

Source: 25 SDR 44, effective September 30, 1998; 25 SDR 90, effective January 3, 1999; 27 SDR 53, effective December 4, 2000; 28 SDR 157, effective May 19, 2002; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17A-2(2)(9)(16).
Law Implemented: SDCL 58-17A-2(2)(9)(16).

ARSD 20:06:13:80.01 Guaranteed issue time periods

(1) In the case of an individual described in subdivision 20:06:13:80(1), the guaranteed issue period begins on the later of:

(a) the date the individual receives a notice of termination or cessation of all supplemental health benefits (or, if a notice is not received, notice that a claim has been denied because of such a termination or cessation);

(b) or the date that the applicable coverage terminates or ceases and ends 63 days thereafter;

(2) In the case of an individual described in subdivision 20:06:13:80(2), (3), (5), or (6) whose enrollment is terminated involuntarily, the guaranteed issue period begins on the date that the individual receives a notice of termination and ends 63 days after the date the applicable coverage is terminated;

(3) In the case of an individual described in subdivision 20:06:13:80(4)(a), the guaranteed issue period begins on the earlier of the date that the individual receives a notice of termination, a notice of the issuer's bankruptcy or insolvency, or other such similar notice if any, and the date that the applicable coverage is terminated, and ends on the date that is 63 days after the date the coverage is terminated;

(4) In the case of an individual described in subdivision 20:06:13:80(2), (4)(b), (4)(c), (5), or (6) who disenrolls voluntarily, the guaranteed issue period begins on the date that is 60 days before the effective date of the disenrollment and ends on the date that is 63 days after the effective date;

(5) In the case of an individual described in subdivision 20:06:13:80(7), the guaranteed issue period begins on the date the individual receives notice pursuant to Section 1882(v)(2)(B) of the Social Security Act from the Medicare supplement issuer during the 60-day period immediately preceding the initial part D enrollment period and ends on the date that is 63 days after the effective date of the individual's coverage under Medicare part D; and

(6) In the case of an individual described in § 20:06:13:80 but not described in the preceding provisions of this section, the guaranteed issue period begins on the effective date of disenrollment and ends on the date that is 63 days after the effective date.

History

Source: 28 SDR 157, effective May 19, 2002; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17A-2(2)(9)(16).
Law Implemented: SDCL 58-17A-2(2)(9)(16).

ARSD 20:06:13:80.02 Extended medigap access for interrupted trial periods

(1) In the case of an individual described in subdivision 20:06:13:80(5) (or deemed to be so described, pursuant to this subsection) whose enrollment with an organization or provider described in subdivision 20:06:13:80(5)(a) is involuntarily terminated within the first twelve (12) months of enrollment, and who, without an intervening enrollment, enrolls with another such organization or provider, the subsequent enrollment shall be deemed to be an initial enrollment described in subdivision 20:06:13:80(5);

(2) In the case of an individual described in subdivision 20:06:13:80(6) (or deemed to be so described, pursuant to this subsection) whose enrollment with a plan or in a program described in subdivision 20:06:13:80(6) is involuntarily terminated within the first twelve (12) months of enrollment, and who, without an intervening enrollment, enrolls in another such plan or program, the subsequent enrollment shall be deemed to be an initial enrollment described in subdivision 20:06:13:80(6); and

(3) For purposes of subdivisions 20:06:13:80(5) and (6), no enrollment of an individual with an organization or provider described in subdivision 20:06:13:80(5)(a), or with a plan or in a program described in subdivision 20:06:13:80(6), may be deemed to be an initial enrollment under this subsection after the two-year period beginning on the date on which the individual first enrolled with such an organization, provider, plan, or program.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17A-2(2)(9)(16).
Law Implemented: SDCL 58-17A-2(2)(9)(16).

ARSD 20:06:13:81 Guaranteed issue -- Products to which eligible persons are entitled

The Medicare supplement policies to which an eligible person is entitled are as follows:

(1) A person eligible under subdivisions 20:06:13:80(1), (2), (3), or (4) is entitled to a Plan A, B, C, F, F with high deductible, K, or L Medicare supplement policy offered by an issuer;

(2) A person eligible under subdivision 20:06:13:80(5) is entitled to the same Medicare supplement policy in which the individual was most recently enrolled, if available from the same issuer, or, if not available, a policy described in subdivision (1) of this section. After December 31, 2005, if the individual was most recently enrolled in a Medicare supplement policy with an outpatient prescription drug benefit, a Medicare supplement policy described in this subdivision is:

(a) The policy available from the same issuer but modified to remove outpatient prescription drug coverage; or

(b) At the election of the policyholder, an A, B, C, F, F with high deductible, K, or L policy that is offered by any issuer;

(3) A person eligible under subdivision 20:06:13:80(6) is entitled to any Medicare supplement policy offered by an issuer;

(4) A person eligible under subdivision 20:06:13:80(7) is entitled to a Plan A, B, C, F, F with high deductible, K, or L that is offered and available for issuance to new enrollees by the same issuer that issued the individual's Medicare supplement policy with outpatient prescription drug coverage.

For purposes of § 20:06:13:81, in the case of any individual newly eligible for Medicare after December 31, 2019, any reference to a Medicare supplement policy C or F, including F With High Deductible, shall be deemed to be a reference to Medicare supplement policy D or G, including G With High Deductible.

History

Source: 25 SDR 44, effective September 30, 1998; 31 SDR 214, effective July 6, 2005; 36 SDR 209, effective July 1, 2010; 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-17A-2(2)(16).
Law Implemented: SDCL 58-17A-2(2)(16).

ARSD 20:06:13:82 Guaranteed issue -- Notification provisions

(1) At the time of an event described in § 20:06:13:80 because of which a person loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the person of that person's rights under this section, and of the obligations of issuers of Medicare supplement policies under § 20:06:13:79. The notice shall be communicated along with the notice of termination.

(2) At the time of an event described in § 20:06:13:80 because of which a person ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the person of that person's rights under this section, and of the obligations of issuers of Medicare supplement policies under § 20:06:13:79. The notice shall be communicated within 10 working days of the issuer receiving notification of disenrollment.

History

Source: 25 SDR 44, effective September 30, 1998.
General Authority: SDCL 58-17A-2(1)(2)(12)(16)(18).
Law Implemented: SDCL 58-17A-2(1)(2)(12)(16)(18).

ARSD 20:06:13:83 Open enrollment.`

Open enrollment.** If an applicant qualifies under SDCL 58-17A-17 and submits an application during the time period referenced in SDCL 58-17A-17 and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer may not exclude benefits based on a preexisting condition. If the applicant qualifies under SDCL 58-17A-17 and submits an application during the time period referenced in SDCL 58-17A-17 and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The secretary shall specify the manner of the reduction under this section.

History

Source: 25 SDR 44, effective September 30, 1998.
General Authority: SDCL 58-17A-2(2)(5).
Law Implemented: SDCL 58-17A-2(2)(5), 58-17A-17.

ARSD 20:06:13:84 Open enrollment required for Medicare eligible individuals regardless of age

Any individual, regardless of age, who becomes eligible for Medicare by reason of age or disability, is entitled to open enrollment into any Medicare supplement policy if application is made within six months of enrollment in Part B of Medicare. This rule applies only to individuals who become eligible for Medicare on or after July 1, 1999. Nothing in this rule prohibits a carrier from using rating methodologies on a class basis for those that qualify for Medicare by reason of disability if:

(1) The rate is an actuarially justified rate; and

(2) The rate does not exceed the rate that the carrier has for an individual who qualifies for Medicare by reason of age and is 75 years of age.

History

Source: 26 SDR 55, effective October 21, 1999; 32 SDR 53, effective October 10, 2005.
General Authority: SDCL 58-17A-2(2), 58-17A-2(5).
Law Implemented: SDCL 58-17A-2(2), 58-17A-2(5), 58-17A-17.

ARSD 20:06:13:85 Notice requirement

Any issuer shall comply with any notice requirement of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

History

Source: 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-4-1, 58-17A-2, 58-17A-7.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:86 Exchanging of standardized plan

An issuer may make a written offer to a policyholder or certificateholder to exchange during a specified period from a 1990 standardized plan to a 2010 standardized plan.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:86.01 Exchanging of standardized plan -- Age rate schedule

An issuer need not provide justification to the director if the insured replaces a 1990 Standardized policy or certificate with an issue age rated 2010 Standardized policy or certificate at the insured's original issue age. If an insured's policy or certificate to be replaced is priced on an issue age rate schedule at the time of such offer, the rate charged to the insured for the new exchanged policy shall recognize the policy reserve buildup, due to the pre-funding inherent in the use of an issue age rate basis, for the benefit of the insured. The method proposed to be used by an issuer must be submitted with the director through the System for Electronic Rate and Form filing, SERFF.

Reference: System for Electronic Rate and Form Filing, SERFF. Copies of industry manuals may be obtained from National Association of Insurance Commissioners, 2301 McGee Street, Suite 800, Kansas City, Missouri, 64108-2604, http://www.serff.org/index.htm.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:86.02 Excahnging of standardized plan -- Rating class

Exchanging of standardized plan -- Rating class.** The rating class of the new policy or certificate is the class closest to the insured's class of the replaced coverage.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:86.03 Exchanging of standardized plan -- Preexisting conditions and incontestability period

An issuer may not apply new pre-existing condition limitations or a new incontestability period to the new policy for those benefits contained in the exchanged 1990 standardized policy or certificate of the insured. Pre-existing condition limitations may be applied of no more than six months to any added benefits contained in the new 2010 standardized policy or certificate not contained in the exchanged policy.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:86.04 Exchanging of standardized plan -- Offering

The new policy or certificate shall be offered to all policyholders or certificateholders within a given plan, except where the offer or issue would be in violation of state or federal law.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:87 Applicability of genetic information

Sections 20:06:13:88 to 20:06:13:92, inclusive, apply to all policies with policy years beginning after May 20, 2009.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:88 Definitions applicable to genetic information

The following terms are defined for purposes of §§ 20:06:13:88 to 20:06:13:92, inclusive:

(1) "Family member," with respect to an individual, any other individual who is a first-degree, second-degree, third-degree, or fourth-degree relative of such individual;

(2) "Genetic information," with respect to any individual, information about such individual's genetic tests, the genetic tests of family members of such individual, and the manifestation of a disease or disorder in family members of such individual. Such term includes, with respect to any individual, any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by such individual or any family member of such individual. Any reference to genetic information concerning an individual or family member of an individual who is a pregnant woman includes genetic information of any fetus carried by such pregnant woman, or with respect to an individual or family member utilizing reproductive technology, includes genetic information of any embryo legally held by an individual or family member. The term genetic information does not include information about the sex or age of any individual;

(3) "Genetic services," a genetic test, genetic education, or genetic counseling. Genetic counseling includes obtaining, interpreting, or assessing genetic information;

(4) "Genetic test," an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detect genotypes, mutations, or chromosomal changes. The term, genetic test, does not mean an analysis of proteins or metabolites that does not detect genotypes, mutations, or chromosomal changes; or an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition that could reasonably be detected by a health care professional with appropriate training and expertise in the field of medicine involved;

(5) "Issuer of a Medicare supplement policy or certificate," includes any insurance company, fraternal benefit society, health care service plan, health maintenance organization, third party administrator, or other person acting for or on behalf of such issuer, and any other entity delivering or issuing for delivery in this state Medicare supplement policies or certificates;

(6) "Underwriting purposes:"

(a) Rules for, or determination of, eligibility, including enrollment and continued eligibility, for benefits under the policy;

(b) The computation of premium or contribution amounts under the policy;

(d) Other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:89 Use of genetic information

An issuer of a Medicare supplement policy or certificate may not deny or condition the issuance or effectiveness of the policy or certificate, including the imposition of any exclusion of benefits under the policy based on a pre-existing condition on the basis of the genetic information with respect to such individual. The issuer may not discriminate in the pricing of the policy or certificate including the adjustment of premium rates of an individual on the basis of the genetic information with respect to such individual. Nothing in this section may be construed to limit the ability of an issuer, to the extent otherwise permitted by law, from denying or conditioning the issuance or effectiveness of the policy or certificate or increasing the premium for a group based on the manifestation of a disease or disorder of an insured or applicant or increasing the premium for any policy issued to an individual based on the manifestation of a disease or disorder of an individual who is covered under the policy. In such case, the manifestation of a disease or disorder in one individual may not also be used as genetic information about other group members and to further increase the premium for the group.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:90 Request of genetic testing

Except as provided under § 20:06:13:91 an issuer of a Medicare supplement policy or certificate may not request or require an individual or a family member of such individual to undergo a genetic test. This section may not be construed to preclude an issuer of a Medicare supplement policy or certificate from obtaining and using the results of a genetic test in making a determination regarding payment as defined for the purposes of applying the regulations promulgated under Part C of Title XI and section 264 of the Health Insurance Portability and Accountability Act of 1996, and consistent with § 20:06:13:88. An issuer of a Medicare supplement policy or certificate may request only the minimum amount of information necessary to accomplish the intended purpose.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:91 Requirement of genetic testing

An issuer of a Medicare supplement policy may request, but not require, that an individual or a family member of such individual undergo a genetic test if each of the following conditions is met:

(1) The request is made pursuant to research that complies with Part 46 of Title 45, Code of Federal Regulations, or equivalent federal regulations, and any applicable state or local law or regulations for the protection of human subjects in research;

(2) The issuer clearly indicates to each individual, or in the case of a minor child, to the legal guardian of such child, to whom the request is made that:

(a) Compliance with the request is voluntary; and

(b) Non-compliance will have no effect on enrollment status or premium or contribution amounts;

(3) The issuer notifies the Secretary of Health and Human Services in writing that the issuer is conducting activities pursuant to the exception provided for under this section, including a description of the activities conducted;

(4) The issuer complies with such other conditions as the Secretary of Health and Human Services may by regulation require for activities conducted under this section and the regulation has been adopted through the issuance of a bulletin by the director.

No genetic information collected or acquired under this section may be used for underwriting, determination of eligibility to enroll or maintain enrollment status, premium rates, or the issuance, renewal, or replacement of a policy or certificate.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

ARSD 20:06:13:92 Genetic information -- Underwriting purposes and enrollment

Genetic information -- Underwriting purposes and enrollment** . An issuer of a Medicare supplement policy or certificate may not request, require, or purchase genetic information for underwriting purposes. An issuer of a Medicare supplement policy or certificate may not request, require, or purchase genetic information for underwriting purposes with respect to any individual prior to such individual's enrollment under the policy in connection with such enrollment.

If genetic information is obtained incidental to the requesting, requiring, or purchasing of other information concerning any individual, such request, requirement, or purchase may not be considered a violation of this section.

History

Source: 35 SDR 183, effective February 2, 2009.
General Authority: SDCL 58-17A-2.
Law Implemented: SDCL 58-17A-2.

Chapter 20:06:14 Health and life insurance solicitation, Repealed

ARSD 20:06:14 Repealed chapter

CHAPTER 20: 06:14

HEALTH AND LIFE INSURANCE SOLICITATION

(Repealed. 38 SDR 116, effective January 10, 2012)

Chapter 20:06:15 Countersignature fees -- Title insurance, Repealed

ARSD 20:06:15 Repealed chapter

CHAPTER 20:06:15

COUNTERSIGNATURE FEES - TITLE INSURANCE

(Repealed. 7 SDR 4, effective July 27, 1980.)

Chapter 20:06:16 Premium tax

ARSD 20:06:16:01 Claim form

The form to be used for requesting a premium tax refund shall be provided by the division and shall contain the following information:

(1) The date of the application;

(2) The name of the company requesting the refund;

(3) The address of the company requesting the refund;

(4) The period of time for which the refund is claimed;

(5) The amount of the claim;

(6) The basis for the claim;

(7) The signature and title of the person entitled to make the claim; and

(8) An attestation of the signature by a notary public.

History

Source: 9 SDR 20, effective August 22, 1982; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 10-44-1.1.
Law Implemented: SDCL 10-44-2.

ARSD 20:06:16:02 Premium defined

For the purpose of calculating premium tax, premiums include payment to an insurer for any charges or fees associated with the processing of claims under a contract of insurance.

History

Source: 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 10-44-1.1.
Law Implemented: SDCL 10-44-2, 58-11-1.

ARSD 20:06:16:03 Premium tax reporting

Any property and casualty company doing insurance business in this state shall report premiums as defined under SDCL 58-11-1 and 10-44-1 when written by the company, on their premium tax return pursuant to SDCL 58-6-68.

History

Source: 35 SDR 306, effective July 1, 2009.
General Authority: SDCL 10-44-1.1, 58-11-63(1)
Law Implemented: SDCL 10-44-1, 10-44-2, 58-6-68.

ARSD 20:06:16:04 Annuity considerations returned defined

For the purpose of calculating consideration for annuity contracts pursuant to SDCL 10-44-1(2), annuity considerations returned are only those refunds paid when annuity contracts are returned and cancelled pursuant to SDCL 58-15-59.1.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 10-44-1.1.
Law Implemented: SDCL 10-44-1(2).

Chapter 20:06:17 Generic naming of life insurance, Repealed

ARSD 20:06:17 Repealed chapter

CHAPTER 20:06:17

GENERIC NAMING OF LIFE INSURANCE

(Repealed. 22 SDR 52, effective October 25, 1995)

Chapter 20:06:18 Producer licensing

ARSD 20:06:18:01 Definitions

Terms used in this chapter mean:

(1) "Approved course," an educational presentation offered in a class, a seminar, self-study, or a similar form of instruction involving insurance fundamentals, insurance-related law, insurance policies, claims and coverage, insurance needs and product changes, insurance risk management, or other areas that have been approved by the director under this chapter as expanding skills and knowledge of insurance principles, coverages, laws, or regulations in the lines of insurance for which the licensee is licensed;

(2) "CEC," continuing education credit;

(3) "Company-sponsored course," a correspondence, classroom, or internet course which only company agents are allowed to attend;

(4) "General credit hours," CEC credit hours that can be applied to either life/health or property/casualty credits;

(5) "Hour," fifty minutes of contact or classroom time, or for self-study courses, the equivalent of fifty minutes of classroom time as determined and approved by the director;

(6) "Licensee," a natural person who is licensed by the division as a resident agent or broker for a specific type of insurance;

(7) "Self-study," a correspondence course or program of independent study.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 16 SDR 208, effective June 3, 1990; 25 SDR 13, effective August 9, 1998; 31 SDR 67, effective November 14, 2004; 34 SDR 200, effective January 28, 2008; 36 SDR 127, adopted February 8, 2010, effective May 1, 2010.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-114, 58-30-117.

ARSD 20:06:18:01.01 Information management system

The division may use a web-based management information system, to provide online processing and electronic storage of information. The division shall direct the information that is processed and stored and the information remains that of the division.

History

Source: 34 SDR 200, effective January 28, 2008.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-114, 58-30-117.

ARSD 20:06:18:02 Applicability

Sections 20:06:18:01 to 20:06:18:18, inclusive do not apply to the following:

(1) A licensee holding a limited license to sell only credit life and credit health insurance;

(2) A licensee outside the United States or its territories;

(3) A licensee who is a resident attorney licensed to practice law in the state;

(4) A licensee who is a transportation ticket agent of common carriers holding a limited license to sell only travel accident and baggage insurance;

(5) A licensee who is an employee of a trade association holding a limited license to sell only surety bonds to its association members;

(6) A licensee holding a limited license to sell only bail bonds.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 19 SDR 160, effective April 27, 1993; 32 SDR 53, effective October 10, 2005; 34 SDR 200, effective January 28, 2008.
General Authority: SDCL 58-4-1, 58-30-117.
Law Implemented: SDCL 58-30-115, 58-30-117.

ARSD 20:06:18:03 Continuing education requirements for licensees

In each two-year period, a licensee shall fulfill the following continuing education requirements:

(1) Licensees who hold a property casualty line of authority shall obtain at least ten CEC hours in courses certified as property/casualty;

(2) Licensees who hold a life, variable contract, or health line of authority shall obtain at least ten CEC hours in courses certified as life/health;

(3) Licensees who hold only a crop hail line of authority shall obtain at least four CEC hours in courses certified as crop hail;

(4) Licensees who hold both property/casualty and life/health lines of authority shall complete at least 20 CEC hours;

(5) Licensees who hold a crop hail line of authority and only one of the lines of authority contained in subdivisions (1) and (2) shall obtain at least ten CEC hours. Two CEC hours must be in certified crop hail courses and only two CEC hours in certified crop hail courses will count towards the required ten CEC hours. If the licensee holds more than two lines of authority contained in subdivisions (1) and (2) including a crop hail line of authority, the licensee shall complete at least 20 CEC hours with two of these CEC hours in certified crop hail courses. Only two CEC hours in certified crop hail courses will count towards the required ten CEC hours as contained in subdivision (1).

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 31 SDR 67, effective November 14, 2004; 34 SDR 200, effective January 28, 2008; 36 SDR 127, effective March 1, 2010; 36 SDR 127, adopted February 8, 2010, effective May 1, 2010; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-116, 58-30-117.

ARSD 20:06:18:03.01 Continuing education requirements for licensees obtaining new lines of authority

Continuing education requirements for licensees obtaining new** lines of authority. Any licensee who obtains a new line of authority during the licensee's two-year continuing education period does not need to fulfill the requirements of § 20:06:18:03 for the new line of authority until the next two-year period.

History

Source: 36 SDR 127, adopted February 8, 2010, effective May 1, 2010; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-116, 58-30-117.

ARSD 20:06:18:04 Continuing education requirements for new licensees

Continuing education requirements for new licenses.** Repealed.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 31 SDR 67, effective November 14, 2004; repealed, 36 SDR 127, adopted February 8, 2010, effective May 1, 2010.

ARSD 20:06:18:04.01 Reciprocity between states

The Division of Insurance shall accept the Continuing Education Filing Form as prescribed by the director, or a substantially similar form, which may be obtained from the division, and the attachments as required for approval of courses submitted by a nonresident continuing education provider, for courses previously awarded credit by the continuing education provider's home state. Courses that have not previously been awarded credit in the provider's home state must be approved pursuant to § 20:06:18:05.

The provider shall submit electronically the location and date of a previously approved course at least fourteen days in advance of the course if, at the time of initial filing, all dates and locations had not been determined.

Collateral Reference: The Continuing Education Filing Form can be obtained from the Division of Insurance website at http://dlr.sd.gov/insurance. Cost: $0.

History

Source: 25 SDR 13, effective August 9, 1998; 31 SDR 67, effective November 14, 2004; 34 SDR 200, effective January 28, 2008; 39 SDR 219, effective June 26, 2013; 50 SDR 13, effective August 10, 2023.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:05 Guidelines for filing for course approval

The provider of a continuing education course is responsible for seeking course approval, monitoring an agent's attendance, supervising the course, and certifying a licensee's successful completion of the course. The provider shall maintain a record of all continuing education offered for two years. The provider shall electronically apply to the director for course approval at least forty-five days in advance of the scheduled date of the course. The forty-five days are calculated from the date of submission. In addition to the application fee pursuant to SDCL 58-2-29, the request for course approval must include the following information:

(1) The provider's name, provider identification number, mailing address, phone number, e-mail address, and website address;

(2) The name of the sponsoring organization, if there is one in addition to the provider. The sponsoring organization may be a national professional association, local or state chapter or affiliate of a national professional organization, an insurance company, or a similar organization;

(3) The course title;

(4) The address and phone number for each course location, unless the course is a self-study course;

(5) The dates of the course offering;

(6) The difficulty classification of the course;

(7) The number of CEC hours requested, including either the number of course contact or classroom hours or the number of self-study hours, or both;

(8) A course outline listing and summarizing each topic covered in the course. The instructor's outline may also be included. A list of topics covered, with no other details, is not an acceptable course outline. If substantial changes have been made, including the addition of new topic content, in a course that has received prior approval, the content of the course must be refiled with the director;

(9) The names and qualifications of instructors;

(10) Any other state in which the course has been approved and the number of credit hours awarded;

(11) Whether a course is part of a national or professional designation program; and

(12) The contact person or coordinator of the proposed offering.

The provider shall electronically submit the location and date of a previously approved course at least fourteen days in advance of the course if, at the time of initial filing, all dates and locations had not been determined. The fourteen days are calculated from the postmark date.

Course approval will expire two years from the date of initial approval.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 19 SDR 160, effective April 27, 1993; 25 SDR 13, effective August 9, 1998; 34 SDR 200, effective January 28, 2008; 36 SDR 127, adopted February 8, 2010, effective May 1, 2010; 43 SDR 181, effective July 7, 2017; 51 SDR 142, effective July 3, 2025.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:05.01 Course attendance roster

Except for a self-study course, a provider shall maintain a list of approved course attendees for two years. A provider shall submit course completion information electronically within fourteen days of the conclusion of each class offering.

History

Source: 16 SDR 208, effective June 3, 1990; 19 SDR 160, effective April 27, 1993; 25 SDR 13, effective August 9, 1998; 31 SDR 67, effective November 14, 2004; 34 SDR 200, effective January 28, 2008; 51 SDR 66, effective January 1, 2025.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:05.02 Forms used for course approval

Courses submitted for approval pursuant to § 20:06:18:05 shall be filed with an Application for Course Approval and an Instructor Qualification Form. The form may be obtained from the division at www.dlr.sd.gov/insurance. The application must be submitted electronically.

History

Source: 25 SDR 13, effective August 9, 1998; 31 SDR 67, effective November 14, 2004; 34 SDR 200, effective January 28, 2008; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:05.03 Guidelines for course renewal

Every two years, on the last day of the continuing education course's original approval month, the course provider must file for renewal. Courses submitted for renewal pursuant to this section must use the form in § 20:06:18:05:02. The fee for course renewal is ten dollars.

History

Source: 43 SDR 181, effective July 7, 2017; 51 SDR 142, effective July 3, 2025.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:06 Course approval

Upon receipt of the information required in § 20:06:18:05, the director shall approve or deny the course. Based on the number of contact hours, the director shall assign the number of CEC hours awarded for an approved course and any line of insurance for which it qualifies. Forty-five days after filing, a course is considered approved for the number of CEC hours requested in the provider's course filing unless it has been formally approved or disapproved by the director within that period. The director may, at any time after notice and for cause shown, withdraw a course approval. Licensees who attend a course prior to the time approval is withdrawn will receive CEC hours. A course may not be established for less than one CEC hour. Courses submitted for approval must consist of a minimum of one hour of course instruction. Courses conducted in conjunction with other meetings must have a separate continuing education course component. The director may audit continuing education offerings or other related insurance education offerings with or without notice to the provider.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 208, effective June 3, 1990; 51 SDR 142, effective July 3, 2025.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:07 Unapproved course subject matter

The director will not approve the following course subject matter for continuing education credit:

(1) Automation;

(2) Clerical functions;

(3) Computer science;

(4) Courses or presentations on computer skills or software;

(5) Compliance courses from the Financial Industry Regulatory Authority, U.S. Securities and Exchange Commission, or National Association of Securities Dealers on investments including stocks, bonds, and mutual funds;

(6) Courses that are primarily intended to impart knowledge of specific products of specific insurers;

(7) Customer service;

(8) General management training;

(9) Goal-setting;

(10) Health, stress, or exercise management;

(11) Marketing or telemarketing;

(12) Motivational training;

(13) Company and vendor-specific product launches;

(14) Office skills or equipment or procedures;

(15) Organizational procedures and internal policies of an individual insurer;

(16) Personal improvement;

(17) Prospecting;

(18) Psychology;

(19) Relationship building;

(20) Restoration courses promoting products or services;

(21) Sales training;

(22) Service standards or service vendors;

(23) Time management; and

(24) Other topics or courses not related to insurance knowledge or the competence of the licensee.

This list does not limit the director's authority to disapprove any application which fails to meet the standards in this chapter for course approval.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 16 SDR 208, effective June 3, 1990; 25 SDR 13, effective August 9, 1998; 46 SDR 65, effective November 25, 2019.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:08 Approved course subject matter

(1) The director may approve the following insurance-related course subject matter for continuing education credit:

(a) Actuarial mathematics, statistics, and probability;

(b) Assigned risk;

(d) Courses leading to and maintaining insurance designations;

(e) Employee benefit plans;

(f) Errors and omissions;

(g) Estate planning or taxation;

(h) Ethics;

(i) Fundamentals or principles of annuity contracts, crop and hail, life, accident and health, or property and casualty insurance;

(j) Insurance accounting or actuarial considerations;

(k) Insurance contract or policy comparison and analysis;

(l) Insurance fraud;

(m) Insurance laws, rules, regulations, and regulatory updates;

(n) Insurance policy provisions;

(o) Insurance product-specific knowledge;

(p) Insurance rating, underwriting, or claims;

(q) Insurance tax laws;

(r) Legal principles;

(s) Long-term care/partnership;

(t) Loss prevention, control, and mitigation;

(u) Managed care;

(v) Principles of risk management;

(w) Proper uses of insurance products;

(x) Real Estate Settlement Procedures Act;

(y) Restoration courses regarding claims, loss control issues, and mitigation;

(z) Retirement planning;

(aa) Securities;

(bb) Suitability in insurance products;

(cc) Surety bail bond;

(dd) Underwriting principles; and

(ee) Viatical or life settlements.

(2) The director may approve other topics that contribute substantive knowledge relating to the field of insurance and expands the competence of the licensee. Courses that meet the subject matter criteria as required by this section include the following:

(a) Any registered program of the Certified Financial Planner Board of Standards, Inc. that fulfills the educational requirement leading to the CERTIFIED FINANCIAL PLANNERTM certification awarded by the Certified Financial Planner Board of Standards, Inc.;

(b) The Certified Insurance Counselor (CIC) program;

(d) The Chartered Life Underwriters (CLU) program;

(e) The Chartered Property Casualty Underwriters (CPCU) program;

(f) The Fellow Life Management Institute (FLMI) program;

(g) The Fraternal Insurance Counselors (FIC) program;

(h) The Insurance Institute of American (IIA) program;

(i) The Life Underwriters Training Course (LUTC) program;

(j) The National Association of Security Dealers (NASD) Series 6, 7, 24, 26, 63, 65, and 66 program;

(k) The Registered Health Underwriters (RHU) program;

(l) Insurance related courses offered by an accredited college or university whether taken by correspondence or class attendance, for the number of CEC hours assigned by the director;

(m) Any graduate courses of the programs listed in this section.

A licensee who studies independently for any part of the courses listed in this section shall receive credit whether or not a passing grade is received. If the licensee fails the course, credits for that part of the course may not again be awarded until the licensee receives a passing score.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 19 SDR 160, effective April 27, 1993; 25 SDR 13, effective August 9, 1998; 31 SDR 67, effective November 14, 2004; 32 SDR 128, effective January 29, 2006; 46 SDR 65, effective November 25, 2019.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:09 Maximum company-sponsored courses, Repealed

Maximum company-sponsored courses. Repealed.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 19 SDR 160, effective April 27, 1993; 32 SDR 203, effective June 5, 2006; 38 SDR 219, effective June 25, 2012; 52 SDR 33, effective October 1, 2025.

ARSD 20:06:18:10 Independent study

A licensee who studies independently for an insurance course examination approved by the director and who passes the examination shall receive credit for the number of CEC hours assigned by the director.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986.
General Authority: SDCL 58-4-1, 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:11 Repealed

Reporting of hours completed.** Repealed.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 15 SDR 143, effective March 29, 1989; 16 SDR 208, effective June 3, 1990; 19 SDR 160, effective April 27, 1993; 31 SDR 67, effective November 14, 2004; repealed, 34 SDR 200, effective January 28, 2008.

ARSD 20:06:18:12 Electronic fee

The fee required by SDCL 58-30-121 must be submitted electronically.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 31 SDR 67, effective November 14, 2004; 34 SDR 200, effective January 28, 2008; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-4-1, 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-121.

ARSD 20:06:18:13 Time extension of continuing education requirements

The director may grant an extension of time to complete the requirements imposed by SDCL 58-30-116 and § 20:06:18:03. This extension shall be granted only when the licensee can show good cause for the extension. "Good cause" includes disability, death, natural disaster, or other extenuating circumstances. Each request for a time extension shall be in writing from the licensee and shall include details to support the request. Each request must be received by the director not less than 21 days before the expiration of the two year period or the expiration of the time extension period.

History

Source: 12 SDR 106, effective December 30, 1985; 12 SDR 151, 12 SDR 155, effective July 1, 1986; 37 SDR 215, effective May 31, 2011.
General Authority: SDCL 58-4-1, 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-119.

ARSD 20:06:18:14 Instructor qualifications

An instructor for a continuing education course shall possess one of the following qualifications:

(1) Three years of recent experience in the subject area being taught;

(2) A degree related to the subject area being taught; or

(3) Two years of recent experience and sixty hours of course work in the subject area being taught.

In addition, instructors and providers must be trustworthy; of good character and reputation as to morals, integrity, and financial responsibility; and professional in manner and demeanor.

History

Source: 19 SDR 160, effective April 27, 1993; 51 SDR 142, effective July 3, 2025.
General Authority: SDCL 58-30-117, 58-30-122.
Law Implemented: SDCL 58-30-122.

ARSD 20:06:18:15 Grounds for revocation or denial of instructor status

The director may withdraw or deny instructor status from instructors:

(1) Supplying incorrect or false information regarding their background or qualifications; or

(2) Failing to meet the requirements of § 20:06:18:14.

History

Source: 19 SDR 160, effective April 27, 1993; 25 SDR 13, effective August 9, 1998.
General Authority: SDCL 58-30-122.
Law Implemented: SDCL 58-30-122.

ARSD 20:06:18:16 Course attendance -- Exceptions

A course may not be offered for less than the approved number of continuing education credits. Credit may not be issued to a participant who does not attend the entire continuing education course unless a written appeal is made to the director showing good cause as to why the course could not be attended in its entirety. If the director approves less than full attendance for the participant, the director shall specify the credit to be awarded. "Good cause" is defined as personal emergency, sickness, family illness, death of a family member, or other extenuating circumstances not within the control of the participant.

History

Source: 19 SDR 160, effective April 27, 1993.
General Authority: SDCL 58-4-1, 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-119.

ARSD 20:06:18:17 Advertisement of courses

A continuing education course may not be advertised as an approved course unless the division has approved the course in writing.

Courses that are advertised prior to formal approval, but after application for approval has been made, must contain the following statement or a substantially similar statement: "Application has been made for continuing education credit; however, this does not guarantee approval."

All advertising related to an approved course must contain the following information:

(1) The course title;

(2) The approved provider of the course;

(3) The line of authority for which the course is approved (life/health, property/casualty, crop/hail, or general);

(4) The number of approved CEC hours; and

(5) A brief summary or outline of the course content.

The course provider shall provide a more detailed outline at no charge to anyone requesting it in writing.

History

Source: 19 SDR 160, effective April 27, 1993; 45 SDR 45, effective October 10, 2018; 51 SDR 142, effective July 3, 2025.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:18 Carry-over of credits prohibited

No continuing education credit hours may be carried over from one two-year period to the next two-year period.

History

Source: 19 SDR 160, effective April 27, 1993.
General Authority: SDCL 58-4-1, 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-119.

ARSD 20:06:18:19 Effective date of producer appointments

The effective date of an appointment is the date that the notice of appointment made pursuant to SDCL 58-30-176 is approved by the director.

History

Source: 32 SDR 53, effective October 10, 2005.
General Authority: SDCL 58-30-195(11).
Law Implemented: SDCL 58-30-6, 58-30-176.

ARSD 20:06:18:20 Maximum credit for a course during a two-year period

Neither a student nor an instructor may earn credit for attending or instructing any continuing education course more than once during a two-year period.

History

Source: 34 SDR 200, effective January 28, 2008; 36 SDR 127, effective March 1, 2010.
General Authority: SDCL 58-4-1, 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:18:21 Definition of initial pretrail hearing

Definition of initial pretrial hearing.** For purposes of Title 58, initial pretrial hearing means either a defendant's arraignment or the first time that a defendant accused of a crime or the defendant's attorney appears before a court in a criminal action in any jurisdiction, whichever occurs first.

History

Source: 39 SDR 55, effective October 4, 2012.
General Authority: SDCL 58-30-195(14).
Law Implemented: SDCL 58-30-194.

ARSD 20:06:18:22 Prohibited compensation arrangements

Each health insurance issuer must provide equal compensation to an insurance producer for the sale of a similar health benefit plan sold inside and outside of an Exchange. No health insurance issuer may, directly or indirectly, enter into any contract, agreement, or arrangement with an insurance producer which provides for or results in the reduction and compensation paid to an insurance producer for the sale of a health benefit plan because the insured qualifies for coverage pursuant to SDCL 58-17-85. A health insurance issuer may pay a commission that does not vary based upon health status. A health insurance issuer may reimburse a producer for an insured who qualifies for coverage pursuant to SDCL 58-17-85 on a basis that varies the commission or that is based only upon the premium of a lesser rated risk only if the aggregate compensation the producer receives is not less than the compensation the health insurance issuer would pay for a similarly situated individual who qualifies for a lower rate. This section will apply to any policies or certificates issued after December 31, 2013.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87(8), 58-18-79, 58-18B-36(10), 58-30-195(10).
Law Implemented: SDCL 58-17-87(8), 58-18-80, 58-30-175.

Chapter 20:06:19 Exchange-traded call and put options

ARSD 20:06:19:01 Definitions

Definitions.** Terms used in this chapter mean:

(1) "Call option," an exchange-traded option contract granting the holder of the option the right to purchase a specified amount of the underlying security in accordance with the terms of the option contract;

(2) "Put option," an exchange-traded option contract granting the holder of the option the right to sell a specified amount of the underlying security in accordance with the terms of the option;

(3) "Closing purchase transaction," the purchase of an exchange-traded call or put option to reduce or eliminate the obligations of a call or put option writer on an option contract or contracts previously sold;

(4) "Closing sale transaction," the sale of an exchange-traded call or put option to reduce or eliminate the obligations of a call or put option purchase on an option contract or contracts previously purchased;

(5) "Escrowed securities," securities owned by an insurance company subject to a custodial agreement;

(6) "Exchange-traded," securities traded on the floor of a national securities exchange registered under the Securities Exchange Act of 1934 (15 U.S.C. 78(a) et seq.) that has been authorized to provide a market for option contracts pursuant to Rule 9b-1 of the Securities Exchange Act of 1934, as amended through October 13, 1982;

(7) "Guaranteed funds," cash or cash equivalents, as defined pursuant to Federal Reserve Regulation T in 12 C.F.R. section 220.1, et seq., as amended through June 26, 1985, owned by an insurance company on which a guarantee letter has been issued;

(8) "Underlying security," a stock, debt instrument, or index of a group of securities authorized or permitted under SDCL 58-27-9 to 58-27-19, inclusive, 58-27-21 to 58-27-26, inclusive, 58-27-28, 58-27-29, 58-27-32, 58-27-36, and 58-27-37 on which options are traded in a registered national securities exchange.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:19:02 Purchase and exercise of exchange-traded call and put options

An insurance company's cost for the purchase or investment in call or put options, except in a closing purchase transaction, is limited to the amount authorized in SDCL 58-27-51, substantiated by a trade confirmation or other proof of ownership issued to the insurance company by an entity meeting the requirements in subdivision 20:06:19:01(6).

An insurance company may not purchase exchange-traded call options for an underlying security in an amount which, when combined with its current security holdings, would exceed the limits in SDCL 58-27-15, 58-27-27, 58-27-29, 58-27-53, 58-27-54, and 58-27-57 to 58-27-60, inclusive.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:19:03 Sale and assignment of exchange-traded call and put options

An insurance company that sells or writes exchange-traded call options on securities it owns shall establish and maintain custodial agreements that require its escrowed securities to be kept segregated by the bank or other custodial agent from other securities owned by the insurance company deposited with the same bank or custodial agent and shall maintain in its possession documentation as required by § 20:06:19:08 for all transactions relating to the escrowed securities.

An insurance company that sells or writes exchange-traded put options guaranteed by its funds shall establish and maintain custodial agreements for its guaranteed funds as required for call options and shall maintain in its possession a copy of a guarantee letter identifying in detail its escrowed guaranteed funds as required in § 20:06:19:08.

An insurance company may not write or sell put options for the purchase of an underlying security in an amount which, when combined with its current securities holdings, would exceed the limits in SDCL 58-27-15, 58-27-27, 58-27-29, 58-27-53, 58-27-54, and 58-27-57 to 58-27-60, inclusive.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:19:04 Accounting standards for transactions in exchange-traded call and put options

An insurance company that buys or sells exchange-traded call and put options shall record the details of the transactions in a manner consistent with National Association of Insurance Commissioners (NAIC) rules and procedures contained in the 2025 edition of the Annual Statement Instructions - Life, Accident, and Health/Fraternal, the 2025 edition of the Annual Statement Instructions - Property and Casualty, the 2026 edition of the Financial Condition Examiners Handbook, the 2026 edition of the Accounting Practices and Procedures Manual, and the 2025 edition of the Purposes and Procedures Manual of the NAIC Investment Analysis Office.

References:

Annual Statement Instructions - Life, Accident and Health/Fraternal, 2025 edition, National Association of Insurance Commissioners. Cost: $0.
Annual Statement Instructions - Property and Casualty, 2025 edition, National Association of Insurance Commissioners. Cost: $0.
Accounting Practices and Procedures Manual, 2026 edition, National Association of Insurance Commissioners. Cost: $0.
Financial Condition Examiners Handbook, 2026 edition, National Association of Insurance Commissioners. Cost: $0.
Purposes and Procedures Manual of the NAIC Investment Analysis Office, 2025 edition, National Association of Insurance Commissioners. Cost: $0.

Copies of references 1 through 5 may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197; (816) 783-8300; http://www.naic.org.

History

Source: 13 SDR 75, effective December 21, 1986; 22 SDR 110, effective March 1, 1996; 23 SDR 43, effective October 1, 1996; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 27 SDR 111, effective May 7, 2001; 30 SDR 39, effective September 28, 2003; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 42 SDR 52, effective October 13, 2015; 42 SDR 177, effective June 28, 2016; 43 SDR 181, effective July 7, 2017; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-6-75, 58-27-7.
Law Implemented: SDCL 58-6-75.

ARSD 20:06:19:05 Accounting procedures for the purchase of call and put options

Accounting procedures for the purchase of call and put options must be in accordance with the following principles:

(1) Payment for call or put options will be recognized as a deferred asset;

(2) Treat call or put options not exercised prior to expiration as a sale of the option on the expiration date and recognize the loss as a capital loss;

(3) If a call option is exercised, add the consideration paid for it to the purchase price paid for the underlying securities and treat it as a capital expenditure;

(4) If a put option is exercised, deduct the consideration paid for it from the price received for the underlying security and treat it as reduction of proceeds;

(5) If a call or put option is terminated through a closing sale transaction, treat the difference between the consideration paid for the purchase of the call or put option and the consideration received for the closing sale transaction as a capital gain or loss.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:19:06 Accounting procedures for the sale or writing of call and put options

Consideration for the sale or writing of a call or put option shall not be recognized as income at the time of receipt; the amount received shall be carried in a deferred account. Accounting procedures for call or put options sold or written by an insurance company must be in accordance with the following principles:

(1) If the call or put option is not exercised, treat the consideration for the option as income at the expiration date of the option;

(2) If the underlying security is sold through the exercise of the call option, treat the consideration received from the option as increasing the amount realized from the sale of the underlying security and include it in determining capital gain or loss;

(3) If the underlying security is purchased through the exercise of the put option, treat the consideration received for the option as reducing the cost basis of the security purchased;

(4) If the obligation under the call or put option is terminated because of a closing purchase transaction, treat the difference between the consideration received from the sale of the call or put option and the consideration paid in the closing purchase transaction as income or expense.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:19:07 Valuation

Exchange-traded call or put options shall be valued as follows:

(1) Exchange-traded call or put stock or stock index options purchased by an insurance company shall be valued at the current market price on a registered national securities exchange. This "adjusting to market" will result in an unrealized gain or loss;

(2) Stock owned by an insurance company on which it has sold a call option shall be valued at the current market price during the period the option exists;

(3) The amount held in a deferred account for call or put stock options sold or written shall be valued at the current market price. The adjustment will result in an unrealized gain or loss;

(4) Every call or put option on an underlying debt instrument purchased by an insurance company shall be valued at cost provided that, at the time of purchase, the insurance company anticipates its disposal or acquisition in the ordinary course of business of an asset or group of assets identified and associated with the option in the company records. Debt options purchased or recorded as set forth in this subdivision shall be valued at the current market price as provided in subdivision (1) of this section;

(5) Debt instruments owned by an insurance company on which it has sold or written a call option shall be valued in the same manner as other instruments owned by the insurer;

(6) The amount held in a deferred account for call or put debt options sold or written shall be valued at the current market price. The adjustment will result in an unrealized gain or loss.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:19:08 Administration and record keeping

An insurance company must establish policies and procedures prior to engaging in call or put option transactions. These policies must be approved by the board of directors and reviewed annually. These policies shall address but are not limited to investment strategies and objectives, record keeping, and accounting for these transactions.

The record keeping and accounting systems governing the purchase and sale of options must be sufficiently detailed so that the insurance examiners and internal auditors can police the insurer's policies and procedures for these transactions.

Every call or put option transaction must be authorized pursuant to SDCL 58-27-69.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

Chapter 20:06:20 Interest rate futures

ARSD 20:06:20:01 Definitions

Terms used in this chapter mean:

(1) "Commodity futures trading commission," the federal regulatory agency charged under the Commodity Futures Trading Commission Act of 1974 (7 U.S.C. 1 et seq.) with the regulation of exchanges;

(2) "Deferred gains or losses," the unrecognized increase or decrease in the value of financial futures contracts resulting from uncompleted hedging transactions or terminated financial futures contracts;

(3) "Exchange-traded," traded on an exchange designated as a contract market regulated by the commodity futures trading commission;

(4) "Financial futures contract," an exchange-traded contract to purchase or deliver a specified amount of financial instruments on a specified date;

(5) "Financial instrument," a security, currency, or index of a group of securities or currencies authorized or permitted under SDCL 58-27-9 to 58-27-19, inclusive, 58-27-28, 58-27-29, 58-27-32, 58-27-36, and 58-27-37;

(6) "Hedge," the positioning of a hedged item with one or more hedging transactions for the purpose of reducing an existing risk;

(7) "Hedged item," a company asset or liability, group of company assets or liabilities, or assets or liabilities or groups of assets or liabilities reasonably expected to be acquired or incurred by a company in the normal course of business. The assets or liabilities must bear price or interest rate risks;

(8) "Hedging transaction," the opening or closing, as may be adjusted from time to time, of one or more financial futures contracts reasonably expected to reduce the price or interest rate risk of a hedged item;

(9) "Margin," cash or securities required for deposit with a futures commission merchant, clearinghouse, or safekeeping agent to ensure performance of the terms of the financial futures contract, including maintenance margins, initial deposits to guarantee performance of the contract terms, and variance margins, subsequent deposits required as the market value of the contract fluctuates.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:20:02 Transactions in financial futures

Insurance companies may not enter into financial futures contracts except as part of a hedging transaction. If at any time during the life of a hedge the dollar variation between the hedged item and the hedging transaction is no longer expected to correlate, the transaction cannot be considered a hedging transaction and the financial futures contract must be closed. The amortized cost of the hedged item may not be increased above its fair market value. If the insurer no longer expects to acquire or incur the hedged item, the hedge must be terminated. An insurance company's transactions in financial futures must be evidenced by a trade confirmation or other proof of ownership issued from an authorized entity within the definition of "exchange-traded" in subdivision 20:06:20:01(3).

An insurance company may not have outstanding any form of margin and net deferred gains and losses from open, completed, or terminated financial futures contracts in an amount exceeding the limits in SDCL 58-27-51. Financial futures contracts must be in investments as described in subdivision 20:06:20:01(5) and, when combined with other current holdings, may not exceed the limits in SDCL 58-27, whether or not they are acquired at the delivery date.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:20:03 Accounting for transactions in financial futures contracts

Gains and losses for hedging transactions may be deferred for hedged items carried at amortized cost under the following accounting procedures:

(1) The initial cost and any subsequent cost of the hedging vehicle shall be carried in a deferred account until the hedge is completed or closed out;

(2) If the underlying transaction is completed, the hedge and the transaction shall be considered as one. In the case of an acquisition, the gain or loss on the hedge shall be amortized over the life of the security acquired. In the case of a disposition, the gain or loss on the hedge shall be combined with the gain or loss on the sale;

(3) If the hedge is closed out and the anticipated underlying transaction is canceled, the gain or loss from the hedge shall be treated as investment income or expense;

(4) Allocation of gains or losses to hedged items must be recorded under an accounting system pursuant to § 20:06:20:05.

Gains or losses on opening hedging transactions on assets or liabilities carried at market value must be recognized currently.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:20:04 Administrative policies and procedures

Insurance companies must establish policies and procedures for transactions in financial futures prior to engaging in any hedging transaction. The policies and procedures must be approved by their board of directors and reviewed annually. The policies and procedures shall include, but are not limited to, the following:

(1) Authorized investments;

(2) Investment limitations;

(3) Authorization and approval procedures;

(4) Investment strategies and objectives;

(5) Accounting and reporting procedures; and

(6) Controls.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

ARSD 20:06:20:05 Repealed

Record keeping requirements.** Repealed.

History

Source: 13 SDR 75, effective December 21, 1986; 22 SDR 110, effective March 1, 1996; 23 SDR 43, effective October 1, 1996; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 27 SDR 111, effective May 7, 2001; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; repealed, 33 SDR 59, effective October 5, 2006.

ARSD 20:06:20:06 Authorization of future contracts

Every financial futures contract transaction must be authorized pursuant to SDCL 58-27-69.

History

Source: 13 SDR 75, effective December 21, 1986.
General Authority: SDCL 58-4-1, 58-27-7.
Law Implemented: SDCL 58-27-7.

Chapter 20:06:21 Long-term care insurance

ARSD 20:06:21:01 Definitions

Terms used in this chapter mean:

(1) "Activities of daily living," bathing, dressing, eating, maintaining continence, toileting, and transferring;

(2) "Acute condition," a medically unstable condition that requires frequent monitoring of an individual by medical professionals, such as physicians and registered nurses;

(3) "Adult day care," a program of social and health-related services provided for six or more individuals during the day in a community group setting for the purpose of supporting frail, impaired elderly or other adults with disabilities who can benefit from care in a group setting outside the home;

(4) "Bathing," washing oneself by sponge bath or in a tub or shower, including the task of getting into or out of the tub or shower;

(5) "Chronically ill individual," any individual who has been certified by a licensed health care practitioner as:

(a) Being unable to perform (without substantial assistance from another individual) at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity; or

(b) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

The term, chronically ill individual, does not include an individual otherwise meeting these requirements unless within the preceding twelve-month period a licensed health care practitioner has certified that the individual meets these requirements;

(6) "Cognitive impairment," a deficiency in a person's short- or long-term memory; orientation as to person, place, and time; deductive or abstract reasoning; or judgment as it relates to awareness of safety;

(7) "Continence," the ability to maintain control of bowel or bladder function or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene, including caring for a catheter or colostomy bag;

(8) "Dressing," putting on and taking off all items of clothing and any necessary braces, fasteners, or artificial limbs;

(9) "Eating," feeding oneself by getting food into the body from a receptacle such as a plate, cup, or table, by a feeding tube, or intravenously;

(10) "Exceptional increase," only those increases filed by an insurer as exceptional for which the director determines the need for the premium rate increase is justified:

(a) Due to changes in laws or rules applicable to long-term care coverage in this state; or

(b) Due to increased and unexpected utilization that affects the majority of insurers of similar products;

(11) "Hands-on assistance," the physical assistance, minimal, moderate, or maximal, without which the individual would not be able to perform the activities of daily living;

(12) "Home health care services," medical and nonmedical services provided to ill, disabled, or infirm persons in their residences, including homemaker services, as defined in § 67:40:07:01, assistance with activities of daily living, and respite care services;

(13) "Incidental," as used in § 20:06:21:67, the value of the long-term care benefits provided is less than ten percent of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue;

(14) "Independent review organization," an organization that conducts independent reviews of long-term care benefit trigger decisions;

(15) "Licensed health care practitioner," a physician, as defined in Section 1861(r)(1) of the Social Security Act, if approved by the director, a registered professional nurse, licensed social worker, or other individual who meets requirements prescribed by the Secretary of the Treasury;

(16) "Licensed health care professional," an individual qualified by education and experience in an appropriate field, to determine, by record review, an insured's actual functional or cognitive impairment;

(17) "Long-term care partnership policy," a long-term care insurance policy, which is designed to meet the requirements for asset disregard, as referenced in the state plan amendment effective July 1, 2007, under Medical Assistance and which meets the requirements of SDCL chapter 58-17B and this chapter, and which includes inflation protection consistent with the provisions of § 20:06:21:76;

(18) "Maintenance or personal care services," any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual (including the protection from threats to health and safety due to severe cognitive impairment);

(19) "Medicare," the federal program of health insurance for older persons provided under Title XVIII of the Social Security Amendments of 1965 and as amended through December 31, 1991, which is The Health Insurance for the Aged Act, amended (Title I, Part I of Pub. L. No. 89-97);

(20) "Mental or nervous disorder," a neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder;

(21) "Personal care," the provision of hands-on service to assist an individual with activities of daily living;

(22) "Qualified actuary," a member in good standing of the American Academy of Actuaries;

(23) "Qualified long-term care insurance contract" or "federally tax-qualified long-term care insurance contract":

(a) An individual or group insurance contract that meets the requirements of Section 7702B(b) of the Internal Revenue Code of 1986, as amended as of January 1, 2002, as follows:

(i) The only insurance protection provided under the contract is coverage of qualified long-term care services. A contract does not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate;

(ii) The contract does not pay or reimburse expenses incurred for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act, as amended as of January 1, 2002, or would be so reimbursable but for the application of a deductible or coinsurance amount. The requirements of this subparagraph do not apply to expenses that are reimbursable under Title XVIII of the Social Security Act only as a secondary payor. A contract does not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate;

(iii) The contract is guaranteed renewable, within the meaning of section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended as of January 1, 2002;

(iv) The contract does not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed except as provided in subsection 20:06:21:01(22)(v);

(v) All refunds of premiums, and all policyholder dividends or similar amounts, under the contract are to be applied as a reduction in future premiums or to increase future benefits, except that a refund on the event of death of the insured or a complete surrender or cancellation of the contract cannot exceed the aggregate premiums paid under the contract; and

(vi) The contract meets the consumer protection provisions set forth in Section 7702B(g) of the Internal Revenue Code of 1986, as amended as of January 1, 2002; or

(b) The portion of a life insurance contract that provides long-term care insurance coverage by rider or as part of the contract and that satisfies the requirements of Sections 7702(B)(b) and (e) of the Internal Revenue Code of 1986, as amended as of January 1, 2002;

(24) "Qualified long-term care services," services that meet the requirements of Section 7702(c)(1) of the Internal Revenue Code of 1986, as amended as of January 1, 2002, as follows: necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation, and rehabilitative services, and maintenance or personal care services which are required by a chronically ill individual, and are provided pursuant to a plan of care prescribed by a licensed health care practitioner;

(25) "Respite care services," care given to provide temporary relief for primary care given to a dependent person;

(26) "Severe cognitive impairment," a loss or deterioration in intellectual capacity that is comparable to, and includes, Alzheimer's disease and similar forms of irreversible dementia, and is measured by clinical evidence and standardized tests that reliably measure impairment of an individual in the following areas:

(a) Short-term or long-term memory;

(b) Orientation as to people, places, or time; and

(27) "Toileting," getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene;

(28) "Transferring," moving into or out of a bed, chair, or wheelchair.

History

Source: 16 SDR 208, effective June 3, 1990; 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002; 31 SDR 21, effective August 23, 2004; 33 SDR 230, effective July 2, 2007; 34 SDR 88, effective September 10, 2007; 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.
Law Implemented: SDCL 58-17B-2, 58-17B-4.

ARSD 20:06:21:01.01 Nature of care -- How defined

The policy or certificate shall contain definitions for the terms, skilled nursing care, personal care, specialized care, assisted living care, home care, and other services, in relation to the level of skill required, the nature of the care, and the setting in which care must be delivered.

History

Source: 22 SDR 97, effective December 18, 1995; 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-2, 58-17B-4.

ARSD 20:06:21:01.02 Service providers -- How defined

The policy or certificate shall contain definitions for all providers of services, including skilled nursing facilities, extended care facilities, convalescent nursing homes, personal care facilities, specialized care providers, assisted living facilities, and home health care agencies in relation to the services and facilities required to be available and the licensure, certification, or registration or degree status of those providing or supervising the services. When the definition requires that the provider be appropriately licensed, certified, or registered, it shall also state what requirements a provider must meet in lieu of licensure, certification or registration when the state in which the service is to be furnished does not require a provider of these services to be licensed, certified or registered, or when the other state licenses, certifies, or registers the provider of services under another classification.

History

Source: 22 SDR 97, effective December 18, 1995; 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38(6), 58-17B-2, 58-17B-4.

ARSD 20:06:21:01.03 Long-term care insurance

The term, long-term care insurance, includes group and individual annuities and life insurance policies or riders that provide direct coverage or supplement long-term care insurance. The term also includes a policy or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. The term also includes qualified long-term care insurance contracts. Long-term care insurance does not include any insurance policy that is offered primarily to provide hospital confinement indemnity coverage, major medical expense coverage, or disability income or related asset-protection coverage. With regard to life insurance, this term does not include life insurance policies that accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement, and that provide the option of a lump-sum payment for those benefits, and where neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long-term care. However, any rider to a life insurance policy that accelerates benefits and:

(1) the amount of the accelerated benefit is unrelated to the reimbursement of long-term care services;

(2) contains no separate premium for the rider; and

(3) is not marketed as long-term care insurance

is not subject to the requirements for long-term care insurance.

Notwithstanding any other provision of SDCL chapter 58-17B, any product advertised, marketed, or offered as long-term care insurance or as an alternative to long-term care or nursing home insurance that conditions benefits based upon activities of daily living (ADLs) is subject to the provisions of chapter 20:06:21.

History

Source: 28 SDR 157, effective May 19, 2002; 32 SDR 203, effective June 5, 2006.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-2.

ARSD 20:06:21:01.04 Similar policy forms

For purposes of this chapter, similar policy forms, are all of the long-term care insurance policies and certificates issued by an insurer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in SDCL 58-17B-2(4)(a) are not considered similar to certificates or policies otherwise issued as long-term care insurance, but are similar to other comparable certificates with the same long-term care benefit classifications. For purposes of determining similar policy forms, long-term care benefit classifications are defined as follows: institutional long-term care benefits only, non-institutional long-term care benefits only, or comprehensive long-term care benefits.

History

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-2.

ARSD 20:06:21:01.05 Treatment of accelerated benefits in life insurance

Accelerated benefits payable under a life insurance contract:

(1) To a policyowner or certificateholder, during the lifetime of the insured, in anticipation of death or upon the occurrence of specified life-threatening or catastrophic conditions as defined by the policy or rider; and

(2) That reduce the death benefit otherwise payable under the life insurance contract; and

(3) That are payable upon the occurrence of a single qualifying event that results in the payment of a benefit amount determined at the time of acceleration

are not considered to be charging a separate premium pursuant to § 20:06:21:01.03.

History

Source: 32 SDR 203, effective June 5, 2006.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-2.

ARSD 20:06:21:01.06 Claim and clean claim -- Defined

For purposes of §§ 20:06:21:104 to 20:06:21:108, inclusive, terms used mean:

(1) "Claim," a request for payment of benefits under an in-force policy, regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;

(2) "Clean claim," a claim that has no defect or impropriety, including any lack of required substantiating documentation, such as satisfactory evidence of expenses incurred, or particular circumstance requiring special treatment that prevents timely payment from being made on the claim.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:02 Minimum standards for long-term care insurance policies

Long-term care insurance policies shall contain benefits that are reasonable in relation to the premium charged. Long-term care insurance policies that require prior hospitalization or institutionalization as a condition of coverage may not require that the present hospitalization or institutionalization be for the same condition for which the insured was previously hospitalized or institutionalized. Long-term care insurance policies may not require, as a condition of coverage, that rehabilitation received by the insured demonstrably improve the insured's condition. The elimination period for any one confinement may not exceed 100 days for a long-term care insurance policy or one year for a long-term care insurance rider.

An insurer may make application for an elimination period in excess of 100 days, provided that specific suitability criteria or underwriting procedures are filed with the application. If the director finds that the procedures or criteria provide adequate protection for consumers, the director may approve the application.

Long-term care policies which condition payment of benefits on the inability to perform activities of daily living (ADLs) may not be so restrictive that they exclude coverage of services provided at least at the level of intermediate care and may not be used to restrict coverage for organic brain disorders, including Alzheimer's disease and senile dementia. This paragraph also applies to policies basing benefits on functional incapacity. Long-term care policies or portions thereof that condition the receipt of benefits on ADLs or functional incapacity may not also condition benefits on a certain level of care.

Cross-Reference: Intermediate care services, § 67:16:04:18.

History

Source: 16 SDR 208, effective June 3, 1990; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.
Law Implemented: SDCL 58-17B-3, 58-17B-6, 58-17B-7.

ARSD 20:06:21:02.01 Annuity policies with long-term care benefits subject to waiting period

An annuity policy that provides long-term care benefits may contain a waiting period before long-term care benefits are payable in addition to an elimination period. The waiting period may not exceed two years and may only be issued to applicants who are determined to be able to self fund the long-term care benefit during the waiting period pursuant to suitability guidelines as approved by the director. Any waiting periods or any other limitations on the use of annuity proceeds to fund long-term care must be prominently disclosed in advertising and solicitation materials.

History

Source: 34 SDR 88, effective September 10, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:03 Renewability of group policies -- Required disclosures

Group long-term care insurance policies that are issued in this state or filed for approval pursuant to SDCL 58-17B-14 and that are neither guaranteed renewable or noncancelable shall prominently state on the front page of each certificate that the coverage is conditionally renewable and shall state in clear and concise language the conditions for nonrenewal.

History

Source: 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.
Law Implemented: SDCL 58-17B-3, 58-17B-12.

ARSD 20:06:21:04 Permissible exclusions from coverage

A long-term care insurance policy may exclude or limit coverage for the following:

(1) Declared or undeclared war;

(2) Suicide or self-inflicted injuries;

(3) Alcoholism or drug abuse. This subdivision does not permit an exclusion or limitation for long-term care services due to the insured's alcoholism or drug abuse, other than for the treatment of alcoholism or drug abuse;

(4) Mental or emotional disorder;

(5) Pre-existing conditions;

(6) Participation in a felony, riot, or insurrection;

(7) Treatment in a government facility at no charge to the insured or that portion of any treatment which is paid by a government plan;

(8) Limitations based on territory;

(9) Mental or nervous disorders. This subdivision does not permit exclusion or limitation of benefits because of Alzheimer's disease;

(10) Aviation. This exclusion applies only to passengers who have not paid fares;

(11) Workers' compensation. Work-related injuries or illnesses if benefits are paid under workers' compensation or other similar laws;

(12) Service or care provided by a family member unless:

(a) The family member is a regular employee of the service or care provider furnishing the service or care;

(b) The service or care provider receives the payment for the service or care; and

(c) The family member receives no compensation other than the normal compensation for an employee in his or her job category; or

(13) For group coverage issued on a guaranteed issue basis an inability to perform activities of daily living or a severe cognitive impairment that predated the coverage and was continuous in determining whether the benefit triggers have been met. An inability to perform an activity of daily living that pre-dated coverage is considered continuous unless the insured demonstrates that the insured has regained the ability to perform that activity of daily living based on the same standards that are applied as benefit triggers under the policy.

History

Source: 16 SDR 208, effective June 3, 1990; 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002; 29 SDR 107, effective February 5, 2003; 31 SDR 21, effective August 23, 2004.
General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.
Law Implemented: SDCL 58-17B-11.

ARSD 20:06:21:05 Loss ratios

This section applies to all long-term care insurance policies or certificates except those covered under § 20:06:21:61 and §§ 20:06:21:63 to 20:06:21:69, inclusive.

A long-term care insurance policy sold in this state shall meet or exceed the minimum loss ratio. The minimum loss ratio for an individual policy is 60 percent. The minimum loss ratio for a group policy is 65 percent. Long-term care insurance coverage sold through the mail or mass media advertising is considered an individual policy and not a group policy. The loss ratio shall be calculated based on earned premium and incurred loss in the aggregate. The premium shall be designed to develop at least the minimum loss ratio over the lifetime of the policy. An anticipated loss ratio shall be based on generally accepted actuarial principles and practices as published in the Actuarial Standards of Practice.

All filings of rates and rating schedules shall demonstrate that actual and expected losses, in relation to premiums, comply with the requirements of this section.

Loss ratio requirements do not apply to long-term care riders attached to or provisions included in life insurance policies.

In evaluating the expected loss ratio, consideration shall be given to all relevant factors, including:

(1) Statistical credibility of incurred claims experience and earned premiums;

(2) The period for which rates are computed to provide coverage;

(3) Experienced and projected trends;

(4) Concentration of experience within early policy duration;

(5) Expected claim fluctuation;

(6) Experience refunds, adjustments, or dividends;

(7) Renewability features;

(8) All appropriate expense factors;

(9) Interest;

(10) Experimental nature of the coverage;

(11) Policy reserves;

(12) Mix of business by risk classification; and

(13) Product features such as long elimination periods, high deductibles, and high maximum limits.

Reference: Actuarial Standards of Practice, American Academy of Actuaries. Copies may be obtained free of charge on the website: http:/www.actuarialstandardsboard.org/asops.htm.

History

Source: 16 SDR 208, effective June 3, 1990; 22 SDR 106, effective February 18, 1996; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-17B-8.
Law Implemented: SDCL 58-17B-8.

ARSD 20:06:21:05.01 Relation of benefits to premium for accelerated death benefit on life insurance

A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:

(1) The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

(2) The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of SDCL 58-15-31;

(3) The policy meets the disclosure requirements of §§ 20:06:21:44.01, 20:06:21:47, and 20:06:21:48;

(4) Any policy illustration that meets the applicable requirements of chapter 20:06:38; and

(5) An actuarial memorandum is filed with the Division of Insurance that includes:

(a) A description of the basis on which the long-term care rates were determined;

(b) A description of the basis for the reserves;

(d) A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

(e) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

(f) The estimated average annual premium per policy and the average issue age;

(g) A statement as to whether underwriting is performed at the time of application. If underwriting is used the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

(h) A description of the effect of the long-term policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-8.
Law Implemented: SDCL 58-17B-8.

ARSD 20:06:21:06 Cost-of-living adjustments -- Basis

The annual cost-of-living adjustment may be based on either the medical care component of the federal consumer price index or may be based on a fixed percentage increase of not less than five percent or more than ten percent. The adjustment period must continue for at least ten years or to age 85, whichever is sooner. The maximum lifetime benefit, if any, must be increased by the same percentage as the daily benefit. Annual adjustments must continue during the entire adjustment period regardless of the claims status of the policy.

An insurer may offer periodic adjustments in lieu of annual adjustments if the adjustments offered are at intervals of no more than three years. If the periodic adjustment is based on a fixed percentage, the adjustment must be at a rate which complies with the annual fixed percentage total over the period used.

If a company already offers a cost-of-living adjustment endorsement that meets the requirements of this section, other adjustment endorsements may be offered if the director determines that the endorsements are in the public interest.

If a policy states the maximum policy limit as a time interval, the maximum policy limit is not required to be adjusted. The daily benefit is required to be adjusted.

Notwithstanding any other provision, an insurer may not be required to increase its maximum lifetime benefit beyond $500,000.

History

Source: 16 SDR 208, effective June 3, 1990; 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4, 58-17B-13.1.
Law Implemented: SDCL 58-17B-13.

ARSD 20:06:21:06.01 Cost-of-living adjustments -- Minimum standards

An insurer may not offer a long-term care insurance policy unless the insurer also offers to the policyholder, in addition to any other inflation protection, the option to purchase a policy that provides for benefit levels along with benefit maximums to increase. The timing of increases in benefits must be related to reasonably anticipated increases in the costs of long-term care services covered by the policy. Insurers must offer to each policy holder, at the time of purchase, the option to purchase a policy with an inflation protection feature no less favorable than one of the following:

(1) An option which guarantees the insured individual the right to periodically increase benefit levels without providing evidence of insurability or health status if the option for the previous period was not declined. The amount of the additional benefit must be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least five percent for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made;

(2) An option which covers a specified percentage of actual or customary and reasonable charges and does not include a maximum specified indemnity amount or limit; or

(3) An option which increases benefit levels annually in a manner so that the increases are compounded annually at a rate not less than five percent;

(4) The offer may not be required of life insurance policies or riders containing accelerated long-term care benefits.

History

Source: 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4, 58-17B-13.1.
Law Implemented: SDCL 58-17B-13, 58-17B-13.1.

ARSD 20:06:21:06.02 Group cost-of-living adjustments -- Exceptions

If the policy is issued to a group, the offer required in SDCL 58-17B-13 and 58-17B-13.1 and in § 20:06:21:06.01 shall be made to the group policyholder. However, if the policy is issued to a group as defined in SDCL 58-17B-2(4)(d), other than a continuing care retirement community, the offering shall be made to each proposed certificateholder.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-13.1.
Law Implemented: SDCL 58-17B-13.

ARSD 20:06:21:06.03 Cost-of-living adjustments -- Continuation of benefit increases

Inflation protection benefit increases under a policy which contains such benefits shall continue without regard to an insured's age, claim status, or claim history or the length of time the person has been insured under the policy.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-13.1.
Law Implemented: SDCL 58-17B-13.

ARSD 20:06:21:06.04 Cost-of-living adjustments -- Automatic increases -- Conspicuous offer of constant premium

An offer of inflation protection which provides for automatic benefit increases shall include an offer of a premium which the insurer expects to remain constant. The offer must disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-13.1.
Law Implemented: SDCL 58-17B-13.

ARSD 20:06:21:06.05 Cost-of-living adjustments -- Rejection by policyholder

Inflation protection as provided in §§ 20:06:21:06 to 20:06:21:06.04, inclusive, shall be included in a long-term care insurance policy unless an insurer obtains a rejection of inflation protection signed by the policyholder. The rejection shall be considered a part of the application and shall state: "I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this policy with and without inflation protection. Specifically, I have reviewed Plans (identify the plans) and I reject inflation protection."

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-13.1.
Law Implemented: SDCL 58-17B-13.

ARSD 20:06:21:07 Applicability of rules to long-term care insurance riders

Long-term care riders attached to or included in life insurance policies must comply with the long-term care rules in this chapter unless specifically excluded.

History

Source: 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.
Law Implemented: SDCL 58-17B-2, 58-17B-4.

ARSD 20:06:21:08 "Medically necessary" defined

When "medically necessary" is used as a condition to qualify for benefits, it may not be defined more restrictively than as requiring the certification of the insured's physician.

If a policy does not have a prior hospitalization requirement, then the following definition of medical necessity may be used: Treatment that is appropriate and consistent with the diagnosed condition. This is treatment, that, in accordance with accepted medical standards, could not have been omitted without adversely affecting the patient's condition. This definition of medical necessity may not be used for policies which condition benefits on inability to perform ADLs or functional incapacity.

History

Source: 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:09 Basis for conversion of coverage from group defined

For the purposes of §§ 20:06:21:09 to 20:06:21:17, inclusive, a basis for conversion of coverage means a policy provision that entitles an individual, under the following conditions, to the issuance, without evidence of insurability, of a converted policy by the insurer under whose group policy the insured is covered:

(1) The individual's coverage under the group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or for an insured class; and

(2) The individual has been continuously insured under the group policy and any group policy that it replaced, for at least six months immediately preceding termination.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:10 Converted policy from group defined

For the purposes of §§ 20:06:21:09 to 21:06:21:17, inclusive, a converted policy from group is an individual policy of long-term care insurance providing benefits identical to or benefits determined by the director to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made.

If the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use, certain providers or facilities, the director, in determining the substantial equivalence of benefits, shall take into consideration the differences between managed care and nonmanaged care plans, including provider system arrangements; service availability; benefit levels; and administrative complexity.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:11 Converted policy from group -- Time allowed for written application

The individual, or someone acting on the individual's behalf, must apply for the converted policy in writing and must pay the first premium due, if any, as directed by the insurer not later than 31 days after termination of coverage under the group policy. The insurer shall issue the converted policy effective on the day following the termination of coverage under the group policy. The converted policy must be renewable annually.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:12 Converted policy from group -- Calculation of policy premium

Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. If the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of the insured's coverage under the previous group policy.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:13 Continuation or conversion is mandatory -- Exceptions

Continuation of coverage or issuance of a converted policy is mandatory, except as follows:

(1) Termination of group coverage resulted from an individual's failure to make a required payment of premium or contribution when due; or

(2) The terminating coverage is replaced not later than 31 days after termination by group coverage which is effective on the day following the termination of coverage and meets the following requirements:

(a) The replacement coverage provides benefits identical to or benefits determined by the director to be substantially equivalent to or in excess of those provided by the terminating coverage; and

(b) The premium for the replacement coverage is calculated in a manner consistent with the requirements of § 20:06:21:12.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:14 Converted policy from group to individual -- Reduction of benefits -- Exception

Notwithstanding any other provision of §§ 20:06:21:09 to 20:06:21:17, inclusive, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy which provides benefits on the basis of incurred expenses may contain a provision which results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100 percent of incurred expenses. The provision may only be included in the converted policy if the converted policy also provides for a premium decrease or refund which reflects the reduction in benefits payable.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:15 Converted policy from group -- Benefits payable

The converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, may not exceed those that would have been payable had the individual's coverage under the group policy remained in force.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:16 Converted policy from group -- Eligibility for coverage of relatives

Notwithstanding any other provision of § 20:06:21:17, any insured individual whose eligibility for group long-term care coverage is based upon a relationship to another person is entitled to continuation of coverage under the group policy on termination of the qualifying relationship by death or dissolution of marriage.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:17 Converted policy from group -- Managed care plan defined

For the purposes of §§ 20:06:21:09 to 20:06:21:16, inclusive, a managed-care plan is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management, or use of specific provider networks.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:18 Discontinuance and replacement of a group policy

If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the insurer and premiums charged to persons under the new group policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced and may not vary or otherwise depend on the individual's health or disability status, claim experience, or use of long-term care services.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5, 58-17B-5.1, 58-17B-6.

ARSD 20:06:21:19 Premium increase prohibitions

The premiums charged to an insured for long-term care insurance may not increase due to either the increasing age of the insured at ages beyond 65 or the duration the insured has been covered under the policy.

(1) The purchase of additional coverage may not be considered a premium rate increase, but for purposes of the calculation required under § 20:06:21:58, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.

(2) A reduction in benefits may not be considered a premium change, but for purpose of the calculation required under § 20:06:21:58, the initial annual premium shall be based on the reduced benefits.

History

Source: 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 18, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-1, 58-17B-4.

ARSD 20:06:21:20 Lapse or termination notice required

An individual long-term care policy or certificate may not be issued until the insurer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium or a written waiver dated and signed by the applicant electing not to designate additional persons to receive notice. The applicant may designate at least one person who is to receive the notice of termination, in addition to the insured. Designation does not constitute acceptance by the third party of any liability for services provided to the insured.

The form used for the written designation must provide space clearly designated for listing at least one person. The designation shall include each person's full name and home address.

If an applicant elects not to designate an additional person, the waiver shall state: "Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until 30 days after a premium is due and unpaid. I elect NOT to designate any person to receive such a notice."

The insurer shall notify the insured of the right to change the written designation at least once every two years.

When soliciting a long-term care insurance application an agent must affirmatively offer lapse designation as provided for by this section and may not encourage or influence an applicant not to designate another person to receive notice of lapse or termination. An agent will be presumed to either have not offered or to have encouraged or influenced a person not to designate another person for lapse designation if at least one-half of the applications for that agent submitted during any year's period of time fail to list a lapse or termination designee. This presumption may be rebutted by a preponderance of evidence showing that the agent both offered the lapse designation and did not encourage or influence the person not to designate another person for notice of lapse or termination.

History

Source: 22 SDR 97, effective December 18, 1995; 34 SDR 88, effective September 10, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.

ARSD 20:06:21:21 Lapse or termination for payment through payroll or pension deduction plan

If the policyholder or certificateholder pays the premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in § 20:06:21:20 need not be met until 60 days after the policyholder or certificateholder is no longer on such a payment plan. The application or enrollment form for the policies or certificates shall clearly indicate the payment plan selected by the applicant.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.

ARSD 20:06:21:22 Lapse or termination for nonpayment of premium

An individual long-term care policy or certificate may not lapse or be terminated for nonpayment of premium unless the insurer, at least 30 days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated pursuant to § 20:06:21:20 at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice shall be given by first class United States mail, postage prepaid. Notice may not be given until 30 days after a premium is due and unpaid. Notice is considered given five days after the date of mailing.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.

ARSD 20:06:21:23 Disclosure of renewability

Individual long-term care insurance policies shall contain a renewability provision. The provision must be captioned, must appear on the first page of the policy, and must clearly state that the coverage is guaranteed renewable or noncancellable.

This section does not apply to policies under which the right to nonrenew is reserved solely to the policyholder and which do not contain a renewability provision. This paragraph applies to long-term care policies which are part of or combined with life insurance policies which do not contain renewability provisions.

History

Source: 22 SDR 97, effective December 18, 1995; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-10.

ARSD 20:06:21:24 Disclosure of payment of benefits based on certain standards

A long-term care insurance policy which provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or similar words must include a definition of the terms and an explanation of the terms in its accompanying outline of coverage.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-10.

ARSD 20:06:21:25 Disclosure of limitations on preexisting conditions

If a long-term care insurance policy or certificate contains any limitations on preexisting conditions, the limitations must appear as a separate paragraph of the policy or certificate and must be labeled as "Preexisting Condition Limitations."

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-10.

ARSD 20:06:21:26 Disclosure of other limitations or conditions on eligibility for benefits

A long-term care insurance policy or certificate containing any limitations or conditions for eligibility other than those prohibited in SDCL 58-17B-7 must contain a description of the limitations or conditions, including any required number of days of confinement in a separate paragraph of the policy or certificate, and shall clearly label the paragraph.

History

Source: 22 SDR 97, effective December 18, 1995; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-7, 58-17B-10.

ARSD 20:06:21:26.01 Notice to claimants -- Temporary leave

Within 30 days of receiving a claim or other written notice that an insured has entered a nursing home or assisted living center, the insurer must provide notice to the insured of the applicable policy or certificate provisions that would apply should the insured temporarily leave the nursing home or assisted living center. If benefits are provided through a bed reservation benefit or other policy provision, the notice must explain the extent of such coverage. If benefits are excluded, the notice must advise the insured of the scope of the exclusion and identify any applicable policy or certificate provision. If a temporary absence from the nursing home or assisted living center affects other policy or certificate benefits or conditions such as waiver of premium, that effect must also be explained in the notice. If, as of the effective date of this rule, an insured had been in a nursing home or assisted living center for 30 or more days and the insurer had received notice of the nursing home or assisted living center stay, the notice required pursuant to this section must be provided to that insured. An insurer may satisfy the requirements of this section by including the notice requirements in other written communications, including claim communications, sent to the insured. No filing of the notice to the director is required. The provisions of this section will be effective October 1, 2005.

The following sample language of notices may be used by insurers to comply with the notice requirements of this section provided that it is consistent with the provisions of the policy or contract:

(1) Your [policy] has a bed reservation benefit. If you leave the nursing home or assisted living center for a period of not more than [X] days during a 12-month period, those days are payable subject to other [policy] limitations that may apply.

(2) Your [policy] does not contain bed reservation benefits. If you leave the nursing home or assisted living center and are not provided care by that facility, you will not be covered for the days that your were absent from the facility. The absence [will/will not] result in your having to again satisfy the waiver of premium waiting period.

History

Source: 31 SDR 214, adopted June 16, 2005, effective October 1, 2005.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:27 Outline of coverage

Insurers shall include the following information in or with the outline of coverage:

(1) A graphic comparison of the benefit levels of a policy that increases benefits over the policy period with a policy that does not increase benefits. The graphic comparison must show benefit levels over at least a 20-year period; and

(2) Any expected premium increases or additional premiums to pay for automatic or optional benefit increases.

An insurer may use a reasonable hypothetical or a graphic demonstration for the purposes of this disclosure.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-10.

ARSD 20:06:21:28 Outline of coverage -- Standard format

The outline of coverage shall be a freestanding document, using no smaller than ten-point type. Text that is capitalized or underscored in the standard format outline or coverage may be emphasized by other means that provide prominence equivalent to the capitalization or underscoring. Use of the text and sequence of text of the standard format outline of coverage is mandatory, unless otherwise specifically indicated. The outline of coverage shall contain no material of an advertising nature. The standard format for an outline of coverage complying with SDCL 58-17B-10 is as follows:

(1) Company name;

(2) Address - city and state.

(3) Telephone number;

(4) Designate the product as long-term care insurance;

(5) Outline of coverage; and

(6) Policy number or group master policy and certificate number.

Except for policies or certificates which are guaranteed issue, a caution statement as set forth in Appendix A at the end of this chapter, or language substantially similar, must appear in the outline of coverage.

History

Source: 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-10.

ARSD 20:06:21:28.01 Applications -- Questions about replacement

Application forms shall include questions designed to elicit information as to whether, as of the date of the application, the applicant has another long-term care insurance policy or certificate in force or whether a long-term care policy or certificate is intended to replace any other accident and sickness or long-term care policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and the agent, if any, containing the questions may be used. Unless coverage is direct marketed, the agent must ask and record the answers to all questions on the forms.

An insurer may complete or make contractual arrangements for persons other than agents to complete the appropriate application questions. The requirements of chapter 20:06:45 apply to such arrangements. If an insurer uses a contractor or performs the service of completing the application, the contractor or person performing the service must ask the applicant the appropriate application questions and such persons must record the applicant's responses to the questions in the application. While assisting the applicant in completing the application, a contractor is prohibited from attempting to sell or to interest the applicant in purchasing any product. The insurer is responsible for any failure to ask and accurately record the applicant's responses.

Nothing in this section in any way modifies the requirement for a person to hold an insurance agent license if that person sells, solicits, or negotiates insurance.

If the policy is a replacement policy issued to a group defined by SDCL 58-17A-1(6), the required questions may be modified only to the extent necessary to elicit information about health or long-term care insurance policies other than the group policy being replaced, provided that the certificateholders have been notified of the replacement.

The questions required by this section are as follows:

(1) Do you have another long-term care insurance policy or certificate in force (including a health care service contract or a health maintenance organization contract)?

(2) Did you have another long-term care insurance policy or certificate in force during the last 12 months?

(a) If so, with which company?

(b) What is the expiration or "paid-to" date of that policy?

(3) Are you covered by Medicaid? and

(4) Do you intend to replace any of your medical or health insurance coverage with this policy (certificate)?

Agents must list any other health insurance policies they have sold to the applicant which are still in force and policies sold in the past five years which are no longer in force.

An insurer may delete the question in subdivision (2)(b) of this section from the application if the insurer either obtains the same information by means of a suitability form to be completed by the agent or obtains this information during the underwriting process.

History

Source: 23 SDR 55, effective October 20, 1996; 37 SDR 215, effective May 31, 2011; 39 SDR 10, effective August 1, 2012; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-5.1.

ARSD 20:06:21:29 Replacement notices

Upon determining that a sale will involve replacement, an insurer, other than an insurer using direct response solicitation methods or its agent, shall furnish the applicant, before issuance or delivery of the individual long-term care insurance policy, a notice regarding replacement of accident and sickness or long-term care coverage. The applicant shall retain one copy of the notice and the insurer shall retain an additional copy signed by the applicant. The notice must be substantially the same as the notice published in Appendix B at the end of this chapter.

Insurers using direct response solicitation methods shall deliver a notice regarding replacement of accident and sickness or long-term care coverage to the applicant upon issuance of the policy. The notice must be substantially the same as the notice published in Appendix C at the end of this chapter.

If replacement is intended, the replacing insurer shall notify, in writing, the existing insurer of the proposed replacement. The existing policy shall be identified by the insurer, name of the insured and policy number, and address, including zip code. The notice shall be made within five working days from the date the application is received by the insurer or the date the policy is issued, whichever is sooner.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-5.1.

ARSD 20:06:21:30 Filing requirements for advertising -- Exemption

Each insurer, health care service plan, or other entity providing long-term care insurance or benefits in this state shall provide a copy of any long-term care insurance advertisement intended for use in this state, whether through written, radio, or television medium, to the director for review within 30 days of its use. In addition, all advertisements shall be retained by the insurer, health care service plan, or other entity for at least five years from the date the advertisement was first used. The director may exempt from the requirements in this section any advertising form or material if, in the director's opinion, any requirement may not be reasonably applied.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-12.

ARSD 20:06:21:31 Standards for marketing -- Requirements

Each insurer, health care service plan, or other entity marketing long-term care insurance coverage in this state, directly or through its producers, shall:

(1) Establish marketing procedures and agent training requirements to assure that any comparison of policies by its agents or other producers will be fair and accurate;

(2) Establish marketing procedures and agent training requirements to assure that excessive insurance is not sold or issued;

(3) Display prominently by type, stamp, or other means, on the first page of the outline of coverage and policy the following: "Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations";

(4) Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of any such insurance, except in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance is not required;

(5) Establish auditable procedures for verifying compliance with this section; and

(6) Provide an explanation of contingent benefit upon lapse provided for in subdivision 20:06:21:58(4)(c) and, if applicable, the additional contingent benefit upon lapse provided to policies with fixed or limited premium paying periods in subdivision 20:06:21:58(4)(d).

If the state in which the policy or certificate is to be delivered or issued for delivery has a senior insurance counseling program approved by the director in the state in which the certificate was issued, the insurer shall, at solicitation, provide written notice to the prospective policyholder or certificateholder that such a program is available and the name, address, and telephone number of the program.

History

Source: 22 SDR 97, effective December 18, 1995; 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-12.

ARSD 20:06:21:32 Standards for marketing -- Prohibited practices

In addition to the practices prohibited in SDCL chapter 58-33, the following practices are prohibited:

(1) Twisting. Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing or tending to induce a person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert an insurance policy or to take out a policy of insurance with another insurer;

(2) High pressure tactics. Employing any method of marketing inducing, having the effect of inducing, or tending to induce the purchase of insurance through force, fright, explicit or implied threat, or undue pressure to purchase or recommend the purchase of insurance;

(3) Cold lead advertising. Making use directly or indirectly of a method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company; and

(4) Misrepresentation. Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.

History

Source: 22 SDR 97, effective December 18, 1995; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-1, 58-17B-12.

ARSD 20:06:21:33 Standards for marketing -- Associations

If an association, as defined in SDCL 58-17B-2(4)(c), endorses or sells long-term care insurance, the primary responsibility of the association regarding the obligations set forth in this section is to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by it to ensure that members of the association receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold. The obligations are as follows:

(1) The insurer shall file with the division the following material:

(a) The policy and certificate;

(b) A corresponding outline of coverage; and

(2) The association shall disclose the following in any long-term care insurance solicitation:

(a) The specific nature and amount of the compensation arrangements, including all fees, commissions, administrative fees, and other forms of financial support, that the association receives from endorsement or sale of the policy or certificate to its members; and

(b) A brief description of the process under which such policies and the insurer issuing such policies were selected;

(3) If the association and the insurer have interlocking directorates or trustee arrangements, the association shall disclose that fact to its members;

(4) The board of directors of an association selling or endorsing long-term care insurance policies or certificates shall review and approve the insurance policies as well as the compensation arrangements made with the insurer;

(5) At the time of the association's decision to endorse, the association shall engage the services of a person with expertise in long-term care insurance who is not affiliated with the insurer to conduct an examination of the policies, including benefits, features, and rates, and shall update the examination thereafter if material change occurs;

(6) The association shall actively monitor the marketing efforts of the insurer and its agents;

(7) The association shall review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policies or certificates.

A group long-term care insurance policy or certificate may not be issued to an association unless the insurer files with the division the information required in this section. The insurer may not issue a long-term care policy or certificate to an association or continue to market such a policy or certificate unless the insurer certifies annually that the association has complied with the requirements in this section.

Failure to comply with the filing and certification requirements of this section constitutes an unfair trade practice within the meaning of SDCL 58-33-38.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-2(4)(c).

ARSD 20:06:21:34 Extension of benefits

Termination of long-term care insurance is without prejudice to any benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. Extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of any benefit period or to payment of the maximum benefits and may be subject to any policy waiting period and all other applicable provisions of the policy.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:35 Basis for continuation or conversion from group coverage required

Group long-term care insurance issued in this state after October 19, 1996, must provide covered individuals with a basis for continuation or conversion of coverage.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:36 Basis for continuation of coverage from group defined

For the purposes of §§ 20:06:21:09 to 20:06:21:17, inclusive, § 20:06:21:35, and this section, a basis for continuation of coverage means a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate and that is subject only to the continued timely payment of premiums when due.

Group policies which restrict provision of benefits and services to, or contain incentives to use, certain providers or facilities may provide continuation benefits which are substantially equivalent to the benefits of the existing group policy. The director shall determine the substantial equivalence of benefits. In determining substantial equivalence, the director shall take into consideration the differences between managed care and nonmanaged care plans, including provider system arrangements; service availability; benefit levels; and administrative complexity.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:37 Reinstatement

In addition to the notice requirement in § 20:06:21:20, a long-term care insurance policy or certificate must include a provision for reinstatement of coverage in the event of lapse if the insurer is provided proof of cognitive impairment or the loss of functional capacity. This option must be available to the insured if it is requested within five months after termination and must allow for the collection of any past due premium. The standard of proof of cognitive impairment or loss of functional capacity may not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity, if any, contained in the policy or certificate.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:38 Disclosure of riders and endorsements

Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after the date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy must have a signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing and signed by the insured unless the increased benefits or coverage are required by law. If a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge must be specified in the policy, rider, or endorsement.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-10.

ARSD 20:06:21:39 Disclosure of tax consequences

Life insurance policies which provide an accelerated benefit for long-term care must have a disclosure statement at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable and that assistance should be sought from a personal tax advisor. The disclosure statement must be prominently displayed on the first page of the policy or rider and any other related documents.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-10.

ARSD 20:06:21:40 Applications -- Health and medication questions

All applications for long-term care insurance policies or certificates, except those which are guaranteed issue, must contain clear and unambiguous questions designed to ascertain the health condition of the applicant. If an application for long-term care insurance contains a question which asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the medication that has been prescribed. If the medications listed in the application were known, or should have been known, by the insurer at the time of application to be directly related to a medical condition for which coverage would otherwise be denied, the policy or certificate may not be rescinded for that condition.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-6.

ARSD 20:06:21:41 Applications -- Notice about incorrect answers

Except for policies or certificates which are guaranteed issue, the following language must be set out conspicuously and in close conjunction with the applicant's signature block on an application for a long-term care insurance policy or certificate:

Caution: If your answers on this application are incorrect or untrue, (company) has the right to deny benefits or rescind your policy.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-6.

ARSD 20:06:21:42 Policies -- Notice about incorrect answers on applications

Except for policies or certificates which are guaranteed issue, the following language must be set out conspicuously on the long-term care insurance policy or certificate:

Caution: The issuance of this long-term care insurance [policy[ [certificate[ is based upon your response to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address].

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-6.

ARSD 20:06:21:43 Elderly applicants -- Required information

Before issuance of a long-term care policy or certificate to an applicant age 80 or older, the insurer must obtain one of the following:

(1) A report of a physical examination;

(2) An assessment of functional capacity;

(3) An attending physician's statement; or

(4) Copies of medical records.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-6.

ARSD 20:06:21:44 Applications -- Delivery

A copy of the completed application or enrollment form, as applicable, must be delivered to the insured no later than at the time of delivery of the policy or certificate unless it was retained by the applicant at the time of application. If an application for a long-term care insurance contract or certificate is approved, the issuer shall deliver the contract or certificate of insurance to the applicant no later than 30 days after the date of approval.

History

Source: 23 SDR 55, effective October 20, 1996; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-6.

ARSD 20:06:21:44.01 Repealed

Applications -- Delivery upon approval. Repealed.

History

Source: 28 SDR 157, effective May 19, 2002; repealed, 30 SDR 89, effective December 9, 2003.

ARSD 20:06:21:45 Records of rescissions -- Maintaining and filing records

Each insurer or other entity selling or issuing long-term care insurance benefits must maintain a record of all policy or certificate rescissions, both state and countrywide, except those which the insured voluntarily effectuated and must annually furnish this information to the director in the format prescribed in Appendix D at the end of this chapter.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-6.

ARSD 20:06:21:46 Minimum standards for home health and community care benefits

The following minimum standards for home health and community care benefits must be complied with for long-term care policies, as well as for any policies or certificates that contain stand-alone home health care benefits or home health care benefits issued in conjunction with coverage for long-term care services, other than institutional based long-term care:

(1) If it provides benefits for home health care or community care services, a long-term care insurance policy or certificate may not limit or exclude benefits in any of the following ways:

(a) By requiring that the insured or claimant would need care in a skilled nursing facility if home health care services were not provided;

(b) By requiring that the insured or claimant first or simultaneously receive nursing, therapeutic services, or both, in a home, community, or institutional setting before home health care services are covered;

(d) By requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide or other licensed or certified home care worker acting within the scope of licensure or certification;

(e) By excluding coverage for personal care services provided by a home health aide;

(f) By requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the service eligible for coverage;

(g) By requiring that the insured or claimant have an acute condition before home health care services are covered;

(h) By limiting benefits to services provided by Medicare-certified agencies or providers; or

(i) By excluding coverage for adult day care services;

(2) If it provides benefits for home health care or community care services, a long-term care insurance policy or certificate, must provide total home health or community care coverage that is equivalent in dollars to at least one-half of one year's coverage available for nursing home benefits under the policy or certificate at the time covered home health or community care services are being received. This requirement does not apply to policies or certificates issued to residents of continuing care retirement communities;

(3) Home health care coverage may be applied to the maximum health care benefits provided in the policy or certificate when determining maximum coverage under the terms of the policy or certificate;

(4) If home health coverage is provided, the coverage must provide benefits for at least one year in daily amounts not less than half of the daily benefit for nursing facilities. If the daily benefit for home health care is less than that for nursing facilities, the insurer may only deduct the pro-rata difference from the lifetime maximum;

(5) The home health care benefit must contain at least 365 benefit days and at least a $25 daily maximum benefit. This subdivision does not apply to long-term care benefits which are provided through a life insurance policy or certificate.

History

Source: 23 SDR 55, effective October 20, 1996; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:47 Policy summary for individual life insurance policy containing long-term care benefits

At the time an insurer delivers an individual life insurance policy which provides long-term care benefits within the policy or by rider, the insurer must deliver a policy summary. If the policy is the result of direct response solicitation, the insurer must deliver the policy summary upon the applicant's request, but no later than the time of policy delivery. The summary must also include:

(1) An explanation of how the long-term care benefit interacts with other components of the policy, including deductions from death benefits;

(2) An illustration of the amount of benefits, the length of benefits, and the guaranteed lifetime benefits, if any, for each covered person;

(3) Any exclusions, reductions, and limitations on benefits of long-term care; and

(4) If applicable to the policy type, the summary must also include:

(a) A disclosure of the effects of exercising other rights under the policy;

(b) A disclosure of the premiums attributable to the long-term care component of the policy or certificate;

(d) A disclosure of guarantees related to long-term care costs of insurance charges.

(5) A statement that any long-term care inflation protection option required by §§ 20:06:21:06.01 to 20:06:21:06.05, inclusive, is not available under this policy.

The provisions of the policy summary listed above may be incorporated into a basic illustration required to be delivered in accordance with §§ 20:06:38:04 to 20:06:38:11, inclusive, or into the life insurance policy summary which is required to be delivered in accordance with § 20:06:14:04.

History

Source: 23 SDR 55, effective October 20, 1996; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:48 Monthly report to policyholder

If a long-term care benefit funded through a life insurance vehicle by the acceleration of the death benefit is in benefit payment status, the insurer must provide a monthly report to the policyholder. The report must include:

(1) Any long-term care benefits paid out during the month;

(2) An explanation of any changes in the policy, e.g., death benefits or cash values, caused by long-term care benefits being paid out; and

(3) The amount of long-term care benefits existing or remaining.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:49 Incontestability period

The following incontestability periods must be complied with for long-term care policies:

(1) For a policy or certificate that has been in force for less than six months, an insurer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim upon a showing of misrepresentation that is material to the acceptance for coverage;

(2) For a policy or certificate that has been in force for at least six months but less than two years, an insurer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim upon a showing of misrepresentation that is both material to the acceptance for coverage and which pertains to the condition for which benefits are sought;

(3) After a policy or certificate has been in force for two years, it is not contestable upon the grounds of misrepresentation alone; the policy or certificate may be contested only upon a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured's health;

(4) A long-term care insurance policy or certificate may be field-issued if the compensation to the field issuer is not based on the number of policies or certificates issued. For purposes of this section, field-issued means a policy or certificate issued by an agent or a third-party administrator pursuant to the underwriting authority granted to the agent or third party administrator by an insurer and using the insurer's underwriting guidelines;

(5) If an insurer has paid benefits under the long-term care insurance policy or certificate, the benefit payments may not be recovered by the insurer if the policy or certificate is rescinded.

History

Source: 23 SDR 55, effective October 20, 1996; 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:50 Assisted living center or facility defined

An assisted living center or facility is any institution, place, building, or agency licensed by the state if such a license is required, which is maintained and operated to provide to five or more individuals personal care and services which meet some basic need beyond provisions of food, shelter, and laundry, in accordance with the following criteria:

(1) Provides 24-hour-a-day care and services sufficient to support needs resulting from an inability to perform activities of daily living or from cognitive impairment;

(2) Has an employee on duty at all times who is awake, trained, and ready to provide care;

(3) Provides three meals a day, including special dietary requirements;

(4) Has formal arrangements for the services of a doctor or nurse to furnish medical care in the event of an emergency; and

(5) Is authorized to administer medication to patients on the order of a doctor.

Cross-Reference: License required to operate institution, SDCL 34-12-2.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:51 Assisted living centers -- Minimum benefit standards

An insurer offering long-term care coverage to any person in this state must include benefits for assisted living centers. If coverage for assisted living centers is provided, the coverage must provide benefits for at least one year in daily amounts not less than half of the daily benefit for nursing facilities. If the daily benefit for assisted living centers is less than that for nursing facilities, the insurer may only deduct the pro-rata difference from the lifetime maximum.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:52 Reporting requirements for insurers

Each insurer must comply with the following reporting requirements for long-term care policies:

(1) The insurer must maintain records for each agent of that agent's amount of replacement sales as a percent of the agent's total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent's total annual sales;

(2) The insurer must report to the director annually by June 30 the ten percent of its agents with the greatest percentages of lapses and replacements as measured by subdivision (1) of this section (Appendix J);

(3) The insurer must report to the director annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year (Appendix J);

(4) The insurer must report to the director annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year (Appendix J); and

(5) Every insurer shall report to the director annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied (Appendix H).

No finding by the director of a violation of insurance laws may be based solely upon reported replacement and lapse rates.

For the purposes of this section, "policy" means only long-term care insurance, "claim" means a request for payment of benefits under an in force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met, "denied" means the insurer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition, and "report" means on a statewide basis.

History

Source: 23 SDR 55, effective October 20, 1996; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:53 Appropriateness of recommended purchase or replacement

In recommending the purchase or replacement of a long-term care insurance policy or certificate, an agent must make a reasonable effort to determine the appropriateness of a recommended purchase or replacement. The provisions of §§ 20:06:13:43.01 and 20:06:13:43.02 apply to this chapter.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-5.1.

ARSD 20:06:21:53.01 Suitability standards

Every insurer, health care service plan or other entity marketing long-term care insurance, all referred to as the "issuer", shall:

(1) Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;

(2) Train its agents in the use of its suitability standards; and

(3) Maintain a copy of its suitability standards and make them available for inspection upon request by the director.

To determine if the applicant meets the suitability standards developed by the issuer, as required by this section, the agent and issuer shall develop procedures that consider the following:

(1) The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

(2) The applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and

(3) The values, benefits, and costs of the applicant's existing insurance, if any, when compared to the values, benefits, and costs of the recommended purchase or replacement.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:53.02 Suitability -- Long-term care insurance personal worksheet

Suitability - Long-term care insurance personal worksheet. The issuer, and when an agent is involved, the agent, shall make reasonable efforts to obtain the information set out in § 20:06:21:53.01. The efforts must include presentation to the applicant, at or prior to application, the "Long-Term Care Insurance Personal Worksheet." The personal worksheet used by the issuer must contain, at a minimum, the information in the format contained in Appendix E, in not less than 12 point type. The issuer may request the applicant to provide additional information to comply with its suitability standards. A copy of the issuer's personal worksheet shall be filed with the director.

A completed personal worksheet shall be returned to the issuer prior to the issuer's consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses. The sale or dissemination outside the company or agency by the issuer or agent of information obtained through the personal worksheet in Appendix E is prohibited.

The issuer shall use the suitability standards it has developed pursuant to § 20:06:21:53.01 in determining whether issuing long-term care insurance coverage to an applicant is appropriate. Agents shall use the suitability standards developed by the issuer in marketing long-term care insurance. At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled "Things You Should Know Before You Buy Long-Term Care Insurance" shall be provided. The form must be in the format contained in Appendix F in not less than 12 point type.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:53.03 Suitability -- Response letter

If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer shall send the applicant a response letter similar to Appendix G. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file. The return of the response letter by an applicant indicating a desire to purchase the coverage, does not constitute a defense for any producer for any violation of the insurance laws and rules of this state.

The commission or compensation, for the sale of a long-term care policy or certificate on which the issuer has determined that the applicant does not meet its financial suitability standards, shall be no greater than the renewal compensation.

The issuer shall report annually by June 30 to the director the total number of applicants received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter.

History

Source: 28 SDR 157, effective May 19, 2002; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:53.04 Suitability -- Policies not included

Sections 20:06:21:53.01 to 20:06:21:53.03, inclusive, do not apply to life insurance policies that accelerate benefits for long-term care.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:53.05 Suitability -- Overinsurance

A long-term care insurance policy issued to an individual who already possesses insurance substantially covering the same risk and paying for the same coverage may be deemed to be overinsurance by the director. The issuance of a long-term care policy or certificate to an applicant who has long-term coverage in force and does not intend to replace the current coverage does not per se constitute overinsurance. Overinsurance does not exist unless the benefits of the policies and/or certificates when combined exceed the insured's present or reasonably expected future long-term care needs. In making a determination of whether overinsurance exists, the director shall take into consideration the carrier's overinsurance standards and whether the existing contract does or does not have a cost of living adjustment feature. If the director determines that overinsurance exists, the duplicating insurer must adjust the dates of coverage for any period of time in which overinsurance resulted to remove the duplication and refund or credit premiums toward future coverage accordingly as the duplicating insurer is liable for a full refund less benefits paid. The duplicating policy is void as of the date of issue until such time as the prior coverage terminated. The provisions of this section do not apply to life insurance policies that accelerate benefits for long-term care.

History

Source: 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:54 Requirement to deliver shopper's guide

A long-term care insurance shopper's guide in the format as published by the National Association of Insurance Commissioners or a similar guide developed or approved by the director, must be provided to all prospective applicants of a long-term care insurance policy or certificate.

If the policy is solicited by an agent, the agent must deliver the shopper's guide before presenting an application or enrollment form to the prospective applicant. The shopper's guide must be presented in conjunction with any application or enrollment form if the policy is a direct response solicitation. Life insurance policies or riders containing accelerated long-term care benefits are not required to furnish the shopper's guide, but must furnish the policy summary required by § 20:06:21:47.

Reference: "A Shopper's Guide to Long-Term Care Insurance," revised 2005, National Association of Insurance Commissioners. Free copies may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, SD 57501, (605) 773-3563.

History

Source: 23 SDR 55, effective October 20, 1996; 25 SDR 13, effective August 9, 1998; 31 SDR 214, effective July 6, 2005; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4, 58-17B-10.

ARSD 20:06:21:55 Standards for benefit triggers

Long-term care policies must comply with the following standards for benefit triggers:

(1) A long-term care policy may require a recommendation by a physician that the services are necessary because of illness, injury, or infirmity, but may not condition benefits on medical necessity. If a long-term care policy provides for medical necessity as an additional mechanism to qualify for benefits, the policy may condition benefits for that additional benefit trigger based on medical necessity;

(2) Long-term care insurance policies must condition the payment of benefits on an assessment of the insured's ability to perform activities of daily living or on cognitive impairment. Activities of daily living included in a policy must include at least the six activities of daily living listed in subdivision 20:06:21:01(1) and as defined in § 20:06:21:01. Insurers may use activities of daily living to trigger covered benefits in addition to those contained in subdivision 20:06:21:01(1) if they are consistent with or no more restrictive than those contained in subdivision (1) of this section and this subdivision. A determination of impairment may not be more restrictive than requiring either a deficiency in the ability to perform three of the activities of daily living or the presence of cognitive impairment;

(3) An insurer may use additional provisions to determine when benefits are payable under a policy or certificate; however, the provisions may not restrict and may not be in lieu of the requirements contained in subdivisions (1) and (2) of this section;

(4) For purposes of this section, the determination of a deficiency may not be more restrictive than requiring the hands-on assistance of another person to perform the prescribed activities of daily living, or, if the deficiency is due to the presence of a cognitive impairment, needing the supervision or verbal cueing by another person to protect the insured or others;

(5) Assessments of activities of daily living and cognitive impairment must be performed by appropriately credentialed, experienced, trained professionals, such as physicians, registered nurses, or licensed social workers; and

(6) Long-term care insurance policies which condition the payment of benefits on an assessment of the insured's ability to perform activities of daily living or on cognitive impairment must include a clear and understandable description of the method for resolving grievances of the insured, including the process for appealing and resolving benefit determinations.

History

Source: 23 SDR 55, effective October 20, 1996.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:56 Additional standards for benefit triggers for qualified long-term care insurance contracts

A qualified long-term care insurance contract shall pay only for qualified long-term care services received a chronically ill individual provided pursuant to a plan of care prescribed by a licensed health care practitioner. A qualified long-term care insurance contract must condition the payment of benefits on a determination of the insured's inability to perform activities of daily living for an expected period of at least 90 days due to a loss of functional capacity or to severe cognitive impairment.

Certification regarding activities of daily living and cognitive impairment required pursuant to this section shall be performed by the following licensed or certified professionals: physicians, registered professional nurses, licensed social workers, or other individuals who meet requirements prescribed by the Secretary of the Treasury, if approved by the director. Certifications required pursuant to this section may be performed by any licensed health care professional, or, at the insured's option, a licensed health care professional at the direction of the carrier, as is reasonably necessary with respect to a specific claim, except that when a licensed health care practitioner has certified that an insured is unable to perform activities of daily living for an expected period of at least 90 days due to a loss of functional capacity and the insured is in claim status, the certification may not be rescinded and additional certifications may not be performed until after the expiration of the 90-day period.

Qualified long-term care insurance contracts must include a clear description of the process for appealing and resolving disputes with respect to benefit determinations.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:57 Nonforfeiture benefits

(1) Except as provided in subdivision 20:06:21:57(2), a long-term care insurance policy may not be delivered or issued for delivery in this state unless the policyholder or certificate holder has been offered the option of purchasing a policy or certificate including a nonforfeiture benefit. The offer of a nonforfeiture benefit may be in the form of a rider that is attached to the policy. In the event the policyholder or certificateholder declines the nonforfeiture benefit, the insurer shall provide a contingent benefit upon lapse that shall be available for a specified period of time following a substantial increase in premium rates.

(2) When a group long-term care insurance policy is issued, the offer required in subdivision 20:06:21:57(1) shall be made to the group policyholder. However, if the policy is issued as group long-term care insurance as defined in SDCL 58-17B-2(4)(d), other than to a continuing care retirement community or other similar entity, the offering shall be made to each proposed certificateholder.

History

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:58 Nonforfeiture benefit requirement

(1) This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

(2) To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of § 20:06:21:57:

(a) A policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers, and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the benefit described in subdivision (5) of this section; and

(b) The offer must be in writing if the nonforfeiture benefit is not otherwise described in the Outline of Coverage or other materials given to the prospective policyholder;

(3) If the offer required to be made under § 20:06:21:57 is rejected, the insurer shall provide the contingent benefit upon lapse described in this section. Even if this offer is accepted for a policy with a fixed or limited premium paying period, the contingent benefit on lapse in subdivision (4)(d) still applies;

(4)(a) After rejection of the offer required under § 20:06:21:57, for individual and group policies without nonforfeiture benefits issued after May 19, 2002, the insurer shall provide a contingent benefit upon lapse;

(b) In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificateholder, a certificate must provide either the nonforfeiture benefit or the contingent benefit upon lapse;

(c) The contingent benefit on lapse is triggered every time an insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase

Issue Age

29 and under

200%

30-34

190%

35-39

170%

40-44

150%

45-49

130%

50-54

110%

55-59

90%

70%

66%

62%

58%

54%

50%

48%

46%

44%

42%

40%

38%

36%

34%

32%

30%

28%

26%

24%

22%

20%

19%

18%

17%

16%

15%

14%

13%

12%

11%

90 and over

10%

(d) A contingent benefit on lapse is also triggered for policies with a fixed or limited premium paying period every time an insurer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insurer's issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased, and the ratio in subdivision (4)(f)(ii) is 40 percent or more. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase

Percent Increase

Issue Age

Over Initial Premium

Under 65

50%

65-80

30%

Over 80

10%

This provision is in addition to the contingent benefit lapse provided by subdivision (4)(c) and if both are triggered, the benefit provided shall be at the option of the insured;

(e) On or before the effective date of a substantial premium increase as defined in subdivision (4)(c) of this section, the insurer shall:

(i) Offer to reduce policy benefits provided by the current coverage consistent with the requirements of § 20:06:21:86 so that required premium payments are not increased;

(ii) Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of subdivision (5) of this section. This option may be elected at any time during the 120-day period referenced in subdivision (4)(c) of this section; and

(iii) Notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in subdivision (4)(c) of this section is deemed to be the election of the offer to convert in subdivision (4)(d)(ii) of this section unless the automatic option in subdivision (4)(f)(iii) applies;

(f) On or before the effective date of a substantial premium increase as defined in subdivision (4)(d), the insurer shall;

(i) Offer to reduce policy benefits provided by the current coverage consistent with the requirements of § 20:06:21:86 so that required premium payments are not increased;

(ii) Offer to convert the coverage to a paid-up status where the amount payable for each benefit is 90 percent of the amount payable in effect immediately prior to lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period. This option may be elected at any time during the 120-day period referenced in subdivision (4)(d); and

(iii) Notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in subdivision (4)(d) shall be deemed to be the election of the offer to convert in subdivision (4)(f)(ii) if the ratio is 40 percent or more;

(g) For any long-term care policy issued in this state, in the event the policy or certificate was issued at least twenty (20) years prior to the effective date of the increase, a value of 0% shall be used in place of all values in the above table, and values above 100% in the table in subdivision (4)(c) shall be reduced to 100%;

(5) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with subdivision (4)(c) but not subdivision (4)(d) of this section, are described in this subdivision:

(a) For purposes of subdivision (5), attained age rating is defined as a schedule of premiums starting from the issue date which increases age at least one percent per year prior to age 50, and at least three percent per year beyond age 50;

(b) For purposes of subdivision (5), the nonforfeiture benefit shall be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in subdivision (5)(c) of this section;

(c) The standard nonforfeiture credit will be equal to 100 percent of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The insurer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit may not be less than 30 times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of subdivision (6) of this section;

(d) (i) The nonforfeiture benefit shall begin not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse shall be effective during the first three years as well as thereafter;

(ii) Notwithstanding subdivision (5)(d)(i) of this section, for a nonforfeiture benefit shall begin on the earlier of:

(1) The end of the tenth year following the policy or certificate issue date; or

(2) The end of the second year following the date the policy or certificate is no longer subject to attained age rating;

(e) Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate;

(6) All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid up status will not exceed the maximum benefits which would be payable if the policy or certificate had remained in premium paying status;

(7) There may be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies;

(8) The requirements set forth in this section shall become effective 12 months after adoption of this provision and shall apply as follows:

(a) Except as provided in subdivisions (8)(b) and (8)(c) of this section, the provisions of this section apply to any long-term care policy issued in this state on or after the effective date of this amended regulation;

(b) For certificates issued on or after May 19, 2002, pursuant to a group long-term care insurance policy as defined in SDCL 58-17B-2(4)(a), which policy was in force at the time this amended regulation became effective, the provisions of this section shall not apply;

(c) The provisions of subdivision (3) relative to acceptance of an offer and subdivisions (4)(d) and (4)(f) apply to any long-term care insurance policy or certificate issued in this state after December 31, 2007, except for new certificates on a group policy as defined in subdivision (5)(a), for which the provisions apply after June 30, 2008;

(9) Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse are subject to the loss ratio requirements of § 20:06:21:05 or §§ 20:06:21:63 to 20:06:21:68, inclusive, whichever is applicable, treating the policy as a whole;

(10) To determine whether contingent nonforfeiture upon lapse provisions are triggered pursuat to subdivision (4)(c) or subdivision (4)(d), a replacing insurer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer;

(11) A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets the following requirements:

(a) The nonforfeiture provision shall be appropriately captioned;

(b) The nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts approved by the director for the same contract form; and

(i) Reduced paid-up insurance;

(ii) Extended term insurance;

(iii) Shortened benefit period; or

(iv) Other similar offerings approved by the director.

History

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003; 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:59 Electronic enrollment for group policies

In the case of a group defined in SDCL 58-17B-2(4)(a), any requirement that a signature of an insured be obtained by an agent or insurer is deemed satisfied if:

(1) The consent is obtained by telephonic or electronic enrollment by the group policyholder or insurer. A verification of enrollment information shall be provided to the enrollee;

(2) The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention, and prompt retrieval of records; and

(3) The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure that the confidentiality of individually identifiable information and "privileged information."

The insurer shall make available, upon request of the director, records that will demonstrate the insurer's ability to confirm enrollment and coverage amounts.

History

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:60 Required disclosure of rating practices to consumers -- Rate stabilization

(1) This subdivision applies as follows:

(a) Except as provided in subdivision (1)(b) of this section, this subdivision applies to any long-term care policy or certificate issued in this state on or after November 1, 2002;

(b) For certificates issued on or after May 19, 2002, under a group long-term care insurance policy as defined in SDCL 58-17B-2(4)(a), which policy was in force at the time this rule became effective, the provisions of this subdivision applies on the policy anniversary on or after May 1, 2003;

(2) Other than policies for which no applicable premium rate or rate schedule increases can be made, insurers shall provide all of the information listed in this section to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time. In such a case, an insurer shall provide all of the information listed in this subdivision to the applicant no later than at the time of delivery of the policy or certificate:

(a) A statement that the policy may be subject to rate increases in the future;

(b) An explanation of potential future premium rate revisions, and the policyholder's or certificateholder's option in the event of a premium rate revision;

(c) The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase;

(d) A general explanation for applying premium rate or rate schedule adjustments that must include:

(i) A description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.); and

(ii) The right to a revised premium rate or rate schedule as provided in subdivision (2)(b) of this section if the premium rate or rate schedule is changed;

(e) (i) Information regarding each premium rate increase on this policy form or similar policy forms over the past ten years for this state or any other state that, at a minimum, identifies:

(1) The policy forms for which premium rates have been increased;

(2) The calendar years when the form was available for purchase; and

(3) The amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics;

(ii) The insurer may, in a fair manner, provide additional explanatory information related to the rate increases;

(iii) An insurer shall have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated insurers or the long-term care policies acquired from other nonaffiliated insurers when those increases occurred prior to the acquisition;

(iv) If an acquiring insurer files for a rate increase on a long-term care policy form acquired from nonaffiliated insurers or a block of policy forms acquired from nonaffiliated insurers on or before the later of May 19, 2002, or the end of a 24-month period following the acquisition of the block or policies, the acquiring insurer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with subdivision (2)(e)(i) of this section;

(v) If the acquiring insurer in subdivision (2)(e)(iv) of this section files for a subsequent rate increase, even within the 24-month period, on the same policy form acquired from nonaffiliated insurers or block of policy forms acquired from nonaffiliated insurers referenced in subsection (2)(e)(iv) of this section, the acquiring insurer shall make all disclosures required by subdivision (2)(e) of this section, including disclosure of the earlier rate increase referenced in subdivision (2)(e)(iv) of this section;

(3) An applicant shall sign an acknowledgement at the time of application, unless the method of application does not allow for signature at that time, that the insurer made the disclosure required under subdivision (2)(a) and (e) of this section. If due to the method of application the applicant cannot sign an acknowledgement at the time of application, the applicant shall sign no later than at the time of delivery of the policy or certificate;

(4) An insurer shall use the forms in Appendices E and I to comply with the requirements of subdivisions (1) and (2) of this section;

(5) An insurer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificateholders, if applicable, at least 45 days prior to the implementation of the premium rate schedule increase by the insurer. The notice shall include the information required by subdivision (2) of this section when the rate increase is implemented.

History

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:61 Initial filing requirements

(1) This section applies to any long-term care policy issued in this state on or after November 1, 2002;

(2) An insurer shall provide the information listed in this section to the director 30 days prior to making a long-term care insurance form available for sale:

(a) A copy of the disclosure documents required in § 20:06:21:60; and

(b) An actuarial certification consisting of at least the following:

(i) A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;

(ii) A statement that the policy design and coverage provided have been reviewed and taken into consideration;

(iii) A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;

(iv) A complete description of the basis for contract reserves that are anticipated to be held under the form, to include:

(I) Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held;

(II) A statement that the assumptions used for reserves contain reasonable margins for adverse experience;

(III) A statement that the net valuation premium for renewal years does not increase (except for attained-age rating where permitted); and

(IV) A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or if such a statement cannot be made, a complete description of the situations where this does not occur;

(A) An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship;

(B) If the gross premiums for certain age groups appear to be inconsistent with this requirement, the director may request a demonstration under subdivision (3) of this section based on a standard age distribution; and

(v)(I) A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or

(II) A comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences;

(vi) A statement that the premiums contain at least the minimum margin for moderately adverse experience defined in subdivision (2)(b)(vi)(I) or the specification of and justification for a lower margin as required by subdivision (2)(b)(vi)(II);

(I) A composite margin shall not be less than 10% of lifetime claims;

(II) A composite margin that is less than 10% may be justified in uncommon circumstances. The proposed amount, full justification of the proposed amount, and methods to monitor developing experience that would be the bases for withdrawal of approval for such lower margins must be submitted;

(III) A composite margin lower than otherwise considered appropriate for the stand-alone long-term care policy may be justified for long-term care benefits provided through a life policy or an annuity contract. This lower composite margin, if utilized, shall be justified by the appropriate actuarial demonstration addressing margins and volatility when considering the entirety of the product;

(IV) A greater margin may be appropriate in circumstances where the company has less credible experience to support its assumptions used to determine the premium rate;

(c) An actuarial memorandum prepared, dated and signed by a member of the Academy of Actuaries shall be included and shall address and support each specific item required as part of the actuarial certification and provide at least the following information:

(i) An explanation of the review performed by the actuary prior to making the statements in subdivisions (2)(b)(ii) and (iii);

(ii) A complete description of pricing assumptions;

(iii) Sources and levels of margins incorporated into the gross premiums that are the basis for the statement in subdivision (2)(b)(i) of the actuarial certification and an explanation of the analysis and testing performed in determining the sufficiency of the margins. Deviations in margins between ages, sexes, plans or states shall be clearly described. Deviations in margins required to be described are other than those produced utilizing generally accepted actuarial methods for smoothing and interpolating gross premium sales; and

(iv) A demonstration that the gross premiums include the minimum composite margin specified in subdivision (2)(b)(vi);

(3) In any review of the actuarial certification and actuarial memorandum, the director may request review by an actuary with experience in long-term care pricing who is independent of the company. In the event the director asks for additional information as a result of any review, the period in subdivision (1) of this section does not include the period during which the insurer is preparing the requested information.

History

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:62 Reserve standards

(1) When long-term care benefits are provided through the acceleration of benefits under group or individual life policies or riders to such policies, policy reserves for the benefits shall be determined in accordance with accepted actuarial practices. Claim reserves shall also be established in the case when the policy or rider is in claim status.

Reserves for policies and riders subject to this section must be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event may the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.

In the development and calculation of reserves for policies and riders subject to this section, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including, but not limited to, the following:

(a) Definition of insured events;

(b) Covered long-term care facilities;

(d) Definition of facilities;

(e) Existence or absence of barriers to eligibility;

(f) Premium waiver provision;

(g) Renewability;

(h) Ability to raise premiums;

(i) Marketing method;

(j) Underwriting procedures;

(k) Claims adjustment procedures;

(l) Waiting period;

(m) Maximum benefit;

(n) Availability of eligible facilities;

(o) Margins in claim costs;

(p) Optional nature of benefit;

(q) Delay in eligibility for benefit;

(r) Inflation protection provisions; and

(s) Guaranteed insurability option.

Any applicable valuation morbidity table shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.

(2) When long-term care benefits are provided other than as in subdivision (1) of this section, reserves shall be determined in accordance with SDCL 58-6-75.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4, 58-26-30.
Law Implemented: SDCL 58-6-75, 58-26-30.

ARSD 20:06:21:63 Premium rate schedule increases -- Notice of pending increase

An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the director at least 30 days prior to the notice to the policyholders, and shall include:

(1) Information required by § 20:06:21:60;

(2) Certification by a qualified actuary that:

(a) If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated;

(b) The premium rate filing is in compliance with the provisions of this section;

(c) The insurer may request a premium rate schedule increase less than what is required under this section and the director may approve such premium rate schedule increase, without submission of the certification in subdivision (2)(a), if the actuarial memorandum discloses the premium rate schedule increase necessary to make the certification required pursuant to subdivision (2)(a), the premium rate schedule increase filing satisfies all other requirements of this section, and is, in the opinion of the director, in the best interest of the policyholders;

(3) An actuarial memorandum justifying the rate schedule change request that includes:

(a) Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;

(i) Annual values for the five years preceding the three years following the valuation date shall be provided separately;

(ii) The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;

(iii) The projections shall demonstrate compliance with § 20:06:21:64; and

(iv) For exceptional increases:

(I) The projected experience must be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and

(II) In the event the director determines as provided in § 20:06:21:70 that offsets may exist, the insurer shall use appropriate net projected experience;

(b) Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;

(c) Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;

(d) A statement that policy design, underwriting, and claims adjudication practices have been taken into consideration; and

(e) In the event that it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer will need to file composite rates reflecting projections of new certificates;

(f) A demonstration that actual and projected costs exceed costs anticipated at the time of initial pricing under moderately adverse experience and that the composite margin specified in subdivision 20:06:21:61(2)(b)(iv) is projected to be exhausted;

(4) A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the director; and

(5) Sufficient information for review and approval of the premium rate schedule increase by the director.

History

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:64 Premium rate schedule increase requirements

All premium rate schedule increases shall be determined in accordance with the following requirements:

(1) Exceptional increases shall provide that 70% of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

(2) Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:

(a) The accumulated value of the initial earned premium times 58%;

(b) 85% of the accumulated value of prior premium rate schedule increases on an earned basis;

(d) 85% of the present value of future projected premiums not in subdivision (2)(c) of this section on an earned basis;

(3) In the event that a policy form has both exceptional and other increases, the values in subdivisions (2)(b) and (d) of this section will also include 70% for exceptional rate increase amounts; and

(4) All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in SDCL 58-26-71 and 58-26-75. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages;

(5) After December 31, 2018, expected claims shall be calculated based on the original filing assumptions assumed until new assumptions are filed as part of a rate increase. New assumptions shall be used for all periods beyond each requested effective date of a rate increase. Expected claims are calculated for each calendar year based on the in-force at the beginning of the calendar year. Expected claims shall include margins for moderately adverse experience, either amounts included in the claims that were used to determine the lifetime loss ration consistent with the original filing or as modified in any rate increase filing.

History

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:65 Premium rate schedule increases -- Review by the director

Premium rate schedule increases - Review by the director. For each rate increase that is implemented, the insurer shall file for approval by the director updated projections, as defined in subdivision 20:06:21:63(3)(a), annually for the next three years and include a comparison of actual results to projected values. The director may extend the period to greater than three (3) years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in § 20:06:21:68, the projections required by this chapter shall be provided to the policyholder in lieu of filing with the director.

(1) If any premium rate in the revised premium rate schedule is greater than 200 percent of the comparable rate in the initial premium schedule, lifetime projections, as defined in subdivision 20:06:21:63(3)(a), shall be filed for approval by the director every five years following the end of the required period in the above paragraph. For group insurance policies that meet the conditions in § 20:06:21:68, the projections required by this subdivision shall be provided to the policyholder in lieu of filing with the director;

(2)(a) If the director has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in § 20:06:21:64, the director may require the insurer to implement any of the following:

(i) Premium rate schedule adjustments; or

(ii) Other measures to reduce the difference between the projected and actual experience;

(b) In determining whether the actual experience adequately matches the projected experience, consideration must be given to subdivision 20:06:21:63(3)(e), if applicable;

(3) If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file:

(a) A plan, subject to director approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the director may impose the condition in subdivisions 20:06:21:66(1) and (2); and

(b) The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to § 20:06:21:64 had the greater of the original anticipated lifetime loss ratio or 58% been used in the calculations described in subdivisions 20:06:21:64(2)(a) and (c).

After December 31, 2018, subdivision 3(b) is no longer applicable.

History

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:66 Premium rate schedule increases -- Adverse lapsation

(1) For a rate increase filing that meets the following criteria, the director shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the 12 months following each increase to determine if significant adverse lapsation has occurred or is anticipated:

(a) The rate increase is not the first rate increase requested for the specific policy form or forms;

(b) The rate increase is not an exceptional increase; and

(c) The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse;

(2) In the event significant adverse lapsation has occurred, is anticipated in the filing, or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the director may determine that a rate spiral exists. Following the determination that a rate spiral exists, the director may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates:

(a) The offer shall:

(i) Be subject to the approval of the director;

(ii) Be based on actuarially sound principles, but not be based on attained age; and

(iii) Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy;

(b) The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:

(i) The maximum rate increase determined based on the combined experience; and

(ii) The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent;

(3) If the director determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the director may, in addition to the provisions of subdivisions (1) and (2) of this section, prohibit the insurer from either of the following:

(a) Filing and marketing comparable coverage for a period of up to five years; or

(b) Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:67 Premium rate schedule increases -- Policies to which does not apply

Premium rate schedule increases - Policies to which does not apply. Sections 20:06:21:63 to 20:06:21:66, inclusive, shall not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in subdivision 20:06:21:01(13), if the policy complies with all of the following provisions:

(2) The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in SDCL 58-15-31 and 58-15-72, and for variable annuities those nonforfeiture requirements as may be approved by the director;

(3) The policy meets the disclosure requirements of §§ 20:06:21:44, 20:06:21:47, and 20:06:21:48;

(4) The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:

(a) Policy illustrations as required by chapter 20:06:38;

(b) If long-term care benefits are funded through an annuity, the disclosure requirements are:

(i) The insurer must provide to all prospective purchasers a Buyer's Guide to Annuities and a Contract Summary, prior to accepting the applicants initial consideration, unless the annuity contract or associated life insurance policy provides for an unconditional refund period of at least ten days or unless the Contract Summary contains an unconditional refund offer;

(ii) The insurer shall provide a Buyer's Guide to Annuities and a Contract Summary to any prospective purchaser upon request;

(iii) A preneed funeral contract or prearrangement which is funded by an annuity contract shall be adequately disclosed at the time of application, prior to accepting the initial consideration. All relevant information shall be disclosed, including but not limited to merchandise, services, penalties or restrictions, impact of any changes in the annuity contract, relationship among agent(s), provider, and administrator; and

(5) An actuarial memorandum is filed with the insurance department that includes:

(a) A description of the basis on which the long-term care rates were determined;

(b) A description of the basis for the reserves;

(d) A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

(e) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

(f) The estimated average annual premium per policy and the average issue age;

(g) A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

(h) A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.

History

Source: 28 SDR 157, effective May 19, 2002; 36 SDR 209, effective July 1, 2010; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:68 Premium rate schedule increases -- Group insurance policies

Subdivisions 20:06:21:65(2) and 20:06:21:66(1) and (2) shall not apply to group insurance policies as defined in SDCL 58-17B-2(4)(a) where:

(1) The policies insure 250 or more persons and the policyholder has 5,000 or more eligible employees of a single employer; or

(2) The policyholder, and not the certificateholders, pays a material portion of the premium, which shall not be less than twenty percent (20%) of the total premium for the group in the calendar year prior to the year a rate increase is filed.

History

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:69 Premium rate schedule increases -- Adoption of rules

(1) Except as provided in subdivision (2) of this section, §§ 20:06:21:63 to 20:06:21:69, inclusive, applies to any long-term care policy or certificate issued in this state on or after November 1, 2002;

(2) For certificates issued on or after May 19, 2002, under a group long-term care insurance policy as defined in SDCL 58-17B-2(4)(a), which policy was in force on May 19, 2002, the provisions of §§ 20:06:21:63 to 20:06:21:69, inclusive, shall apply on the policy anniversary following May 1, 2003.

History

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:70 Premium rate schedule increases -- Exceptional increases

Except as provided in §§ 20:06:21:63 to 20:06:21:69, inclusive, exceptional increases are subject to the same requirements as other premium rate schedule increases.

The director may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase.

The director, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:71 Permitted compensation arrangements

No insurer or other entity may provide commission or other compensation greater than the renewal compensation, to a producer or other representative, for the sale of a long-term care insurance policy or certificate which replaces an existing long-term care insurance policy or certificate, unless the replacing policy contains clearly and substantially greater benefits than the replaced policy provided. The commission or other compensation provided in subsequent renewal years must be the same as that provided in the second year or period and must be provided for a reasonable number of renewal years.

Unless prohibited in this section or § 20:06:21:53.03, the first year commission or other compensation provided may be greater than the renewal commission.

For purposes of this section, "compensation" includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate, including but not limited to bonuses, gifts, prizes, awards, and finders fees.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:72 Disclosure to applicant for a claim denial

If a claim under a long-term care insurance contract is denied, the issuer shall, within 60 days of the date of a written request by the policyholder or certificateholder, or a representative thereof:

(1) Provide a written explanation of the reasons for the denial; and

(2) Make available all information directly related to the denial.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:73 Providers in a different state

No long-term care issuer may deny a claim because services are provided in a state other than the state of policy issue if the following conditions are met:

(1) If the state other than the state of policy issue does not have the provider licensing, certification, or registration required in the policy, but the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification, or registration; or

(2) If the state other than the state of policy issue licenses, certifies, or registers the provider under another classification.

For purposes of this section, "state of policy issue" means the state in which the individual policy or certificate was originally issued.

History

Source: 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:74 Producer training required to market long-term care plans

An individual may not sell, solicit, or negotiate long-term care insurance unless the individual:

(1) Is licensed as a health or life producer;

(2) Has completed a one-time, eight-hour training course prior to selling, soliciting, or negotiating long-term care insurance; and

(3) Completes four hours of ongoing training within every twenty-four-month license renewal period.

History

Source: 33 SDR 230, effective July 2, 2007; 51 SDR 66, effective January 1, 2025.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:21:74.01 Long-term care plan training topics for producers

The training required under § 20:06:21:74 must consist of the following topics related to long-term care insurance and services, and, if applicable, qualified state long-term care insurance partnership programs:

(1) State and federal requirements and the relationship between qualified state long-term care insurance partnership programs and other public and private coverage of long-term care services, including medicaid;

(2) Available long-term care services and providers;

(3) Changes or improvements in long-term care services or providers;

(4) Alternatives to the purchase of private long-term care insurance;

(5) The effect of inflation on benefits and the importance of inflation protection; and

(6) Consumer suitability standards and guidelines.

The training required in this section may not include subject matter that is prohibited by § 20:06:18:07. A course meeting the training requirements of § 20:06:21:74 and this section may be approved as a continuing education course pursuant to § 20:06:18:06.

History

Source: 51 SDR 66, effective January 1, 2025.
General Authority: SDCL 58-30-117.
Law Implemented: SDCL 58-30-117, 58-30-118.

ARSD 20:06:21:75 Insurers required to verify agent training and maintain records

Any insurer subject to this chapter shall obtain verification that its agent receives training required by § 20:06:21:74 before the agent is permitted to sell, solicit, or negotiate the insurer's long-term care insurance products, maintain records subject to the state's record retention requirements, and make that verification available to the director upon request.

Any insurer that markets long-term care partnership plans shall maintain records with respect to the training of its agents concerning the distribution of its partnership policies that will allow the director to provide assurance to the state Medicaid agency that the insurer's agents have received the training contained in § 20:06:21:74 and that the insurer's agents have demonstrated an understanding of the partnership policies and their relationship to public and private coverage of long-term care, including Medicaid, in this state. These records shall be maintained in accordance with the state's record retention requirements and shall be made available to the director upon request.

The satisfaction of these training requirements in any state shall be deemed to satisfy the training requirements in this state.

History

Source: 33 SDR 230, effective July 2, 2007; 34 SDR 200, effective January 28, 2008.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38, 58-17B-4.

ARSD 20:06:21:76 Long-term care partnership policies -- Inflation protection requirements

An insurer may not issue a policy intended to qualify as a partnership policy unless in addition to the requirements of §§ 20:06:21:06 to 20:06:21:06.05, inclusive, the policy includes the following inflation protection:

(1) For a person who is less than 61 years of age as of the date of purchase, the policy provides compound annual inflation protection; and

(2) For a person who is at least 61 years of age but less than 76 years of age, the policy provides some level of inflation protection that may not be less than one percent per year or a rate equal to the Consumer Price Index.

Inflation protection as required by this section may not be less than one percent per year or a rate equal to the Consumer Price Index. For any person who has attained the age of 76, inflation protection may be provided but is not required.

History

Source: 33 SDR 230, effective July 2, 2007; 34 SDR 88, effective September 10, 2007; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38(6), 58-17B-4.

ARSD 20:06:21:77 Long-term care partnership policies -- Required policy disclosures

A policy, certificate, or contract designed or marketed as a long-term care partnership policy must prominently disclose on the schedule page the following:

(1) The [policy, certificate, or contract] is intended to meet the standards for the long-term care partnership program in this state;

(2) Nothing in this [policy, certificate, or contract] is a guarantee of Medicaid eligibility nor is it a guarantee of any ability to disregard assets for purposes of Medicaid eligibility. This notice is required by the State of South Dakota.

Any policy, certificate, or contract that is not designed or marketed as a long-term care partnership policy must prominently disclose that it is not a long-term care partnership policy. The disclosures required by this section must also be included in a separate disclosure document. Appendix K is a sample of an acceptable disclosure document.

History

Source: 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 28-6-38, 58-17B-2, 58-17B-4.
Law Implemented: SDCL 28-6-38, 58-17B-4.

ARSD 20:06:21:78 Long-term care partnership policies -- Filing requirements

Schedule pages issued in compliance with § 20:06:21:77 are not required to be re-filed for approval. An informational filing notifying the division that the language specified in § 20:06:21:78 will be used meets the requirements of this section. The informational filing may be included with the insurer's certification of forms that meet partnership standards and are intended to be used for the issuance of partnership policies in this state.

A partnership policy issued or issued for delivery in the State of South Dakota shall be accompanied by a Partnership Disclosure Notice, explaining the benefits associated with a partnership policy and indicating that at the time issued, the policy is a qualified state long-term care insurance partnership policy. If the company uses Appendix K, the company is not required to file it for approval by the division. If the company makes changes to the form, the company must file the form for approval by the director. The Partnership Disclosure Notice shall also include a statement indicating that by purchasing such partnership policy, the insured does not automatically qualify for Medicaid.

Any policy submitted for approval as a partnership policy shall be accompanied by a Partnership Certification Form.

Insurers requesting to make use of a previously approved policy form as a qualified state long-term care partnership policy shall submit to the director a Partnership Certification Form signed by an officer of the company. The Partnership Certification Form shall be accompanied by a copy of the policy or certificate form listed, the approval date, and a bookmark for each of the requirements listed in sections II and III of the form. A Partnership Certification Form shall be required for each policy form submitted for partnership qualification. Appendix L is a sample of a Partnership Certification Form that meets the requirements of this section.

History

Source: 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38, 58-17B-4.

ARSD 20:06:21:79 Long-term care -- Minimum benefit requirements

Any long-term care policy, certificate, or contract issued in this state must contain at least one year of nursing facility coverage. A daily benefit of not less than $100 per day must be included in the policy, certificate, or contract unless one of the following are met:

(1) A suitability form is completed showing that a lesser amount per day is suitable for the applicant and both of the following:

(a) The commissions paid to the agent are renewal commissions only; and

(b) The applicant acknowledges in writing that the applicant understands the daily benefits are less than the minimum otherwise required and are not sufficient to fund the per day costs in nursing homes based upon current data available;

(2) The agent has submitted the suitability form and accompanying documentation to the division and the division determines that the benefits as applied for are suitable;

(3) If the policy, certificate, or contract is issued with at least $100 per day in daily benefits and the insured requests to decrease the daily benefit below $100 per day, the suitability forms and disclosure required by subdivision (1) are provided to the insured;

(4) A new policy, certificate, or contract with a daily benefit of less than $100 per day when combined with any existing long-term care coverage, the combined total of the daily benefits equals or exceeds $100. All long-term care policies in force covering the insured must be considered in determining whether the benefit meets the $100 per day minimum standard; or

(5) Except for policies subject to § 58-17B-2(4)(d), the long-term care policy is a group plan for which an employer or labor union contributes part or all of the premium for the long-term care policy.

A policy, certificate, or contract issued with a minimum of $100 per day or issued in compliance with subdivisions one through five may be issued as a long-term care partnership policy.

History

Source: 33 SDR 230, effective July 2, 2007; 34 SDR 88, effective September 10, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38, 58-17B-4.

ARSD 20:06:21:80 Long-term care partnership policies -- Policy amendments

Any amendment to the policy that alters the status of a partnership policy so that it no longer meets the applicable partnership standards must affirmatively disclose that fact and include an amended schedule page that removes the references to the long-term care partnership program.

History

Source: 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38, 58-17B-4.

ARSD 20:06:21:81 Long-term care policies -- Policy amendments

No long-term care policy, certificate, or contract may be amended or benefits reduced pursuant to § 20:06:21:86 to:

(1) Reduce the nursing home benefit to less than one year;

(2) Reduce or delete benefits for assisted living in a manner not consistent with §§ 20:06:21:50 and 20:06:21:51; or

(3) Reduce or delete benefits for home health care in a manner not consistent with § 20:06:21:46.

A policy, certificate, or contract issued prior to July 1, 2007, may be exchanged by amendment or endorsement to become a long-term care partnership policy provided that the requirements of this chapter are met with the endorsed or amended policy. The endorsements or amendments must identify the policy, certificate, or contract as required by §§ 20:06:21:77 and 20:06:21:78.

History

Source: 33 SDR 230, effective July 2, 2007; 34 SDR 88, effective September 10, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38, 58-17B-4.

ARSD 20:06:21:82 Availability of new services or providers

An insurer shall notify policyholders of the availability of a new long-term care policy series that provides coverage for new long-term care services or providers material in nature and not previously available through the insurer to the general public. The notice shall be provided within 12 months of the date the new policy series is made available for sale in this state.

Notification is not required for any policy issued prior to July 1, 2007, or to any policyholder or certificateholder who is currently eligible for benefits, within an elimination period or on claim, or who previously has been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

The insurer shall make the new coverage available in one of the following ways:

(1) By adding a rider to the existing policy and charging a separate premium for the new rider based on the insured's attained age;

(2) By exchanging the existing policy or certificate for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate. The premium credits shall be based on premiums paid or reserves held for the prior policy or certificate;

(3) By exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status shall be recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged. The cost for the new policy or certificate may recognize the difference in reserves between the new policy or certificate and the original policy or certificate; or

(4) By an alternative program developed by the insurer that meets the intent of this section if the program is filed with and approved by the director.

An insurer is not required to notify policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this section, the phrase, limited distribution channel, means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public. Policyholders that purchased such a proprietary policy shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers material in nature is made available to that limited distributed channel.

History

Source: 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:83 Policies issued considered exchanges

Policies issued pursuant to § 20:06:21:82 are considered exchanges and not replacements. These exchanges are not subject to §§ 20:06:21:28.01, 20:06:21:53.01 to 20:06:21:53.04, inclusive, and the reporting requirements of § 20:06:21:52.

History

Source: 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38, 58-17B-4.

ARSD 20:06:21:84 Policies offered through employers, labor unions, and associations

If the policy is offered through an employer, a labor organization, or a professional, trade, or occupational association, the required notification in § 20:06:21:82 shall be made to the offering entity. However, if the policy is issued to a group defined in SDCL 58-17B-2(4)(d), the notification shall be made to each certificateholder.

History

Source: 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:85 Applicability of new provider or service requirements

Nothing in §§ 20:06:21:82 to 20:06:21:84, inclusive, prohibits an insurer from offering any policy, rider, certificate, or coverage change to any policyholder or certificateholder. However, upon request any policyholder may apply for currently available coverage that includes the new services or providers. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

Nothing in §§ 20:06:21:82 to 20:06:21:84, inclusive, applies to life insurance policies or riders containing accelerated long-term care benefits.

History

Source: 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 28-6-38, 58-17B-4.

ARSD 20:06:21:86 Right to reduce coverage and lower premiums

Each long-term care insurance policy and certificate shall include a provision that allows the policyholder or certificateholder to reduce coverage and lower the policy or certificate premium in at least one of the following ways:

(1) Reducing the maximum benefit; or

(2) Reducing the daily, weekly, or monthly benefit amount.

The insurer may also offer other reduction options that are consistent with the policy or certificate design or the carrier's administrative processes. In the event the reduction in coverage involves the reduction or elimination of the inflation protection provision, the insurer shall allow the policyholder to continue the benefit amount in effect at the time of the reduction. The provision shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage.

The premium for the reduced coverage shall be based on the same age and underwriting class used to determine the premium for the coverage currently in force and be consistent with the approved rate table.

The insurer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable. If a policy or certificate is about to lapse, the insurer shall provide a written reminder to the policyholder or certificateholder of his or her right to reduce coverage and premiums in the notice required by § 20:06:21:22.

This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

A premium increased notice required by subdivision 20:06:21:60(5) shall include:

(1) An offer to reduce policy benefits provided by the current coverage consistent with the requirements of this section;

(2) A disclosure stating that all options available to the policyholder may not be of equal value; and

(3) In the case of a partnership policy, a disclosure that some benefit reduction options may result in a loss in partnership status that may reduce policyholder protections.

History

Source: 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:87 Authorized representative

For purposes of §§ 20:06:21:87 to 20:06:21:104, inclusive, an authorized representative is a person authorized to act as the covered person's personal representative within the meaning of 45 CFR 164.502(g) promulgated by the Secretary under the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act and means the following:

(1) A person to whom a covered person has given express written consent to represent the covered person in an external review;

(2) A person authorized by law to provide substituted consent for a covered person; or

(3) A family member of the covered person or the covered person's treating health care professional if the covered person is unable to provide consent.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:88 Notice to insured

If an insurer determines that the benefit trigger of a long-term care insurance policy has not been met, the insurer shall provide a clear, written notice to the insured and the insured's authorized representative, if applicable, of all of the following:

(1) The reason that the insurer determined that the insured's benefit trigger has not been met;

(2) The insured's right to internal appeal in accordance with § 20:06:21:89, and the right to submit new or additional information relating to the benefit trigger denial with the appeal request; and

(3) The insured's right, after exhaustion of the insurer's internal appeal process, to have the benefit trigger determination reviewed under the independent review process in accordance with §§ 20:06:21:91 to 20:06:21:100, inclusive.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:89 Internal appeal

The insured or the insured's authorized representative may appeal the insurer's adverse benefit trigger determination by sending a written request to the insurer, along with any additional supporting information, within 120 calendar days after the insured and the insured's authorized representative, if applicable, receives the insurer's benefit determination notice. The internal appeal shall be considered by an individual or group of individuals designated by the insurer. However, no individual involved in making the initial benefit determination may be involved in making the internal appeal decision. The internal appeal shall be completed and written notice of the internal appeal decision shall be sent to the insured and the insured's authorized representative, if applicable, within 30 calendar days of the insurer's receipt of all necessary information upon which a final determination can be made.

A rebuttable presumption that the notice was received by the insured within five days of mailing exists if the insurer can provide proof of actual properly addressed mailing or proof of standard office practice or procedure designed to ensure that items are properly addressed and mailed. If no proof of actual mailing or proof of standard office practice or procedure is provided, there is no presumption of receipt by the insured.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:90 Internal appeal notice requirements

If the insurer's original determination is upheld upon internal appeal, the notice of the internal appeal decision shall describe any additional internal appeal rights offered by the insurer. Nothing in this chapter requires the insurer to offer any internal appeal rights other than those described in §§ 20:06:21:89 and 20:06:21:90.

If the insurer's original determination is upheld after the internal appeal process has been exhausted, and new or additional information has not been provided to the insurer, the insurer shall provide a written description of the insured's right to request an independent review of the benefit determination as described in §§ 20:06:21:91 to 20:06:21:100, inclusive, to the insured and the insured's authorized representative, if applicable.

As part of the written description of the insured's right to request an independent review, an insurer shall include the following, or substantially equivalent, language:

"We have determined that the benefit eligibility criteria ("benefit trigger") of your [policy] [certificate] has not been met. You have the right to an independent review of our decision conducted by long-term care professionals who are not associated with us. Please send a written request for independent review to us at [address]. You must inform us, in writing, of your election to have this decision reviewed within 120 days of receipt of this letter. Listed below are the names and contact information of the independent review organizations approved or certified by the director to conduct long-term care insurance benefit eligibility reviews. If you wish to request an independent review, please choose one of the listed organizations and include its name with your request for independent review. If you elect independent review, but do not choose an independent review organization with your request, we will choose one of the independent review organizations for you and refer the request for independent review to that organization."

If the insurer does not believe the benefit trigger decision is eligible for independent review, the insurer shall inform the insured and the insured's authorized representative, if applicable, and the director in writing and include in the notice the reasons for its determination of independent review ineligibility.

The appeal process described in §§ 20:06:21:89 and 20:06:21:90 is not deemed to be a new service or provider as referenced in § 20:06:21:82; and therefore does not trigger the notice requirements of that section.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:91 Independent review of benefit trigger determination

The insured or the insured's authorized representative may request an independent review of the insurer's benefit trigger determination after the internal appeal process outlined in §§ 20:06:21:89 and 20:06:21:90 has been exhausted. A written request for independent review may be made by the insured or the insured's authorized representative to the insurer within 120 calendar days after the insurer's written notice of the final internal appeal decision is received by the insured and insured's authorized representative, if applicable.

The cost of the independent review shall be borne by the insurer.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:92 Independent review process

Within five business days of receiving a written request for independent review, the insurer shall refer the request to the independent review organization that the insured or the insured's authorized representative has chosen from the list of organizations the insurer has provided to the insured. If the insured or the insured's authorized representative does not choose an approved independent review organization to perform the review, the insurer shall choose an independent review organization approved or certified by the director. The insurer shall vary its selection of authorized independent review organizations on a rotating basis.

The insurer shall refer the request for independent review of a benefit trigger determination to an independent review organization, subject to the following:

(1) The independent review organization shall be on a list of certified or approved independent review organizations that satisfy the requirements of a qualified long-term care insurance independent review organization contained in §§ 20:06:21:87 to 20:06:21:104, inclusive;

(2) The independent review organization may not have any conflicts of interest with the insured, the insured's authorized representative, if applicable, or the insurer; and

(3) Such review shall be limited to the information or documentation provided to and considered by the insurer in making its determination, including any information or documentation considered as part of the internal appeal process.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:93 Additional appeal information

If the insured or the insured's authorized representative has new or additional information not previously provided to the insurer, whether submitted to the insurer or the independent review organization, such information shall first be considered in the internal review process, as set forth in § 20:06:21:89. While this information is being reviewed by the insurer, the independent review organization shall suspend its review and the time period for review is suspended until the insurer completes its review.

The insurer shall complete its review of the information and provide written notice of the results of the review to the insured and the insured's authorized representative, if applicable, and the independent review organization within five business days of the insurer's receipt of such new or additional information.

If the insurer maintains its denial after such review, the independent review organization shall continue its review, and render its decision within the time period specified in § 20:06:21:99. If the insurer overturns its decision following its review, the independent review request shall be considered withdrawn.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:94 Independent review notification

The insurer shall acknowledge in writing to the insured and the insured's authorized representative, if applicable, and the director that the request for independent review has been received, accepted, and forwarded to an independent review organization for review. Such notice shall include the name and address of the independent review organization.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:95 Independent review organization selection

Within five business days of receipt of the request for independent review, the independent review organization assigned pursuant to this section shall notify the insured and the insured's authorized representative, if applicable, the insurer and the director that it has accepted the independent review request and identify the type of licensed health care professional assigned to the review. The assigned independent review organization shall include in the notice a statement that the insured or the insured's authorized representative may submit in writing to the independent review organization within seven days following the date of receipt of the notice additional information and supporting documentation that the independent review organization should consider when conducting its review.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:96 Review of information

The independent review organization shall review all of the information and documents received pursuant to § 20:06:21:95 that have been provided to the independent review organization. The independent review organization shall provide copies of any documentation or information provided by the insured or the insured's authorized representative to the insurer for its review, if it is not part of the information or documentation submitted by the insurer to the independent review organization. The insurer shall review the information and provide its analysis of the new information in accordance with §§ 20:06:21:97 and 20:06:21:98.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:97 Additional information to independent review

The insured or the insured's authorized representative may submit, at any time, new or additional information not previously provided to the insurer but pertinent to the benefit trigger denial. The insurer shall consider such information and affirm or overturn its benefit trigger determination. If the insurer affirms its benefit trigger determination, the insurer shall promptly provide such new or additional information to the independent review organization for its review, along with the insurer's analysis of such information.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:98 Process if determination overturned

If the insurer overturns its benefit trigger determination:

(1) The insurer shall provide notice to the independent review organization and the insured and the insured's authorized representative, if applicable, and the director of its decision; and

(2) The independent review process shall immediately cease.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:99 Review decision requirements

The independent review organization shall provide the insured and the insured's authorized representative, if applicable, the insurer, and the director written notice of its decision, within 30 calendar days from receipt of the referral to the independent review organization by the insurer pursuant to § 20:06:21:92. If the independent review organization overturns the insurer's decision, the independent review organization shall:

(1) Establish the precise date within the specific period of time under review that the benefit trigger was deemed to have been met;

(2) Specify the specific period of time under review for which the insurer declined eligibility, but during which the independent review organization deemed the benefit trigger to have been met; and

(3) For tax-qualified long-term care insurance contracts, provide a certification made by a licensed health care practitioner as defined by subdivision 20:06:21:01(21) that the insured is a chronically ill individual.

The independent review organization's determination shall be used solely to establish liability for benefit trigger decisions, and is intended to be admissible in any proceeding only to the extent it establishes the eligibility of benefits payable. Nothing in §§ 20:06:21:87 to 20:06:21:104, inclusive, restricts the insured's right to submit a new request for benefit trigger determination after the independent review decision, if the independent review organization upholds the insurer's decision.

The decision of the independent review organization with respect to whether the insured met the benefit trigger will be final and binding on the insurer, except to the extent the insurer has other remedies available under applicable state or federal law. However, if the decision of the independent review organization is that a benefit trigger has been met and the insurer has sought other applicable state or federal remedies in lieu of accepting the decision of the independent review organization, then the insurer shall provide notice to the director within 30 days of that decision. Nothing in this section prevents the director upon receipt of notice from initiating administrative proceedings pursuant to § 20:06:21:108, SDCL 58-6-46, 58-6-47, or 58-33-67.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:100 Acceptance of state certification

The director shall accept another state's certification of an independent review organization, if the state requires the independent review organization to meet substantially similar qualifications as those contained in Appendix M and as such state requires as provided § 20:06:21:102.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:101 Certification of long-term care insurance independent review organizations

The director shall consider a long-term care insurance independent review organization to be qualified in this state, if the independent review organization demonstrates that it is unbiased and has either been certified by another state with substantially similar qualifications as contained in Appendix M or meets the following qualifications:

(1) Have on staff, or contract with, a qualified and licensed health care professional in an appropriate field for determining an insured's functional or cognitive impairment (e.g. physical therapy, occupational therapy, neurology, physical medicine, and rehabilitation) to conduct the review;

(2) Neither it nor any of its licensed health care professionals may, in any manner, be related to or affiliated with an entity that previously provided medical care to the insured;

(3) Utilize a licensed health care professional who is not an employee of the insurer or related in any manner to the insured;

(4) Neither it nor its licensed health care professional who conducts the reviews may receive compensation of any type that is dependent on the outcome of the review;

(5) Be state-approved or certified to conduct such reviews if the state requires such approvals or certifications;

(6) Provide a description of the fees to be charged by it for independent reviews of a long-term care insurance benefit trigger decision. Such fees shall be reasonable and customary for the type of long-term care insurance benefit trigger decision under review;

(7) Provide the name of the medical director or health care professional responsible for the supervision and oversight of the independent review procedure; and

(8) Have on staff or contract with a licensed health care practitioner as defined in subdivision 20:06:21:01(21), who is qualified to certify that an individual is chronically ill for purposes of a qualified long-term care insurance contract.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:102 Maintenance of records and reporting obligations by independent review organizations

Each insurer contracting with an independent review organization doing business in this state shall contractually ensure that the independent review organization complies with the following:

(1) Maintain written documentation establishing the date it receives a request for independent review, the date each review is conducted, the resolution, the date such resolution was communicated to the insurer and the insured, the name and professional status of the reviewer conducting such review in an easily accessible and retrievable format for the year in which it received the information, plus two calendar years;

(2) Be able to document measures taken to appropriately safeguard the confidentiality of such records and prevent unauthorized use and disclosures in accordance with applicable federal and state law;

(3) Report annually to the director, by June 1, in the aggregate and for each long-term care insurer all of the following:

(a) The total number of requests received for independent review of long-term care benefit trigger decisions;

(b) The total number of reviews conducted and the resolution of such reviews (i.e., the number of reviews which upheld or overturned the long-term care insurer's determination that the benefit trigger was not met);

(d) The percentage of reviews conducted within the prescribed timeframe set forth in § 20:06:21:99; and

(e) Such other information the director may require.

(4) Report immediately to the director any change in its status which would cause it to cease meeting any of the qualifications required of an independent review organization performing independent reviews of long-term care benefit trigger decisions.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:103 Additional rights

Nothing contained in §§ 20:06:21:87 to 20:06:21:104, inclusive, limits the ability of an insurer to assert any rights an insurer may have under the policy related to:

(1) An insured's misrepresentation;

(2) Changes in the insured's benefit eligibility; and

(3) Terms, conditions, and exclusions of the policy, other than failure to meet the benefit trigger.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:104 Applicability

The requirements of §§ 20:06:21:87 to 20:06:21:103, inclusive, apply to a benefit trigger request made after December 31, 2010, under a long-term care insurance policy.

As used for purposes of independent review, a benefit trigger is a contractual provision in the insured's long-term care insurance conditioning the payment of benefits on a determination of the insured's ability to perform activities of daily living and on cognitive impairment. For purposes of a tax-qualified long term care insurance contract as defined in Section 7702B of the Internal Revenue Code of 1986, as amended, a benefit trigger shall include a determination by a licensed health care practitioner that an insured is a chronically ill individual.

History

Source: 36 SDR 209, effective July 1, 2010; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:105 Payment of clean claim

Payment of a clean claim. Within 30 business days after receipt of a claim for benefits under a long-term care insurance policy or certificate, an insurer shall pay such claim if it is a clean claim, or send a written notice acknowledging the date of receipt of the claim and one of the following:

(1) The insurer is declining to pay all or part of the claim and each specific reason for the denial; or

(2) That additional information is necessary to determine if all or any part of the claim is payable and the specific additional information that is necessary.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:106 Claim timeframes

Within 30 business days after receipt of all the requested additional information, an insurer shall pay a claim for benefits under a long-term care insurance policy or certificate if it is a clean claim, or send a written notice that the insurer is declining to pay all or part of the claim, and the specific reason or reasons for denial.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:107 Unpaid claims

If an insurer fails to comply with § 20:06:21:105 or 20:06:21:106, the insurer shall pay interest at the rate of one percent per month on the amount of the claim that should have been paid but that remains unpaid 45 business days after the receipt of the claim with respect to § 20:06:21:105 or all requested additional information with respect to § 20:06:21:106. The interest payable pursuant to this section shall be included in any late reimbursement without requiring the person who filed the original claim to make any additional claim for such interest.

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

ARSD 20:06:21:108 Violations

The provisions of §§ 20:06:21:105 to 20:06:21:107, inclusive, do not apply if the insurer has a reasonable basis supported by specific information that such claim was fraudulently submitted.

Any violation of §§ 20:06:21:105 to 20:06:21:107, inclusive, by an insurer if committed flagrantly and in conscious disregard of provisions of §§ 20:06:21:87 to 20:06:21:107, inclusive, or with such frequency as to constitute a general business practice shall be considered a violation of SDCL 58-6-47(3).

‎

History

Source: 36 SDR 209, effective July 1, 2010.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.

Chapter 20:06:22 Loss ratios for health insurance policies

ARSD 20:06:22:01 Types of renewal clauses

For purposes of § 20:06:22:02, the types of renewal clauses are as follows:

(1) Optionally Renewable (OR): renewal is at the option of the insurance company;

(2) Conditionally Renewable (CR): renewable, but may be declined by class, by geographic area, or for stated reasons other than deterioration of health;

(3) Guaranteed Renewable (GR): renewal may not be declined by the insurance company for any reason, but the insurance company may revise rates on a class basis;

(4) Noncancelable (NC): renewal may not be declined nor may rates be revised by the insurance company.

History

Source: 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-4-1, 58-17-4.2.
Law Implemented: SDCL 58-17-4.2.

ARSD 20:06:22:02 Anticipated loss ratio requirements -- Exception

The anticipated loss ratio for a policy form of excepted benefits on which the average annual premium is expected to be $250 or more must be equal to or greater than the applicable percentage shown in the following table:

Type of Coverage Type of Renewal Clause

Medical Expense

70%

65%

60%

Other

70%

65%

60%

55%

Disability Income

60%

55%

50%

45%

Special consideration may be given to disability policies in determining the timeframe in which the anticipated loss ratio is to be achieved.

If the expected average annual premium for a policy form is $150, but less than $250, subtract 5 percentage points from the numbers in the table in this section. If the expected average annual premium is less than $150, subtract 10 percentage points.

When justified by the insurer, the director may give special consideration and may permit anticipated loss ratios lower than those indicated in this section based on the type of coverage or a lower average annual premium, or both.

Nothing in this section applies to credit life, credit health, or credit unemployment insurance policies.

The loss ratio percentages required by this section apply to all policies issued after December 18, 1995, regardless of the date of approval of the policy form and accompanying rates.

For individual and small group policies other than excepted benefits, the minimum loss ratio is 80%. The minimum loss ratio for large group policies other than excepted benefits is 85%. In calculating the loss ratio for policies other than excepted benefits, the earned premium may be reduced by federal and state taxes and incurred claims may be increased by expenses to improve health care quality.

History

Source: 16 SDR 208, effective June 3, 1990; 20 SDR 60, effective November 3, 1993; 22 SDR 97, effective December 18, 1995; 24 SDR 86, effective December 31, 1997; 37 SDR 131, effective January 11, 2011.
General Authority: SDCL 58-4-1, 58-17-4.2, 58-17-64, 58-17-87, 58-18-63, 58-18-79.
Law Implemented: SDCL 58-17-4.2, 58-17-64.

ARSD 20:06:22:03 Rate filings

Every policy form affecting benefits which is submitted for approval must be accompanied by a rate filing unless the form does not require a change in the rate. Any subsequent addition to or change in rates applicable to the policy must also be filed.

The rate filing shall include the following:

(1) An actuarial memorandum describing the basis on which rates were determined;

(2) An indication and description of the calculation of the anticipated loss ratio over the entire period for which rates are computed to provide coverage;

(3) A certification by an actuary that, to the best of the actuary's knowledge and judgment, the entire rate filing is in compliance with the applicable laws and rules of South Dakota and that the benefits are reasonable in relation to premiums;

(4) A rate schedule based on the rates to be used from the effective date of the rate filing.

History

Source: 16 SDR 208, effective June 3, 1990; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-17-87(5), 58-18B-18.
Law Implemented: SDCL 58-11-76, 58-17-4.1, 58-17-4.2, 58-18B-3.1.

ARSD 20:06:22:04 Filings of rate revisions

In addition to the requirements in § 20:06:22:05, filings of rate revisions for a previously approved policy form shall include the following:

(1) A statement of the scope and reason for the revision, and an estimate of the expected average effect on premiums, including the original anticipated loss ratio for the form;

(2) A statement of whether the filing applies only to new business, only to in-force business, or both, and the reason; and

(3) A history of the experience under existing rates.

History

Source: 16 SDR 208, effective June 3, 1990; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-17-87(5), 58-18B-18.
Law Implemented: SDCL 58-11-76, 58-17-4.1, 58-17-4.2, 58-18B-3.1.

ARSD 20:06:22:05 Requirements for history of experience

The history of experience required by § 20:06:22:04 shall include earned premium and incurred benefit information for each calendar year for each policy form, including data for rider and endorsement forms which are used with the policy form, on the same basis, including reserves. Subject to the approval of the director, an insurer may combine the premium and incurred benefit information on similar coverages. Separate data may be maintained for each rider or endorsement form to the extent appropriate.

Subject to approval of the director, experience under forms which provide substantially similar coverage and provisions and which are issued to substantially similar risk classes may be combined for purposes of evaluating experience data in relation to premium rates and rate revisions, particularly if statistical credibility would be materially improved by the combination. Once the insurer has combined forms, the insurer may not thereafter separate the experience, except with the approval of the director.

The history may also include, if available and appropriate, the ratios of actual claims to the claims expected according to the assumptions underlying the existing rates.

The data shall be presented using the following format:

(1) For all years of issue combined;

(2) For each calendar year of experience used in the rate determination process;

(3) For the last five years;

(4) The date and magnitude of each previous rate change, if any;

(5) The number of South Dakota policies affected by the rate revision.

History

Source: 16 SDR 208, effective June 3, 1990; 39 SDR 219, effective June 26, 2013.
General Authority: SDCL 58-17-87(5), 58-18B-18.
Law Implemented: SDCL 58-11-76, 58-17-4.1, 58-17-4.2, 58-18B-3.1.

ARSD 20:06:22:06 Repealed

Maximum allowable rate increase per filing -- Exception.** Repealed.

History

Source: 16 SDR 208, effective June 3, 1990; repealed, 29 SDR 107, effective February 5, 2003.

ARSD 20:06:22:07 Repealed

Annual limitation on rate increases -- Exception.** Repealed.

History

Source: 16 SDR 208, effective June 3, 1990; repealed, 29 SDR 107, effective February 5, 2003.

ARSD 20:06:22:08 Applicability of rules

These rules apply only to health insurance policies issued pursuant to SDCL 58-17.

History

Source: 16 SDR 208, effective June 3, 1990.
General Authority: SDCL 58-4-1, 58-17-4.1, 58-17-4.2.
Law Implemented: SDCL 58-17-4.1, 58-17-4.2.

ARSD 20:06:22:09 Repealed

Definitions.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:10 Repealed

Applicability.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:11 Repealed

Levels of aggregation for medical loss ratio rebate calculations.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:12 Repealed

Frequency and timing of medical loss ratio rebate calculations and rebate payments.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:13 Repealed

Credibility adjustments to medical loss ratio.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:14 Repealed

Medical loss ratio rebate calculation for plan year 2011.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:15 Repealed

Single employer multi-state blended rates for plan year 2011.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:16 Repealed

Dual option coverage for single employers at blended rate for plan year 2011.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:17 Repealed

Loss ratio formula calculations for plan year 2011.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:18 Repealed

Medical loss ratio rebate calculation for plan year 2012.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:19 Repealed

Single employer multi-state blended rates for plan year 2012.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:20 Repealed

Dual option coverage for single employers at blended rate for plan year 2012.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:21 Repealed

Loss ratio formula calculations for plan year 2012.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:22 Repealed

Medical loss ratio rebate calculation for plan year 2013.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:23 Repealed

Single employer multi-state blended rates for plan year 2013.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:24 Repealed

Dual option coverage for single employers at blended rate for plan year 2013.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:25 Repealed

Loss ratio formula calculations for plan year 2013.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:26 Repealed

Credibility adjusted medical loss ratio for plan year 2013.** Repealed.

History

Source: 37 SDR 131, effective January 11, 2011; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:22:27 Rating bands

With respect to the premium rate a health insurance issuer charges for health insurance coverage offered in the individual or small group market, the rate may only vary with respect to the particular plan or coverage involved by the following factors:

(1) Whether the plan or coverage covers an individual or a family;

(2) Rating area;

(3) Age, except the rate may not vary by more than 3:1 for like individuals of different age who are age 21 and older. The variation in rate must be actuarially justified for individuals under age 21, consistent with the uniform age rating curve under § 20:06:22:30. For purposes of identifying the appropriate age adjustment under this subdivision and the age band in § 20:06:22:31, applicable to a specific enrollee, the enrollee's age as of the date of policy issuance or renewal shall be used; and

(4) Tobacco use, except such rate may not vary by more than 1.5:1 for like individuals who vary in tobacco usage and may only be applied with respect to individuals who may legally use tobacco under state law.

The premium rate may not vary with respect to the particular plan or coverage involved by any other factor not described in this section.

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:27.01 Tobacco use defined

For purposes of § 20:06:22:27, tobacco use means the use of any tobacco product on average four or more times per week within no longer than the past six months. Tobacco use does not include religious or ceremonial use of tobacco. Tobacco use must be defined in terms of when a tobacco product was last used.

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:27.02 Tobacco usage reporting. Tobacco usage reporting

Tobacco usage reporting.** If an enrollee is found to have reported false or incorrect information about the enrollee's tobacco use, the issuer may retroactively apply the appropriate tobacco use rating factor to the enrollee's premium as if the correct information had been accurately reported from the beginning of the plan year. An issuer must not rescind the coverage on this basis. Tobacco use is not a material fact for which an issuer may rescind coverage if there is a misrepresentation.

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:28 Health status and gender factors precluded

A health insurance issuer may not use health status or gender as a factor in any premium rate in the individual or small group market.

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:29 Rating area

No health insurance issuer may vary rates based on geographical location in this state except as permitted by this section. The rating areas are on a county basis and are as follows:

(1) Harding, Butte, Perkins, Ziebach, Haakon, Jackson, Bennett, Oglala Lakota, Fall River, Custer, Pennington, Lawrence, Meade, Jones, Mellette, and Todd;

(2) Lake, Moody, McCook, Minnehaha, Turner, Lincoln, Clay, and Union;

(3) Campbell, Corson, Dewey, Walworth, Potter, McPherson, Edmunds, Faulk, Brown, Spink, Marshall, Roberts, Day, Grant, Codington, Clark, Hamlin, Deuel, Brookings, Kingsbury, and Beadle; and

(4) Sully, Hughes, Hyde, Hand, Buffalo, Jerauld, Sanborn, Lyman, Miner, Brule, Aurora, Davison, Hanson, Douglas, Charles Mix, Hutchinson, Bon Homme, Stanley, Tripp, Gregory, and Yankton.

Nothing in this section requires a health insurance issuer to use a different geographic rating factor for each rating area. A health insurance issuer may assign the same rating band for any or all of the rating areas specified in this section.

History

Source: 39 SDR 203, effective June 10, 2013; SL 2015, ch 56, § 1, effective May 1, 2015; 44 SDR 184, effective June 25, 2018.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:30 Rating variations

With respect to family coverage under a health insurance plan, the rating variations permitted under § 20:06:22:27(3) and (4), must be applied based on the portion of the premium attributable to each family member covered. The total premium for family coverage must be determined by summing the premiums for each individual family member. In determining the total premium for family members, premiums for no more than the three oldest covered children who are under age 21 may be taken into account.

In the case of the small group market, the total premium charged to the group shall be determined by summing the premiums of covered participants and beneficiaries in accordance with this section.

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:31 Uniform age bands

For rating purposes under § 20:06:22:27(3) uniform age bands are as follows:

AGE

PREMIUM

RATIO

AGE

PREMIUM

RATIO

AGE

PREMIUM

RATIO

0-20

0.635

1.222

1.786

1.000

1.230

1.865

1.000

1.238

1.952

1.000

1.246

2.040

1.000

1.262

2.135

1.004

1.278

2.230

1.024

1.302

2.333

1.048

1.325

2.437

1.087

1.357

2.548

1.119

1.397

2.603

1.135

1.444

2.714

1.159

1.500

2.810

1.183

1.563

2.873

1.198

1.635

2.952

1.214

1.706

64 and older

ARSD 20:06:46

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:32 Single risk pool. Single risk pool

Single risk pool.** For the individual market, a health insurance issuer shall consider the claims experience of all individual health plans, other than those enrolled in grandfathered health plans and group plans subject to SDCL 58-17-70, and excepted benefits offered by the issuer in the individual market in a state, including those enrollees who do not enroll in such plans through an Exchange, to be members of a single risk pool.

For the small group market, a health insurance issuer shall consider the claims experience of all enrollees in all health plans, other than grandfathered health plans, subject to SDCL chapter 58-18B and offered by the issuer in the small group market in a state, including those enrollees who do not enroll in such plans through an Exchange, to be members of a single risk pool.

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:33 Index rate

For each plan year or policy year, as applicable, each health insurance issuer shall establish its own index rate for this state based on the total combined claims costs for providing essential health benefits within the single risk pool of this state. Separate single risk pools are required for the individual and small group markets. Each health insurance issuer shall adjust the index rate on a market-wide basis based on the total expected market-wide payments and charges under the risk adjustment and reinsurance program in this state. The premium rate for all the plans the health insurance issuer offers in this state market must use the applicable index rate, as adjusted for total expected market-wide payments and charges under the risk adjustment and reinsurance programs, subject only to the adjustments permitted under § 20:06:22:34.

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:34 Permitted plan-level adjustments to the index rate

For each plan year or policy years beginning after December 31, 2013, a health insurance issuer may vary premium rates for a particular plan from its index rate for a relevant market in this state based only on the following actuarially justified plan specific factors:

(1) The actuarial value and costsharing design of the plan;

(2) The plan's provider network, delivery system characteristics, and utilization management practices;

(3) The benefits provided under the plan that are in addition to the essential health benefits. These additional benefits must be pooled with similar benefits within the single risk pool and the claims experience from those benefits must be utilized to determine rate variations for plans that offer those benefits in addition to essential health benefits;

(4) Administrative costs, excluding Exchange user fees; and

(5) With respect to catastrophic plans, the expected impact of the specific eligibility categories for those plans.

History

Source: 39 SDR 203, effective June 10, 2013; 46 SDR 26, effective September 4, 2019.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:35 Frequency of index rate and plan-level adjustments

A health insurance issuer may not establish an index rate and make the market-wide adjustments pursuant to § 20:06:22:33, or make the plan-level adjustments pursuant to § 20:06:22:33, more or less frequently than annually, except as provided in this section.

A health insurance issuer in the small group market may establish index rates and make the market-wide adjustments pursuant to § 20:06:22:33, and make the plan-level adjustments pursuant to § 20:06:22:33, no more frequently than quarterly. Any changes to rates must have effective dates of January 1, April 1, July 1, or October 1. Such rates may only apply to coverage issued or renewed on or after the rate effective date and will apply for the entire plan year of the group health plan.

History

Source: 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-4.1, 58-17-87, 58-18B-18, 58-18B-36.

ARSD 20:06:22:36 Applicability

20 : 06 : 22 : 36 . Applicability . The provisions of §§ 20:06:22:27 to 20:06:22:35, inclusive, apply for plan years beginning after December 31, 2013, in the small group market and for policy years beginning after December 31, 2013, for the individual market. The provisions of §§ 20:06:22:27 to 20:06:22:35, inclusive, do not apply to grandfathered health plans.

Effective January 1, 2014, the provisions of §§ 20:06:22:27 to 20:06:22:35, inclusive, apply to any individual plan, group, or small employer plan other than excepted benefits as defined in § 20:06:55:27 and grandfathered plans.

History

Source: 39 SDR 203, effective June 10, 2013; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-4.2, 58-17-87, 58-18B-18, 58-18B-36.
Law Implemented: SDCL 58-17-74.1, 58-17-87, 58-18B-18, 58-18B-36.

Chapter 20:06:23 Financial condition of insurers

ARSD 20:06:23:01 Increase in capital and surplus

The division may require an insurer to increase its capital and surplus based on the type of risk it is writing, the amount of risk it is writing, a change in its investment portfolio, change in the lines the company is writing, unusual ratios produced by the National Association of Insurance Commissioners Insurance Regulatory Information System, or any other factor which indicates it is necessary for the protection of policyholders. The increase may be based on industry-accepted practices and standards.

History

Source: 19 SDR 160, effective April 27, 1993.
General Authority: SDCL 58-4-1, 58-4-39.
Law Implemented: SDCL 58-4-39.

ARSD 20:06:23:02 Standards for determining the hazardous financial condition of an insurer

The director may consider any one of the following standards to determine whether the continued operation of an insurer transacting an insurance business in this state might be hazardous to the policyholders, creditors, or the general public:

(1) Adverse findings reported in financial condition and market conduct examination reports, audit reports, and actuarial opinions, reports, or summaries;

(2) The National Association of Insurance Commissioners Insurance Regulatory Information System and its other financial analysis solvency tools and reports;

(3) Whether the insurer has made adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the insurer, when considered in light of the assets held by the insurer with respect to such reserves and related actuarial items including, the investment earnings on such assets and the considerations anticipated to be received and retained under such policies and contracts;

(4) The ability of an assuming reinsurer to perform and whether the insurer's reinsurance program provides sufficient protection for the insurer's remaining surplus after taking into account the insurer's cash flow, the classes of business written, and the financial condition of the assuming reinsurer;

(5) Whether the insurer's operating loss in the last twelve-month period or any shorter period of time, including net capital gain or loss, change in non-admitted assets, and cash dividends paid to shareholders, is greater than fifty percent (50%) of the insurer's remaining surplus as regards policyholders in excess of the minimum required in SDCL 58-6-23;

(6) Whether the insurer's operating loss in the last twelve-month period or any shorter period of time, excluding net capital gains, is greater than twenty percent (20%) of the insurer's remaining surplus as regards policyholders in excess of the minimum required in SDCL 58-6-23;

(7) Whether a reinsurer, obligor, or any entity within the insurer's insurance holding company system is insolvent, threatened with insolvency, or is delinquent in payment of monetary or other obligations, that may affect the solvency of the insurer;

(8) Contingent liabilities, pledges, or guarantees which either individually or collectively involve a total amount which, in the opinion of the director, may affect the solvency of the insurer;

(9) Whether any controlling person of an insurer is delinquent in the transmitting to, or payment of, net premiums to the insurer;

(10) The age and collectability of receivables;

(11) Whether the management of an insurer, including officers, directors, or any other person who directly or indirectly controls the operation of the insurer, fails to possess and demonstrate the competence, fitness, and reputation necessary to serve the insurer in such positions;

(12) Whether management of an insurer has failed to respond to inquiries relative to the condition of the insurer or has furnished false or misleading information concerning an inquiry;

(13) Whether the insurer has failed to meet financial and holding company filing requirements in the absence of a reason satisfactory to the director;

(14) Whether the insurer has filed a false or misleading sworn financial statement, has released false or misleading financial statements to lending institutions or to the general public, has made a false or misleading entry, or has omitted an entry of material amount in the books of the insurer;

(15) Whether the insurer has grown so rapidly and to an extent that it lacks adequate financial and administrative capacity to meet its obligations in a timely manner;

(16) Whether the insurer has experienced or will experience in the foreseeable future cash flow or liquidity problems;

(17) Whether the insurer has established financial reserves that do not comply with minimum standards established by state insurance laws, regulations, statutory accounting standards, sound actuarial principles, and standards of practice;

(18) Whether the insurer persistently engages in material under reserving that results in adverse development;

(19) Whether transactions among affiliates, subsidiaries, or controlling persons for which the insurer receives assets or capital gains, do not provide sufficient value, liquidity, or diversity to assure the insurer's ability to meet its outstanding obligations as they mature;

(20) Whether there is a rating drop by a nationally recognized rating organization; or

(21) Any other finding determined by the director to be hazardous to the insurer's policyholders, creditors, or general public.

History

Source: 19 SDR 160, effective April 27, 1993; 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-4-39.
Law Implemented: SDCL 58-4-39.

ARSD 20:06:23:03 Criteria for dividends

In determining whether any dividend should be paid, disallowed, or limited by an insurer, the director may consider the following:

(1) If the insurer is in a hazardous financial condition under § 20:06:23:02;

(2) If the insurer would become impaired, financially distressed or troubled, or insolvent after the payment;

(3) If the insurer could not meet its obligations;

(4) If the insurer cannot meet the requirements of SDCL 58-5A-34;

(5) If the insurer's surplus as regards policyholders is not reasonable in relation to the company's outstanding liabilities and adequate to its financial needs; or

(6) If the dividends paid are reasonable based on the adequacy of the level of surplus remaining after the dividend payment or the quality of the company's earnings and the extent to which the reported earnings include extraordinary items, such as surplus relief reinsurance transactions and reserve destrengthening.

History

Source: 19 SDR 160, effective April 27, 1993.
General Authority: SDCL 58-5A-70.
Law Implemented: SDCL 58-5A-70.

ARSD 20:06:23:04 Criteria for targeted exams

In targeting a company for an examination not within the five-year examination schedule, the division may use any one of the following criteria in making that determination:

(1) The company meets any of the hazardous financial condition criteria in § 20:06:23:02;

(2) The company fails to complete the annual or quarterly statement correctly;

(3) The company is in violation of any section of Title 58;

(4) The nature and number of consumer complaints; or

(5) Another state requests or invites participation in a targeted examination.

History

Source: 19 SDR 160, effective April 27, 1993.
General Authority: SDCL 58-3-26.
Law Implemented: SDCL 58-3-1, 58-3-26.

ARSD 20:06:23:05 Farm mutual annual statement information

A farm mutual shall file the annual statement adopted by the division on December 31, 1989, and shall report all information required by the annual statement unless waived by the division. The farm mutual shall report the unearned premium reserve calculation, but the division may not consider the calculation for deciding the provisions of SDCL chapter 58-29B until the filing of the 1993 annual statement.

History

Source: 19 SDR 160, effective April 27, 1993.
General Authority: SDCL 58-35-59.
Law Implemented: SDCL 58-35-59.

Chapter 20:06:24 Life reinsurance, Repealed

ARSD 20:06:24 Repealed chapter

CHAPTER 20:06:24

LIFE REINSURANCE

(Repealed. 22 SDR 52, effective October 25, 1995)

Chapter 20:06:25 Annual financial filing requirements

ARSD 20:06:25:01 Annual statements

An insurer shall file an annual statement in accordance with the standards adopted by the National Association of Insurance Commissioners in the 2026 edition of the Accounting Practices and Procedures Manual and the 2025 editions of the following Annual Statement Instructions manuals: Life, Accident, and Health/Fraternal; Property/Casualty; Health; and Title.

References:

Annual Statement Instructions - Life, Accident, and Health/Fraternal, 2025 edition. Cost: $0.
Annual Statement Instructions - Property/Casualty, 2025 edition. Cost: $0.
Annual Statement Instructions - Health, 2025 edition. Cost: $0.
Annual Statement Instructions - Title, 2025 edition. Cost: $0.
Accounting Practices and Procedures Manual, 2026. Cost: $0.

History

Source: 21 SDR 144, effective February 19, 1995; 22 SDR 110, effective March 1, 1996; 23 SDR 202, effective June 1, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 27 SDR 111, effective May 7, 2001; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 42 SDR 52, effective October 13, 2015; 42 SDR 177, effective June 28, 2016; 43 SDR 181, effective July 7, 2017; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-6-75.
Law Implemented: SDCL 58-6-75.

ARSD 20:06:25:01.01 Accounting methods for certain surety bonds

An insurer writing surety bonds guaranteeing to lending institutions the repayment of student loans made by lending institutions may, in lieu of compliance with SSAP No. 60 of the Accounting Practices and Procedures Manual, 2026 edition, develop premium earning patterns that are representative of the insurer's claims and expense patterns by loan and program and compute unearned premium reserves according to those premium earning patterns. In lieu of compliance with SSAP No. 3 of the Accounting Practices and Procedures Manual, 2026 edition, changes in accounting estimates, for this method of accounting only, may be amortized over the remaining life of the student loans utilizing pro-rated current premium earning patterns. In lieu of compliance with SSAP No. 53 of the Accounting Practices and Procedures Manual, 2026 edition, the insurer may recognize written premiums when due.

Reference: Accounting Practices and Procedures Manual, 2026 edition. Copies may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197; (816) 783-8300; http://www.naic.org. Cost: $0.

History

Source: 27 SDR 111, effective May 7, 2001; 29 SDR 5, effective July 10, 2002; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 42 SDR 52, effective October 13, 2015; 42 SDR 177, effective June 28, 2016; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-6-75.
Law Implemented: SDCL 58-6-75.

ARSD 20:06:25:01.02 Accounting methods for bail bonds

An insurer writing bail bonds may, in lieu of compliance with SSAP No. 53 of the Accounting Practices and Procedures Manual, 2026 edition, report bail bond written premiums less agent commissions and recognize total premiums as earned on the effective date of the bonds. An insurer reporting premiums on this method shall file a supplemental Schedule T with the annual statement setting forth the gross premiums by state for premium tax purposes.

History

Source: 29 SDR 5, effective July 10, 2002; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 42 SDR 52, effective October 13, 2015; 42 SDR 177, effective June 28, 2016; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-6-75.
Law Implemented: SDCL 58-6-75.

ARSD 20:06:25:02 Actuarial opinions

Actuarial opinions must be filed in accordance with standards adopted by the National Association of Insurance Commissioners in the manuals on Annual Statement Instructions - Life, Accident, and Health/Fraternal, 2025 edition, and Annual Statement Instructions - Property/Casualty, 2025 edition.

References:

Annual Statement Instructions - Life, Accident, and Health/Fraternal, 2025 edition. Cost: $0.
Annual Statement Instructions - Property/Casualty, 2025 edition. Cost: $0.

Copies of references 1 and 2 may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197; (816) 783-8300; http://www.naic.org.

History

Source: 21 SDR 144, effective February 19, 1995; 22 SDR 110, effective March 1, 1996; 23 SDR 202, effective June 1, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 42 SDR 52, effective October 13, 2015; 42 SDR 177, effective June 28, 2016; 43 SDR 181, effective July 7, 2017; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-26-13.1, 58-26-46.
Law Implemented: SDCL 58-26-13.1, 58-26-46.

Chapter 20:06:26 Rating and valuation of investments

ARSD 20:06:26:01 Standards for rating and valuation of investments

The division's standards for rating and valuing investments are set forth in the Purposes and Procedures Manual of the NAIC Investment Analysis Office, 2025 edition.

Reference: Purposes and Procedures Manual of the NAIC Investment Analysis Office, 2025 edition, National Association of Insurance Commissioners (NAIC). Copies may be obtained from the NAIC, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197; (816) 783-8300; http://www.naic.org. Cost: $0.

History

Source: 21 SDR 144, effective February 19, 1995; 22 SDR 110, effective March 1, 1996; 23 SDR 202, effective June 1, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 42 SDR 52, effective October 13, 2015; 42 SDR 177, effective June 28, 2016; 43 SDR 181, effective July 7, 2017; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-27-108.
Law Implemented: SDCL 58-27-108.

Chapter 20:06:27 Standardized health care forms

ARSD 20:06:27:01 Definitions

Terms used in this section mean:

(1) "ASC Z12N standard format," the standards for electronic data interchange within the health care industry developed by the Accredited Standards Committee Z12N Insurance Subcommittee of the American National Standards Institute;

(2) "CDT-2 codes," the current dental terminology prescribed by the American Dental Association;

(3) "CPT-4 codes," codes for medical services and procedures performed by medical providers as listed in Physicians Current Procedural Terminology, (CPT '95) Fourth Edition, published by the American Medical Association;

(4) "HCFA," the Health Care Financing Administration of the U.S. Department of Health and Human Services;

(5) "HCFA Form 1450," the health insurance claim form maintained by HCFA for use by institutional care practitioners;

(6) "HCFA Form 1500," the health insurance claim form maintained by HCFA for use by health care practitioners;

(7) "HCPCS," HCFA's common procedure coding system which describes products, supplies, procedures, and health professional services;

(8) "HCPCS Level 1 Codes," the AMA's CPT-4 codes and modifiers for professional services and procedures;

(9) "HCPCS Level 2 Codes," alphanumeric codes and modifiers for health care products and supplies, as well as some codes for professional services not included in the AMA's CPT-4;

(10) "HCPCS Level 3 Codes," local alphanumeric codes and modifiers for items and services not included in the HCPCS Level 1 or HCPCS Level 2;

(11) "Health care practitioner," a provider of health care as follows:

(a) A chiropractor licensed under SDCL chapter 36-5;

(b) A corporation or partnership of health care practitioners listed in this subdivision;

(d) A nurse licensed under SDCL chapter 36-9 or 36-9A;

(e) An optometrist licensed under SDCL chapter 36-7;

(f) A physician licensed under SDCL chapter 36-4;

(g) A podiatrist licensed under SDCL chapter 36-8;

(h) A psychologist licensed under SDCL chapter 36-27A;

(i) A speech, physical, respiratory, or occupational therapist licensed under SDCL chapter 36-10 or 36-31;

(j) A medical assistant licensed under SDCL chapter 36-9B;

(k) A physician assistant licensed under SDCL chapter 36-4A; or

(l) An emergency medical technician licensed under SDCL chapter 36-4B;

(12) "ICD-9-CM codes," the diagnosis and procedure codes in the International Classification of Diseases, Ninth Revision, Clinical Modification published by the U.S. Department of Health and Human Services;

(13) "Institutional care practitioner," a facility licensed under SDCL chapter 34-12 or listed in § 44:04:01:02;

(14) "Issuer," an insurance company, fraternal benefit society, health care service plan, health maintenance organization, third party administrator, and any other entity reimbursing the costs of health care expenses;

(15) "J512 form," the uniform dental claim form approved by the American Dental Association for use by dentists;

(16) "Revenue codes," the codes established for use by institutional care practitioners by the National Uniform Billing Committee.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-12-14.
Law Implemented: SDCL 58-12-12.

ARSD 20:06:27:02 Scope

Except as otherwise specifically provided, the requirements of this chapter apply to issuers, health care providers, and institutional care practitioners. Nothing in this chapter prevents an issuer from requesting additional information that is not contained on the required forms to determine eligibility of the claim for payment if required under the terms of the policy, certificate, program, or plan the claimant is covered under. Nothing in this chapter prohibits an issuer, health care practitioner, or institutional care practitioner from using alternative forms or procedures for filing claims as specified in a written contract between the health care practitioner or institutional care practitioner and issuer. Nothing in this chapter applies to disability insurance.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-12-14.
Law Implemented: SDCL 58-12-12.

ARSD 20:06:27:03 Requirements for use of HCFA Form 1500

The HCFA Form 1500 shall be used as follows:

(1) Health care practitioners, other than dentists, shall use the HCFA Form 1500, adopted by HCFA, approved by AMA Council on Medical Service in August, 1988, and in effect in May of 1995, when filing claims for professional services with issuers. Health care practitioners that bill patients directly shall provide a completed HCFA Form 1500 in addition to any other explanatory information used to bill the patient if requested by the patient. Issuers may only require health care practitioners to use the following coding systems for the initial filing of claims for health care services:

(a) HCPCS Level 1, Level 2, and Level 3 codes in effect as of June 30, 1995; and

(b) ICD-9-CM codes in effect as of June 30, 1995;

(2) Issuers may only require health care practitioners to use other explanations with a code or to furnish additional information with the initial submission of a HCFA Form 1500 under the following circumstances:

(a) If the procedure code used describes a treatment or service that is not otherwise classified;

(b) If the procedure code is followed by the CPT-4 modifier 22, 52, or 99, pursuant to the CPT-4 manual in effect as of June 30, 1995. Health care practitioners may use item 19 of the HCFA Form 1500 to explain multiple modifiers, unless box 19 is used for other purposes in accordance with the instructions for this form; or

(c) If information contained in the code is insufficient to process the claim or, in the case of a public program, is necessary to administer the program;

(3) Health care practitioners may use box 19 of the HCFA Form 1500 to indicate the form is an amended version of a form previously submitted to the issuer by inserting the word "amended" in the space provided;

(4) Except as otherwise required through participation in Medicaid, health care practitioners billing for services based on the amount of time involved shall define on line 19 the time interval in item 24 G of the HCFA Form 1500, if the time interval is not already defined in the HCPCS code. If not defined by either HCPCS or in line 19, the issuer shall assume units to be days of treatment;

(5) Except as otherwise required through participation in Medicaid, as authorized by Title XIX of the Social Security Act, 42 U.S.C. § 1396d, health care practitioners shall provide the unique physician identification number, as assigned by HCFA, in box 17a and the federal tax identification number or social security number to complete item 25 of the HCFA Form 1500.

References: HCFA Form 1500 (12/90), in effect as of May, 1995, Health Care Financing Administration. Copies may be obtained from the American Medical Association, P.O. Box 7046, Dover, DE 19903-7046. Cost: Carton of 1,000, $67.95.

HCPCS Level 1 Codes: Physicians' Current Procedural Terminology (CPT '95) , Fourth edition, revised 1994, American Medical Association. Copies may be obtained from American Medical Association, P.O. Box 7046, Dover, DE 19903-7046. Cost: $41.95 each, plus shipping and handling.

HCPCS Level 2 Code: HCFA Common Procedure Coding System (HCPCS) , (Alpha-Numeric Portion), January, 1995, Health Care Financing Administration, U.S. Department of Health and Human Services. Copies may be obtained from Superintendent of Documents, Publication Service Section 5505, Washington, DC 20402. Cost: $16 each.

Level 3 HCPCS Code: HCPCS 1995, November 7, 1994, pp. 161-163. Denver Region VIII, 00820 North Dakota B/S, Health Care Financing Administration, U.S. Department of Health and Human Services. Copies may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, SD 57501-5070. Cost: $.75 a page.

The International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) , Fourth Edition, Volumes I and II, 1995: Context Software Systems, Inc., McGraw-Hill, Inc. Copies may be obtained from the American Medical Association, P.O. Box 7046, Dover, DE 19903-7046. Cost: $39.95 each, plus shipping and handling.

History

Source: 22 SDR 97, effective December 18, 1995; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-12-14.
Law Implemented: SDCL 58-12-12.

ARSD 20:06:27:04 Requirements for use of HCFA Form 1450

The HCFA Form 1450 shall be used as follows:

(1) Institutional care practitioners shall use the HCFA Form UB-92 HCFA-1450, adopted by HCFA and in effect as of June 30, 1995, when filing claims for health care services with issuers. When requested by the patient, institutional care providers that bill patients directly shall provide a completed HCFA Form 1450 in addition to any other explanation or information used to bill the patient;

(2) Issuers may require institutional care practitioners to use only the following coding system for the initial filing of claims for health care services:

(a) ICD-9-CM codes, in effect as of June 30, 1995;

(b) Revenue codes, in effect as of June 30, 1995;

(d) The information outlined in subdivision 20:06:27:03(3), if the charges include direct service furnished by a health care practitioner and the direct service is not covered by the instructions for the HCFA Form 1450;

(3) Hospitals may use the HCFA Form 1500 to supplement a HCFA Form 1450 if necessary in billing patients or their representatives or filing claims with issuers for outpatient services.

References: HCFA Form 1450: UB-92 HCFA-1450 , in effect as of June 30, 1995, Health Care Financing Administration, U.S. Department of Health and Human Services. Copies may be obtained from the American Medical Association, P.O. Box 7046, Dover, DE 19903-7046. Cost: Carton of 1,000, $67.95.

The International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) , Fourth Edition, Volumes I and II, 1995; Context Software Systems, Inc., McGraw-Hill, Inc. Copies may be obtained from the American Medical Association, P.O. Box 7046, Dover, DE 19903-7046. Cost: $39.95 each, plus shipping and handling.

Revenue Codes: UB-92, National Uniform Billing Data Element Specifications as Developed by the National Uniform Billing Committee as of January 8, 1993, effective October 1, 1993, Health Care Financing Administration, U.S. Department of Health and Human Services. Copies may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd floor, Pierre, SD 57501-5070. Cost: $.75 a page.

HCPCS Level 1 Codes: Physicians' Current Procedural Terminology (CPT 95) , Fourth edition, revised 1994, American Medical Association. Copies may be obtained from American Medical Association, P.O. Box 7046, Dover, DE 19903-7046. Cost: $41.95 each, plus shipping and handling.

Level 2 HCPCS Code: HCFA Common Procedure Coding System (HCPCS), (Alpha-Numeric Portion) , in effect as of January, 1995, Health Care Financing Administration, U.S. Department of Health and Human Services. Copies may be obtained from Superintendent of Documents, Publication Service Section 5505, Washington, DC 20402. Cost: $16 each.

Level 3 HCPCS Code : HCPCS 1995, November 7, 1994, pp. 161-163. Denver Region VIII, 00820 North Dakota B/S, Health Care Financing Administration, U.S. Department of Health and Human Services. Copies may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, SD 57501-5070. Cost: $.75 a page.

History

Source: 22 SDR 97, effective December 18, 1995; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-12-14.
Law Implemented: SDCL 58-12-12.

ARSD 20:06:27:05 Requirements for use of J512 Form

The J512 Form shall be used as follows:

(1) Dentists shall use the Dental Claim Form, J512, adopted by the American Dental Association as of 1994, according to instructions contained in the American Dental Association's Current Dental Terminology CDT-2, 1995-2000, for filing claims with issuers for professional dental services. When requested by the patient, dentists that bill patients directly shall provide the patient with a completed J512 Form in addition to any other form used to bill the patient;

(2) Issuers may not require a dentist to use any code other than the CDT-2 codes for the initial filing of claims for dental care services, unless the use of supplemental codes is defined and permitted in a written contract between the issuer and dentist;

(3) Dentists performing procedures within their scope of practice which do not have assigned CDT-2 codes may use the HCFA 1500 Form with the applicable CPT-4 codes. Issuers must accept the J512 Form or, as applicable, the HCFA 1500 Form.

References: Form J512 , adopted in 1994, American Dental Association. Copies may be obtained from the American Dental Association, 211 East Chicago Avenue, Chicago, IL 60611. Cost: $25.20, plus $3.95 for shipping and handling.

Current Dental Terminology CDT-2 , Second Edition, 1995-2000, American Dental Association. Copies may be obtained from the American Dental Association, 211 East Chicago Avenue, Chicago, IL 60611. Cost: $29.95.

Physicians' Current Procedural Terminology CPT '95 , Fourth Edition, 1994, Health Care Financing Administration, U.S. Department of Health and Human Services. Copies may be obtained from the American Medical Association, P.O. Box 7046, Dover, DE 19903-7046. Cost: $41.95, plus shipping and handling.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-12-14.
Law Implemented: SDCL 58-12-12.

ARSD 20:06:27:06 General provisions for the filing and processing of claims

Health care practitioners, institutional care practitioners, and issuers shall file and process claims in the following manner:

(1) Health care practitioners and institutional care practitioners shall file claims in a manner consistent with the requirements of this chapter. Claims filed in paper form must be printed on 8.5 x 11-inch paper;

(2) Issuers shall accept forms submitted in compliance with this chapter for the processing of claims;

(3) Health care practitioners, institutional care practitioners, and issuers shall:

(a) Use and accept HCFA Form 1500, HCFA Form 1450, and J512 Form and the instructions for these forms in the billing of patients or their representatives and filing claims with issuers; and

(b) Modify their billing and claim reimbursement practices to encompass the coding changes for all billing and claim filing by the effective date of the changes set forth by the developers of the forms, codes, and procedures required under this chapter.

HCFA Form 1450: UB-92 HCFA-1450, in effect as of June 30, 1995, Health Care Financing Administration, U.S. Department of Health and Human Services. Copies may be obtained from the American Medical Association, P.O. Box 7046, Dover, DE 19903-7046. Cost: Carton of 1,000, $67.95.

Form J512, adopted in 1994, American Dental Association. Copies may be obtained from the American Dental Association, 211 East Chicago Avenue, Chicago, IL 60611. Cost: $25.20, plus $3.95 for shipping and handling.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-12-14.
Law Implemented: SDCL 58-12-12.

ARSD 20:06:27:07 Mandatory electronic format

Issuers that receive claims or send payments by electronic means shall, by the date on which the Health Care Financing Administration requires it of Medicare intermediaries and carriers, accept the ASC X12N standard format for the health care claims submission transaction set (837) and send the ASC X12N health care claim payment transaction set (835), both of which have been adopted by the Data Interchange Standards Association, Inc. (DISA) as of December, 1994.

Reference: ASC X12N Draft Version 3, Release 5 Standards , published December, 1994, by the Data Interchange Standards Association, Inc. (DISA) and distributed by Washington Publishing Company (WPC). Copies of the entire standards manual may be obtained from EDI Support Services, P.O. Box 203, Chadron, OH 44024-0203. Cost: $425 each.

History

Source: 22 SDR 97, effective December 18, 1995.
General Authority: SDCL 58-12-14.
Law Implemented: SDCL 58-12-12.

Chapter 20:06:28 Form filing requirements

ARSD 20:06:28:01 Filing fees -- Identification and documentation

.** A form filing is not considered filed for purposes of SDCL chapter 58-11 unless the following requirements are met:

(1) Any requisite retaliatory fee owed, pursuant to SDCL 58-6-70, is noted on the cover letter accompanying the forms and is paid upon receipt of the quarterly billing sent by the Division of Insurance;

(2) All required forms must be completed and filed including identification and date approved as to which other forms the form is intended to be used with, and, if applicable, a copy of the form and a cover letter which lists the forms contained in the filing, contains a general description of their intended market use, and provides the insurer's NAIC number;

(3) For purposes of an insurer making an informational filing, sufficient documentation is provided to show that the group in question is eligible for the coverage under the provisions of Title 58.

History

Source: 22 SDR 52, effective October 25, 1995; 30 SDR 89, effective December 9, 2003; 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-11-63.
Law Implemented: SDCL 58-11-12, 58-11-63.

ARSD 20:06:28:02 Repealed

Duplicates.** Repealed.

History

Source: 22 SDR 52, effective October 25, 1995; repealed, 33 SDR 230, effective July 2, 2007.

ARSD 20:06:28:03 Filings by third parties

If an entity other than the insurer whose forms are being filed makes the filing, an authorization from the insurer must accompany the filing.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-11-63.
Law Implemented: SDCL 58-11-12, 58-11-63.

ARSD 20:06:28:04 Repealed

Follow-up correspondence -- Identification.** Repealed.

History

Source: 22 SDR 52, effective October 25, 1995; repealed, 33 SDR 230, effective July 2, 2007.

ARSD 20:06:28:05 Repealed

Self-addressed, stamped envelope.** Repealed.

History

Source: 22 SDR 52, effective October 25, 1995; repealed, 33 SDR 230, effective July 2, 2007.

ARSD 20:06:28:06 Life and annuity filings -- Actuarial certification of rating and nonforfeiture requirements

Each life and annuity filing must contain an actuarial certification certifying that rating and nonforfeiture requirements have been met. The certification must include the certifying actuary's designation.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-11-63.
Law Implemented: SDCL 58-11-12, 58-11-63.

ARSD 20:06:28:07 Property and casualty filings -- Identification -- Reference filings prohibited -- Exception

Each property or casualty filing which uses an Insurance Services Organization (ISO) form or other licensed rating organization shall include in the form number an edition date identifying the applicable month and year. A letter referring to the ISO form with its edition date may be filed without actual copies of the ISO forms to be used. Filings, commonly referred to as "me too" filings, in which an insurer makes a filing referring to another insurer's approved filing and requests approval of its use are not permitted. Reference filings are only permitted if a subscriber is using a licensed advisory organization's forms.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-11-63.
Law Implemented: SDCL 58-11-12, 58-11-63.

ARSD 20:06:28:08 Electronic filings

All form filings must be submitted through the System for Electronic Rate and Form filing, SERFF. An electronic form filing must meet the requirements of this chapter only to the extent that the requirements are consistent with the electronic filing of forms. Each filing submitted to the division through SERFF may only contain forms from one Type of Insurance, (TOI). Nothing in this section exempts an insurer from the payment of retaliatory fees nor does it prohibit the division from requiring the use of a designated electronic transmission form.

Reference: System for Electronic Rate and Form Filing , SERFF. Copies of industry manuals may be obtained from National Association of Insurance Commissioners, 2301 McGee Street, Suite 800, Kansas City, Missouri, 64108-2604, http://www.serff.org/index.htm.

History

Source: 22 SDR 52, effective October 25, 1995; 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-11-63.
Law Implemented: SDCL 58-11-12, 58-11-63.

ARSD 20:06:28:09 Workers' compensation claim expenditure report required

Each insurer providing workers' compensation insurance in this state must file a workers' compensation claim expenditure report each month before the sixteenth day of the month. The claim expenditure report must contain all claim information relative to the prior month's expenditures.

History

Source: 38 SDR 102, effective December 7, 2011.
General Authority: SDCL 58-2-39(3), 58-3-26.
Law Implemented: SDCL 58-1-26, 58-2-22, 58-3-7.4, 58-4-44.

Chapter 20:06:29 Cancellations and replacements

ARSD 20:06:29:00 Lending institution coverage

For purposes of this chapter the terms policyholder and insured include borrowers whose property is covered through coverage purchased by the lending institution covering that lending institution's interest in the property.

History

Source: 24 SDR 86, effective December 31, 1997.
General Authority: SDCL 58-11-63(1).
Law Implemented: SDCL 58-11-63(1).

ARSD 20:06:29:01 Cancellation by insurer or policyholder

An insurer canceling a policy must return to the policyholder unearned premiums on at least a pro rata basis. An insurer may use a short rate calculation of unearned premiums if the cancellation is at the request of the policyholder. A cancellation is not considered to be at the request of the policyholder if the premium increases at policy renewal or at inception in excess of the quoted rate and the insurer fails to provide notice of the premium increase before the renewal or inception date. If it is specified in the policy, an insurer may either calculate all cancellations short rate or consider the premium fully earned at policy inception for short term or seasonal policies. The requirements of this section do not apply to surety insurance which requires the payment of a minimum premium or a premium that is fully earned pursuant to rules or rates filed and approved by the division. Nothing in this section prohibits an insurer from having a minimum premium of not more than $25 on property and casualty coverage provided that the minimum premium is filed as part of a rating plan pursuant to SDCL chapter 58-24. This section does not apply to life insurance.

History

Source: 22 SDR 52, effective October 25, 1995; 24 SDR 86, effective December 31, 1997; 25 SDR 76, effective November 26, 1998; 31 SDR 214, effective July 6, 2005; 36 SDR 112, effective January 11, 2010.
General Authority: SDCL 58-11-63(7)(9).
Law Implemented: SDCL 58-11-63(7)(9), 58-33-83, 58-33-84.

ARSD 20:06:29:02 Replacement of policy

This section applies to the cancellation date of any replaced policy, other than a life or health policy. If the replacing policy is already effective on the date an insured or an insured's representative makes a request for cancellation of the replaced policy, the cancellation date of the replaced policy shall coincide with the effective date of the replacing policy if the insured or an insured's representative provides to the replaced insurer one of the following:

(1) A copy of the declaration of the replacing policy or a binder issued under the authority of the replacing insurer; or

(2) The replaced policy or a properly completed lost policy release form.

However, if a document in subdivision (1) or (2) is not provided to the replaced insurer, the cancellation date of the replaced policy shall coincide with the date of request for cancellation of the replaced policy.

A personal policy is considered to be a replacing policy for coverage purchased by a lending institution for its interest in the property of the borrower.

The insurer who is honoring a request for cancellation made pursuant to this section is not liable for coverage under the policy after the effective date of the cancellation regardless of the date the cancellation was requested.

A replaced insurer who, pursuant to the policy, made one or more Public Utilities Commission form filings, a similar filing in another state, or an Interstate Commerce Commission filing is not required to comply with this section unless the replacing insurer provides a hold harmless agreement for the period of time during which the filing requires the replaced carrier to continue with the risk.

History

Source: 22 SDR 52, effective October 25, 1995; 24 SDR 86, effective December 31, 1997; 25 SDR 76, effective November 26, 1998.
General Authority: SDCL 58-11-63(1)(4)(7).
Law Implemented: SDCL 58-11-63(1)(4)(7), 58-33-35, 58-33-83.

ARSD 20:06:29:03 Cancellation refunds

An insurer shall issue and mail any refund due the insured within 20 days after the insurer receives a request for cancellation or, if the insurer cancels the policy, within 20 days after the effective date of the cancellation.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-11-63
Law Implemented: SDCL 58-11-63.

ARSD 20:06:29:04 Format for notice of transfer of insurance

An insurer that transfers a policyholder to another insurer within the same group of insurers may issue, in lieu of a nonrenewal notice, a notice that contains the following information:

(1) The name of the new insurer;

(2) The date that the new insurer assumes liability under the policy; and

(3) A general statement as to the reason for the change in insurers.

This section applies to all personal automobile insurance, homeowner insurance, property and casualty insurance as defined in SDCL 58-9-5 to 58-9-33, inclusive.

History

Source: 27 SDR 9, effective August 10, 2000; 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-1-14, 58-1-15, 58-11-51, 58-11-63(7).
Law Implemented: SDCL 58-1-14, 58-1-15, 58-11-51.

ARSD 20:06:29:05 Definitions

Terms used in this chapter mean:

(1) "Pro rata method," the pro rata unearned gross premium method produces the minimum refund amount to be used for insurance under which premiums are collected from the insured on a basis other than a minimum premium or fully earned basis as allowed pursuant to § 20:06:29:01, where the refund amount is to be determined by multiplying the original gross single premium times the quotient arrived at by dividing the number of remaining days by the number of days in the term;

(2) "Short rate method," the pro rata method of unearned premium reduced by an administrative expense factor not to exceed 10%;

(3) "Earned premium," the premium that has been used during the policy term. It is the premium that is payable to the insurer for the time period for which insurance was provided;

(4) "Unearned premium," that portion of the written premium applicable to the unexpired or unused part of the period for which the premium has been calculated.

History

Source: 27 SDR 118, effective May 17, 2001.
General Authority: SDCL 58-11-63(1).
Law Implemented: SDCL 58-11-63(1).

Chapter 20:06:30 Life and health reinsurance

ARSD 20:06:30:01 Scope

This chapter applies to all domestic life and accident and health insurers and to all other licensed life and accident and health insurers which are not subject to a substantially similar regulation in their domiciliary state. This chapter also applies to the accident and health business of licensed property and casualty insurers. This chapter does not apply to assumption reinsurance, yearly renewable term reinsurance, or certain nonproportional reinsurance, such as stop loss or catastrophe reinsurance, except as referenced in § 20:06:30:14.

History

Source: 22 SDR 52, effective October 25, 1995; 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:02 Conditions prohibiting reductions in liability or establishment of assets

An insurer subject to this chapter may not, for reinsurance ceded, reduce a liability or establish an asset in any financial statement filed with the division, if, by the terms of the reinsurance agreement, in substance or effect, any of the following conditions exist:

(1) Renewal expense allowances provided or to be provided to the ceding insurer by the reinsurer in any accounting period are not sufficient to cover anticipated allocable renewal expenses of the ceding insurer on the portion of the business reinsured, unless a liability is established for the present value of the shortfall, using assumptions equal to the applicable statutory reserve basis on the business reinsured. Those expenses include commissions, premium taxes, and direct expenses, including billing, valuation, claims, and maintenance, expected by the company at the time the business is reinsured;

(2) The ceding insurer may be deprived of surplus or assets at the reinsurer's option or automatically upon the occurrence of some event, such as the insolvency of the ceding insurer. However, termination of the reinsurance agreement by the reinsurer for nonpayment of reinsurance premiums or other amounts due, such as modified coinsurance reserve adjustments, interest and adjustments on funds withheld, and tax reimbursements, is not considered to be a deprivation of surplus or assets;

(3) The ceding insurer is required to reimburse the reinsurer for negative experience under the reinsurance agreement. However, neither offsetting experience refunds against current and prior years' losses under the agreement nor payment by the ceding insurer of an amount equal to the current and prior years' losses under the agreement upon voluntary termination of in-force reinsurance by the ceding insurer is considered a reimbursement to the reinsurer for negative experience. Voluntary termination does not include situations in which termination occurs because of unreasonable provisions which allow the reinsurer to reduce its risk under the agreement. An example of such a provision is the right of the reinsurer to increase reinsurance premiums or risk and expense charges to excessive levels, forcing the ceding company to prematurely terminate the reinsurance treaty;

(4) The ceding insurer is required, at specific times scheduled in the agreement, to terminate or automatically recapture all or part of the reinsurance ceded;

(5) The reinsurance agreement involves the possible payment by the ceding insurer to the reinsurer of amounts realized from sources other than income from the reinsured policies. For example, a ceding company may not pay reinsurance premiums or other fees or charges to a reinsurer which are greater than the direct premiums collected by the ceding company;

(6) The agreement does not transfer all of the significant risk inherent in the business being reinsured. The table in § 20:06:30:05 identifies for a representative sampling of products or type of business the risks which are considered to be significant. For products not specifically included in the table, the risks determined to be significant must be consistent with the table;

(7) The credit quality, reinvestment, or disintermediation risk is significant for the business reinsured and the ceding company does not, other than for the classes of business excepted in § 20:06:30:03, either transfer the underlying assets to the reinsurer or legally segregate them in a trust or escrow account or otherwise establish a mechanism satisfactory to the director which legally segregates, by contract or contract provision, the underlying assets;

(8) Settlements are made less frequently than quarterly or payments due from the reinsurer are not made in cash within 90 days after the settlement date;

(9) The ceding insurer is required to make representations or warranties not reasonably related to the business being reinsured;

(10) The ceding insurer is required to make representations or warranties about future performance of the business being reinsured; or

(11) The reinsurance agreement is entered into for the principal purpose of producing significant surplus aid for the ceding insurer, typically on a temporary basis, while not transferring all of the significant risks inherent in the business reinsured and, in substance or effect, the expected potential liability to the ceding insurer remains basically unchanged.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:03 Certain assets allowed to be held without segregation

Notwithstanding the requirements of subdivision 20:06:30:02(7), the assets supporting the reserves for the following classes of business and any classes of business which do not have a significant credit quality, reinvestment, or disintermediation risk may be held by the ceding company without segregation:

(1) Health insurance - Long term care/Long term disability;

(2) Traditional nonpar permanent;

(3) Traditional par permanent;

(4) Adjustable premium permanent;

(5) Indeterminate premium permanent; and

(6) Universal life fixed premium, no dump-in premiums allowed.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:04 Formula for determining reserve interest rate adjustment

The associated formula for determining the reserve interest rate adjustment must reflect the ceding company's investment earnings and incorporate all realized and unrealized gains and losses reflected in the statutory statement. The following is an acceptable formula:

Rate = 2 (I + CG)

X + Y - I - CG

Where: I is the net investment income in Exhibit 2, line 16, column 7,

page 10 of the Annual Statement for the year ended December 31, 1994;

CG is capital gains less capital losses in Exhibit 4, line 10, column 4,

page 11 of the Annual Statement for the year ended December 31, 1994;

X is the current year cash and invested assets, page 2, line 10A,

column 1, plus investment income due and accrued, page 2, line 16,

column 1, less borrowed money, page 3, line 22, column 1, all in

the Annual Statement for the year ended December 31, 1994; and

Y is the same as X but for the prior year.

Reference: Life, Accident & Health Annual Statement for the Year Ended December 31, 1994 , pages 2, 3, 10 and 11. National Association of Insurance Commissioners. Copies may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, SD 57501-2000, (605) 773-3563. Cost: $.75 a page.

History

Source: 22 SDR 52, effective October 25, 1995; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:05 Table of risk categories

The following is a table of risk categories that are considered to be significant for purposes of considering the transfer of risk. The categories of risk are as follows:

(1) Morbidity;

(2) Mortality;

(3) Lapse - The risk that a policy will voluntarily terminate before the recoupment of a statutory surplus strain experienced at issue of the policy;

(4) Credit quality (C1) - The risk that invested assets supporting the reinsured business will decrease in value. The main hazards are that assets will default or that there will be a decrease in earning power. It excludes market value declines due to changes in interest rate;

(5) Reinvestment (C3) - The risk that interest rates will fall and funds reinvested, coupon payments or monies received upon asset maturity or call, will therefore earn less than expected. If asset durations are less than liability durations, the mismatch will increase;

(6) Disintermediation (C3) - The risk that interest rates rise and policy loans and surrenders increase or maturing contracts do not renew at anticipated rates of renewal. If asset durations are greater than the liability durations, the mismatch will increase. Policyholders will move their funds into new products offering higher rates. The company may have to sell assets at a loss to provide for these withdrawals.

TABLE OF RISK CATEGORIES

= Significant 0 = Insignificant

Health insurance - other than LTC/LTD*

Health insurance - LTC/LTD*

Immediate annuities

Single premium deferred annuities

Flexible premium deferred annuities

Guaranteed interest contracts

Other annuity deposit business

Single premium whole life

Traditional nonpar permanent

Traditional nonpar term

Traditional par permanent

Traditional par term

Adjustable premium permanent

Indeterminate premium permanent

Universal life flexible premium

Universal life fixed premium

Universal life fixed premium - dump

in premiums allowed

*LTC = long term care insurance

*LTD = long term disability insurance

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:06 Prior approval of director required for reserve credits or establishing assets

Notwithstanding the first paragraph of §20:06:30:02, an insurer subject to this chapter may, with the prior approval of the director, take a reserve credit or establish an asset that the director considers to be consistent with SDCL title 58 or this article, including actuarial interpretations or standards adopted by the division.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:07 Agreements -- Actuarial information required about financial impact

An agreement entered into after the effective date of this chapter which involves the reinsurance of business issued before the effective date of the agreement, along with any subsequent amendments to the agreement, must be filed by the ceding company with the director within 30 days from its date of execution. Each filing must include data detailing the financial impact of the transaction. The ceding insurer's actuary who signs the financial statement actuarial opinion regarding valuation of reserves shall consider this chapter and any applicable actuarial standards of practice when determining the proper credit in financial statements filed with this division. The actuary shall maintain documentation and be prepared upon request to describe the actuarial work performed for inclusion in the financial statements and to demonstrate that such work conforms to this chapter.

Reference: Actuarial Standards of Practice , American Academy of Actuaries. Copies may be obtained free of charge on the website: http://www.actuarialstandardsboard.org/asops.htm.

History

Source: 22 SDR 52, effective October 25, 1995; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:08 Agreements -- Reporting of surplus increases

Any increase in surplus net of federal income tax resulting from arrangements described in § 20:06:30:07 must be identified separately on the insurer's financial statement required by SDCL 58-6-75 as a surplus item in aggregate write-ins for gains and losses in surplus in the Capital and Surplus Account, line 46, page 4 of the Annual Statement for the year ended December 31, 1994. Recognition of the surplus increase as income must be reflected on a net of tax basis in "Commissions and expense allowances on reinsurance ceded," line 5, page 4 of the Annual Statement for the year ended December 31, 1994, as earnings emerge from the business reinsured. See the examples at the end of this section.

Reference: Life, Accident & Health Annual Statement for the Year Ended December 31, 1994 , page 4. National Association of Insurance Commissioners. Copies may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, SD 57501-2000, (605) 773-3563. Cost: $.75 a page.

Examples:

(1) On the last day of calendar year N, company XYZ pays a $20 million initial commission and expense allowance to company ABC for reinsuring an existing block of business. Assuming a 34 percent tax rate, the net increase in surplus at inception is $13.2 million ($20 million - $6.8 million) which is reported on page 4, line 46, "Aggregate write-ins for gains and losses in surplus" in the Capital and Surplus Account of the Annual Statement for the year ended December 31, 1994. $6.8 million (34% of $20 million) is reported as income on page 4, line 5, of the "Commissions and expense allowances on reinsurance ceded," line 5, of the Summary Operations of the Annual Statement for the year ended December 31, 1995.

(2) At the end of year N+1, the business has earned $4 million. Company ABC has paid $.5 million in profit and risk charges in arrears for the year and has received a $1 million experience refund. Company ABC's Annual Statement would report $1.65 million [66% of ($4 million - $1 million - $.5 million), up to a maximum of $13.2 million] on page 4, line 5, of "Commissions and expense allowances on reinsurance ceded," of the Summary of Operations of the Annual Statement for the year ended December 31, 1994, and - $1.65 million on page 4, line 46, on "Aggregate write-ins for gains and losses in surplus," of the Capital and Surplus Account of the Annual Statement for the Year Ended December 31, 1994. The experience refund would be reported separately as a miscellaneous income item in the Summary of Operations of the Annual Statement for the year ended December 31, 1994.

History

Source: 22 SDR 52, effective October 25, 1995; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:09 Execution of agreement, amendment, or letter of intent required

A reinsurance agreement or an amendment to an agreement may not be used to reduce a liability or to establish an asset in any financial statement filed with the division unless the agreement, amendment, or a binding letter of intent has been executed by both parties no later than the "as of date" of the financial statement.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:10 Letter of intent -- Time allowed for execution of agreement or amendment

A reinsurance agreement or an amendment to a reinsurance agreement must be executed within 90 days after the execution date of a letter of intent for credit to be granted for the reinsurance ceded.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:11 Reinsurance agreement -- Required provisions

The reinsurance agreement must contain the following provisions:

(1) That the agreement constitutes the entire agreement between the parties regarding the business being reinsured and there are no understandings between the parties other than those expressed in the agreement; and

(2) That any change or modification to the agreement is void unless it is made by amendment to the agreement and signed by both parties.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:12 Existing agreements

Insurers subject to this chapter shall reduce to zero by January 1, 1996, any reserve credits or assets established regarding reinsurance agreements entered into before the effective date of this chapter which, under the provisions of this chapter, are not entitled to recognition.

Cross-Reference: Reinsurance, SDCL chapter 58-14.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:13 Definitions

The following definitions apply to §§ 20:06:30:13 to 20:06:30:20, inclusive:

(1) “Actuarial method,” the methodology used to determine the required level of primary security, as described in § 20:06:30:14;

(2) “Covered policy,” subject to the exemptions described in § 20:06:30:18, a policy, other than a grandfathered policy, that is:

(a) A life insurance policy with either guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, or with both, except for flexible premium universal life insurance policy; or

(b) A flexible premium universal life insurance policy with provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period;

(3) “Grandfathered policy,” a covered policy that was:

(a) Issued prior to January 1, 2015; and

(b) Ceded, as of December 31, 2014, as part of a reinsurance treaty that would not have met one of the exemptions set forth in § 20:06:30:18, had that section then been in effect;

(4) “Non-covered policy,” any policy that does not meet the definition of a covered policy, including grandfathered policy;

(5) “Other security,” any security acceptable to the director, other than primary security;

(6) “Primary security,”:

(a) Cash meeting the requirements of SDCL 58-14-16;

(b) Securities listed by the National Association of Insurance Commissioners Securities Valuation Office and meeting the requirements of SDCL 58-14-16, but excluding any synthetic letter of credit, contingent note, credit-linked note, or other similar security that operates in a manner similar to a letter of credit, and excluding any securities issued by the ceding insurer or any of its affiliates; and

(i) Commercial loans in good standing of CM3 quality and higher, as defined in the Valuation Manual;

(ii) Policy loans; and

(iii) Derivatives acquired in the normal course and used to support and hedge liabilities pertaining to the actual risks in the policies ceded pursuant to the reinsurance treaty;

(7) “Required level of primary security,” the dollar amount determined by applying the actuarial method to the risks ceded with respect to a covered policy, but not more than the total reserve ceded;

(8) “Valuation Manual,” the manual adopted by the director under § 20:06:59:01 and SDCL 58-26-45.1, with all amendments adopted by the National Association of Insurance Commissioners that are effective for the financial statement date on which credit for reinsurance is claimed; and

(9) “VM-20,” the definition of “Requirements for Principle-Based Reserves for Life Products” from the Valuation Manual, including all relevant definitions.

History

Source: 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-17, 58-26-45.1.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:14 The actuarial method

A ceding insurer shall use the VM-20 actuarial method to establish the required level of primary security for each reinsurance treaty subject to §§ 20:06:30:13 to 20:06:30:20, inclusive, applied on a treaty-by-treaty basis from the Valuation Manual, as then in effect, including all relevant definitions, applied as follows:

(1) For a covered policy described in subsection 20:06:30:13(2)(a), the actuarial method is the greater of the deterministic reserve or the net premium reserve (NPR), regardless of whether the criteria for exemption testing can be met. If the covered policy does not meet the requirements of the stochastic reserve exclusion test in the Valuation Manual, the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the NPR. If such covered policies are reinsured in a reinsurance treaty that also contains covered policies described in § 20:06:30:13(2)(b), the ceding insurer may elect to instead use subdivision 20:06:30:14(2) as the actuarial method for the entire reinsurance agreement treaty. Whether subdivision 20:06:30:14(1) or 20:06:30:14(2) is used, the actuarial method must comply with any requirements or restrictions that the Valuation Manual imposes when aggregating these policy types for purposes of principle-based reserve calculations;

(2) For a covered policy described in subsection 20:06:30:13(2)(b), the actuarial method is the greatest of the deterministic reserve, the stochastic reserve, or the NPR, regardless of whether the criteria for exemption testing can be met;

(3) Except as provided in subdivision 20:06:30:13(4), the actuarial method must be applied on a gross basis to all risks with respect to the covered policy, as originally issued or assumed by the ceding insurer; and

(4) If the reinsurance treaty cedes less than one hundred percent of the risk with respect to the covered policy, then the required level of primary security may be reduced as follows:

(a) If a reinsurance treaty cedes only a quota share of some or all of the risks pertaining to the covered policy, the required level of primary security, as well as any adjustment under subsection 20:06:30:14(4)(c), may be reduced to a pro rata portion in accordance with the percentage of the risk ceded;

(b) If the reinsurance treaty in a non-exempt arrangement cedes only the risks pertaining to a secondary guarantee, the required level of primary security may be reduced by an amount determined by applying the actuarial method on a gross basis to all risks, other than risks related to the secondary guarantee, pertaining to the covered policy, except that for a covered policy in which the ceding insurer did not elect to apply the provisions of VM-20 to establish statutory reserves, the required level of primary security may be reduced by the statutory reserve retained by the ceding insurer on that covered policy, where the retained reserve of that covered policy is reflective of any reduction pursuant to the cession of mortality risk on a yearly renewable term basis in an exempt arrangement;

(c) If a portion of the covered policy risk is ceded to another reinsurer on a yearly renewable term basis in an exempt arrangement, the required level of primary security may be reduced by the amount resulting in applying the actuarial method, including the reinsurance section of VM-20, to the portion of the covered policy risk ceded in the exempt arrangement; except that in a case of a covered policy issued prior to January 1, 2017, this adjustment is not to exceed [cx divided by (2 times the number of reinsurance premiums per year)] where cx is calculated using the same mortality table used in calculating the net premium reserve; and

(d) For any other treaty ceding a portion of risk to a different reinsurer, including stop loss, excess of loss, and other non-proportional reinsurance treaties, there is no reduction in the required level of primary security.

A ceding insurer may apply individually or in combination subsections 20:06:30:14(4)(a), 20:06:30:14(4)(b), 20:06:30:14(4)(c), and 20:06:30:14(4)(d) to apply. These adjustments to the required level of primary security shall be done in the sequence that accurately reflects the portion of the risk ceded via the treaty. The ceding insurer shall document the rationale and steps taken to accomplish the adjustments to the required level of primary security, due to the cession of less than one hundred percent of the risk.

History

Source: 49 SDR 9, effective August 8, 2022.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:14.01 Adjustments for other reinsurance treaties

The adjustments for other reinsurance treaties may only be made with respect to reinsurance treaties entered into directly by the ceding insurer. The ceding insurer may not make an adjustment as a result of a retrocession treaty entered into by the assuming insurers.

The required level of primary security resulting from an application of the actuarial method may not exceed the amount of statutory reserves ceded.

If the ceding insurer cedes risks with respect to a covered policy, including any riders, in more than one reinsurance treaty subject to §§ 20:06:30:13 to 20:06:30:20, inclusive, the aggregate required level of primary security for those reinsurance treaties may not be less than the required level of primary security calculated using the actuarial method as if all risks ceded in those treaties were ceded in a single treaty subject to §§ 20:06:30:13 to 20:06:30:30, inclusive; and

If a reinsurance treaty subject to §§ 20:06:30:13 to 20:06:30:20, inclusive, cedes risk on both covered and non-covered policies, credit for the ceded reserves must be determined as follows:

(1) The actuarial method must be used to determine the required level of primary security for the covered policy, and § 20:06:30:16 must be used to determine the credit for reinsurance for the covered policy reserves; and

(2) Credit for the non-covered policy reserves may be granted only to the extent that security, in addition to the security held to satisfy the requirements of subdivision 20:06:3014.1(1), is held by or on behalf of the ceding insurer, in accordance with SDCL chapter 58-26. Any primary security used to meet the requirements of this subdivision may not be used to satisfy the required level of primary security for the covered policy.

History

Source: 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-17, 58-26-45.1.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:15 Valuation used for purposes of calculation

Valuation used for purposes of calculations. For purposes of calculating the required level of primary security pursuant to the actuarial method and determining the amount of primary security and other security, as applicable, held by or on behalf of the ceding insurer, the following apply:

(1) For assets, including any assets held in trust, which would be admitted under the Accounting Practices and Procedures Manual, as adopted by the director under SDCL 58-6-75 and § 20:06:25:01, if the assets are held by the ceding insurer, the valuations must be determined according to statutory accounting procedures, as if the assets were held in the ceding insurer’s general account, and without taking into consideration the effect of any prescribed or permitted practices; and

(2) For all other assets, the valuations must be those that are assigned to the assets for the purpose of determining the amount of reserve credit taken. The asset spread tables and asset default cost tables required by VM-20 must be included in the actuarial method, if adopted by the National Association of Insurance Commissioner Life Actuarial (A) Task Force, no later than the December thirty-first on or immediately preceding the valuation date for which the required level of primary security is being calculated and adopted by the director pursuant to SDCL 58-26-45.1 and § 20:06:59:01. The tables of asset spreads and asset default costs must be incorporated into the actuarial method in the manner specified in VM-20.

History

Source: 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:16 Requirements applicable to a covered policy to obtain credit for reinsurance

Subject to the exemptions described in § 20:06:30:18 and the provisions of § 20:06:30:17, credit for reinsurance must be allowed with respect to ceded liabilities pertaining to a covered policy pursuant to SDCL chapter 58-26 if, in addition to all other requirements imposed by law or rule, the following requirements are met on a treaty-by-treaty basis:

(1) The ceding insurer’s statutory policy reserves, with respect to the covered policy, are established in accordance with SDCL 58-26-45 to 58-26-105, inclusive, and related rules and actuarial guidelines, and credit claimed for any reinsurance treaty subject to §§ 20:06:30:13 to 20:06:30:20, inclusive, does not exceed the proportionate share of those reserves ceded under the reinsurance treaty;

(2) The ceding insurer determines the required level of primary security with respect to each reinsurance treaty subject to §§ 20:06:30:13 to 20:06:30:20, inclusive, and provides support for its calculation, as determined acceptable by the director;

(3) Funds consisting of primary security, in an amount at least equal to the required level of primary security, are held by or on behalf of the ceding insurer, as security under the reinsurance treaty, within the meaning of SDCL 58-14-16, on a funds withheld, trust, or modified coinsurance basis;

(4) Funds consisting of other security, in an amount at least equal to any portion of the statutory reserves as to which primary security is not held pursuant to subdivision 20:06:30:16(3), are held by or on behalf of the ceding insurer, as security under the reinsurance treaty, within the meaning of SDCL 58-14-16;

(5) Any trust used to satisfy the requirements of this section must comply with the conditions and qualifications of § 20:06:31:06, except that:

(a) Funds consisting of primary security or other security held in trust must, for the purposes identified in § 20:06:30:15, be valued according to the valuation rules set forth in § 20:06:30:17, as applicable;

(b) There may be no affiliate investment limitations with respect to any security held in the trust, if that security is not needed to satisfy the requirements of subdivision 20:06:30:16(3);

(c) The reinsurance treaty must prohibit withdrawals or substitutions of trust assets that would leave the fair market value of the primary security within the trust, when aggregated with primary security outside the trust that is held by or on behalf of the ceding insurer in the manner required by subdivision 20:06:30:16(3), below one hundred two percent of the level required by subdivision 20:06:30:16(3), at the time of the withdrawal or substitution; and

(d) The determination of reserve credit in § 20:06:31:13 must be determined according to the valuation rules set forth in § 20:06:30:15, as applicable; and

(6) The reinsurance treaty has been approved by the director.

History

Source: 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-1, 58-26-45.1.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:17 Requirements at inception date and on an on-going basis -- Remediation

The requirements of § 20:06:30:16 must be satisfied as of the date that risks under a covered policy are ceded, if that date is on or after the effective date of §§ 20:06:30:13 to 20:06:30:20, inclusive, and on an ongoing basis thereafter. A ceding insurer may not take or consent to any action that would result in a deficiency under subdivision 20:06:30:16(3) or 20:06:30:16(4), with respect to any reinsurance treaty under which a covered policy has been ceded, if a ceding insurer becomes aware that a deficiency exists, it shall use its best efforts to arrange for the deficiency to be eliminated as expeditiously as possible.

Prior to the due date of each quarterly or annual statement, each life insurance company that has ceded reinsurance, within the scope of chapter 20:06:30, shall perform an analysis, on a treaty-by-treaty basis, to determine, as to each reinsurance treaty under which a covered policy has been ceded, whether, as of the end of the immediately preceding calendar quarter, the valuation date, the requirements of subdivisions 20:06:30:16(3) or 20:06:30:16(4) are satisfied. The ceding insurer shall establish a liability equal to the excess of the credit for reinsurance taken over the amount of primary security actually held pursuant to subdivision 20:06:30:16(3), unless:

(1) The requirements of subdivision 20:06:30:16(3) or 20:06:30:16(4) were fully satisfied, as of the valuation date and as to the reinsurance treaty; or

(2) Any deficiency was eliminated before the due date of the quarterly or annual statement to which the valuation date relates, through the addition of primary security or other security, in such amount and form as would have caused the requirements of subdivision 20:06:30:16(3) or 20:06:30:16(4) to be fully satisfied as of the valuation date.

A ceding company shall not maintain any deficiency under subdivision 20:06:30:16(3) or 20:06:30:16(4) for any period of time longer than is reasonably necessary to eliminate it.

History

Source: 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:18 Exemptions

Sections 20:06:30:13 to 20:06:30:20, inclusive, do not apply to the following:

(1) Reinsurance of:

(a) A policy that satisfies the criteria for an exemption under the attained-age-based yearly renewable term life insurance policies exemption or the unitary reserves for certain yearly renewable term life insurance policies, as defined in Appendix A-830 of the Accounting Practices and Procedures Manual, as adopted under SDCL 58-6-75 and § 20:06:25:01, and which are issued before the later of:

(i) The effective date of §§ 20:06:30:13 to 20:06:30:20, inclusive; or

(ii) The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policy’s statutory reserves;

(b) Portions of a policy that satisfy the criteria for the yearly renewable term reinsurance exemption, as defined and set forth in in Appendix A-830 of the Accounting Practices and Procedures Manual, as adopted under SDCL 58-6-75 and § 20:06:25:01, and which are issued before the later of:

(i) The effective date of §§ 20:06:30:13 to 20:06:30:20, inclusive; or

(ii) The date on which the ceding insurer begins to apply the provisions of VM-20 to establish the ceded policy’s statutory reserves;

(i) The secondary guarantee period, if any, is five years or less;

(ii) The specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period, based on the Commissioners Standard Ordinary valuation tables and valuation interest rate, as listed in the National Association of Insurance Commissioners (NAIC) Valuation Manual, adopted under SDCL 58-26-45.1, and applicable to the issue year of the policy; and

(iii) The initial surrender charge is not less than one hundred percent of the first year annualized specified premium for the secondary guarantee period;

(d) Credit life insurance;

(e) Any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts; or

(f) Any group life insurance certificate, unless the certificate provides for a stated or implied schedule of maximum gross premiums required to continue coverage in force for a period in excess of one year;

(2) Reinsurance ceded to an assuming insurer that meets the applicable requirements of SDCL 58-14-11 to 58-14-15, inclusive;

(3) Reinsurance ceded to an assuming insurer that meets the applicable requirements of SDCL 58-14-8 to 58-14-10, inclusive, and that:

(a) Prepares statutory financial statements in compliance with the Accounting Practices and Procedures Manual, as adopted under SDCL 58-6-75 and § 20:06:25:01, without any departures from the NAIC statutory accounting practices and procedures pertaining to the admissibility or valuation of assets or liabilities that increase the assuming insurer’s reported surplus and are material enough that they need to be disclosed in the financial statement of the assuming insurer pursuant to the Statement of Statutory Accounting Principles No. 1; and

(b) Is not in a company action level event, regulatory action level event, authorized control level event, or mandatory control level event, as those terms are defined in §§ 20:06:36:01 to 20:06:36:28, inclusive, when its risk-based capital (RBC) is calculated in accordance with the life RBC report, including overview and instructions for companies, as adopted under SDCL 58-4-48 and chapter 20:06:36;

(4) Reinsurance ceded to an assuming insurer that meets the applicable requirements of SDCL 58-14-8 to 58-14-10, inclusive, and that:

(a) Is not an affiliate, as that term is defined in § 20:06:36:01, of:

(i) The insurer ceding the business to the assuming insurer; or

(ii) Any insurer that directly or indirectly ceded the business to that ceding insurer;

(b) Prepares statutory financial statements in compliance with the Accounting Practices and Procedures Manual, as adopted under SDCL 58-6-75 and § 20:06:25:01;

(c) Is licensed or accredited in at least ten states, including its state of domicile and not licensed in any state as a captive, special purpose vehicle, special purpose financial captive, special purpose life reinsurance company, limited purpose subsidiary, or any other similar licensed entity; and

(d) Is not, or would not be, below five hundred percent of the authorized control level RBC, as that term is defined in §§ 20:06:36:01 to 20:06:36:28, inclusive, if its RBC is calculated in accordance with the life RBC report, including overview and instructions for companies, as adopted under SDCL 58-4-48 and chapter 20:06:36;

(5) Reinsurance ceded to an assuming insurer that meets the requirements of SDCL 58-14-16.24 to 58-14-16.34, inclusive, or is operating in accordance with provisions substantially equivalent to SDCL 58-14-16.24 to 58-14-16.34, inclusive, in a minimum of five other states. To determine if a state has laws substantially equivalent to SDCL 58-14-16.24 to 58-14-16.34, inclusive, the director shall verify the existence of similar reinsurance laws in the other state and assess and ensure that those reinsurance laws meet the minimum licensing requirements of SDCL 58-14-16.24 to 58-14-16.34, inclusive; or

(6) Reinsurance not otherwise exempt under subdivisions 20:06:30:18(1) to 20:06:30:18(5), inclusive, if the director, after consulting with the NAIC Financial Analysis Working Group or other group of regulators designated by the NAIC, determines under all the facts and circumstances:

(a) The risks are clearly outside of the intent and purpose of §§ 20:06:30:13 to 20:06:30:20, inclusive;

(b) The risks are included within the scope of §§ 20:06:30:13 to 20:06:30:20, inclusive, only as a technicality; and

(c) The application of §§ 20:06:30:13 to 20:06:30:20, inclusive, to those risks is not necessary to provide appropriate protection to policyholders.

If the director decides, pursuant to subdivision (6), to exempt a reinsurance treaty from §§ 20:06:30:13 to 20:06:30:20, inclusive, the director shall publicly disclose the decision, as well as the general basis therefor, and shall include a summary of the treaty.

History

Source: 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:19 Prohibition against avoidance

No insurer that has a covered policy as to which §§ 20:06:30:13 to 20:06:30:20, inclusive, apply may take any action, or enter into any transaction or arrangement, if the purpose of that action, transaction or arrangement is to avoid the requirements of §§ 20:06:30:13 to 20:06:30:20, inclusive, or to circumvent its purpose and intent.

History

Source: 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:30:20 Applicability

In the event of a direct conflict between the provisions of §§ 20:06:30:13 to 20:06:30:20, inclusive, and the provisions in chapter 20:06:31, the provisions of §§ 20:06:30:13 to 20:06:30:20, inclusive, apply, but only to the extent of the conflict.

History

Source: 49 SDR 9, effective August 9, 2022.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

Chapter 20:06:31 Credit for reinsurance

ARSD 20:06:31:01 Reinsurer licensed in this state

The director shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that was licensed in this state as of any date on which statutory financial statement credit for reinsurance is claimed.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-8, 58-14-17.

ARSD 20:06:31:02 Accredited reinsurers

The director shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that is accredited as a reinsurer in this state as of the date on which statutory financial statement credit for reinsurance is claimed. An accredited reinsurer shall:

(1) File a completed Form AR-1 provided by the director as evidence of its submission to this state's jurisdiction and to this state's authority to examine its books and records;

(2) File with the director a certified copy of a letter or a certificate of authority or other acceptable evidence that it is licensed to transact insurance or reinsurance in at least one state, or, in the case of a United States branch of an alien assuming insurer, is entered through and licensed to transact insurance or reinsurance in at least one state;

(3) File annually with the director a copy of its annual statement filed with the insurance department of its state of domicile or, in the case of an alien assuming insurer, a copy of its annual statement filed with the state through which it is entered and in which it is licensed to transact insurance or reinsurance, and a copy of its most recent audited financial statement; and

(4) Maintain a surplus as regards policyholders in an amount not less than $20,000,000, or obtain the affirmative approval of the director upon a finding that it has adequate financial capacity to meet its reinsurance obligations and is otherwise qualified to assume reinsurance from domestic insurers.

Credit shall not be allowed a domestic ceding insurer under this section if the assuming insurer's accreditation has been revoked by the director or if the reinsurance was ceded while the assuming insurer's accreditation was under suspension by the director.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-9, 58-14-17.

ARSD 20:06:31:03 Reinsurer domiciled and licensed in another jurisdiction

Reinsurer domiciled and licensed in another** jurisdiction . The director shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that as of any date on which statutory financial statement credit for reinsurance is claimed:

(1) Is domiciled in a state or, in the case of an alien assuming insurer with the state through which it is entered, that employs standards regarding credit for reinsurance substantially similar to this state;

(2) Maintains a surplus as regards policyholders in an amount not less than $20,000,000; and

(3) Has filed a properly executed Form AR-1 with the director as evidence of its submission to this state's authority to examine its books and records on a form to be provided by the director.

The provisions of this section relating to surplus as regards policyholders may not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system. As used in this section, substantially similar standards means credit for reinsurance standards that the director determines are equal to or exceeding the standards of SDCL chapter 58-14 and this chapter.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-10, 58-14-17.

ARSD 20:06:31:04 Repealed

Reinsurers maintaining trust funds -- Requirements.** Repealed.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.

ARSD 20:06:31:04.01 Group of incorporated insurers under common administration

20 : 06 : 31 : 04.01 . Group of incorporated insurers under common administration. The trust fund for a group of incorporated insurers under common administration, whose members possess aggregate policyholders' surplus of $10,000,000,000, calculated in substantially the same manner as prescribed by the annual statement instructions and Accounting Practices and Procedures Manual of the National Association of Insurance Commissioners as provided in § 20:06:25:01, and which has continuously transacted an insurance business outside the United States for at least three years immediately prior to making application for accreditation, shall:

(1) Consist of funds in trust in an amount not less than the assuming insurers' several liabilities attributable to business ceded by U.S. domiciled ceding insurers to any members of the group pursuant to reinsurance contracts issued in the name of such group; and

(2) File a properly executed Form AR-1, provided by the director, as evidence of the submission to this state's authority to examine the books and records of any of its members and shall certify that any member examined will bear the expense of any such examination on a form

provided by the director.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 48-14-11, 58-14-12, 58-14-17.

ARSD 20:06:31:04.02 Trust liabilities

20 : 06 : 31 : 04.02 . Trust liabilities. For purposes of SDCL 58-14-11 to 58-14-12.1, inclusive, and §§ 20:06:31:03 and 20:06:31:04.01, the term, liabilities, shall mean the assuming insurer's gross liabilities attributable to reinsurance ceded by U.S. domiciled insurers excluding liabilities that are otherwise secured by acceptable means and shall include:

(1) Business ceded by domestic insurers authorized to write accident and health, and property and casualty insurance, including losses and allocated loss expenses paid by the ceding insurer, recoverable from the assuming insurer, reserves for losses reported and outstanding, reserves for losses incurred but not reported, reserves for allocated loss expenses, and unearned premiums; and

(2) Business ceded by domestic insurers authorized to write life, health and annuity insurance, including aggregate reserves for life policies and contracts net of policy loans and net due and deferred premiums, aggregate reserves for accident and health policies, deposit funds and other liabilities without life or disability contingencies, and liabilities for policy and contract claims.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.03 Trust assets and investments

20 : 06 : 31 : 04.03 . Trust assets and investments. Assets deposited in trusts established pursuant to SDCL 58-14-11 and this chapter shall be valued according to their current fair market value and shall consist only of cash in U.S. dollars; certificates of deposit issued by a U.S. financial institution as defined SDCL 58-14-16.18; clean, irrevocable, unconditional, and evergreen letters of credit issued or confirmed by a qualified U.S. financial institution, as defined in SDCL 58-14-16.18; and investments of the type specified in this chapter, but investments in or issued by an entity controlling, controlled by, or under common control with either the grantor or beneficiary of the trust may not exceed five percent of total investments. No more than twenty percent of the total of the investments in the trust may be foreign investments authorized under §§ 20:06:31:04.04(5), 20:06:31:04.06, 20:06:31:04.09(2) or 20:06:31:04.10, and no more than ten percent of the total of the investments in the trust may be securities denominated in foreign currencies. A depository receipt denominated in U.S. dollars and representing rights conferred by a foreign security shall be classified as a foreign investment denominated in a foreign currency. The assets of a trust established to satisfy the requirements of SDCL 58-14-11 shall be invested in accordance with §§ 20:06:31:04.04 to 20:06:31:04.13, inclusive.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.04 Government obligations

20 : 06 : 31 : 04.04 . Government obligations. Trust assets may be invested in government obligations that are not in default as to principal or interest, that are valid and legally authorized, and that are issued, assumed, or guaranteed by:

(1) The United States or by any agency or instrumentality of the United States;

(2) A state of the United States;

(3) A territory, possession or other governmental unit of the United States;

(4) An agency or instrumentality of a governmental unit if the obligations shall be payable by law, as to both principal and interest, from taxes levied or required by law to be levied or from adequate special revenues pledged or otherwise appropriated or required by law to be provided for making these payments, but the obligations may not be eligible for investment under this section if payable solely out of special assessments on properties benefited by local improvements; or

(5) The government of any other country that is a member of the Organization for Economic Cooperation and Development and whose government obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.05 Securities ratings

20 : 06 : 31 : 04.05 . Securities ratings. Trust assets may be invested in obligations that are issued in the United States, that are dollar denominated and issued in a non-U.S. market by a solvent U.S. institution other than an insurance company, or that are assumed or guaranteed by a solvent U.S. institution other than an insurance company and that are not in default as to principal or interest if the obligations:

(1) Are rated A or higher, or the equivalent, by a securities rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners, or, if not so rated, are similar in structure and other material respects to other obligations of the same institution that are so rated;

(2) Are insured by at least one authorized insurer, other than the investing insurer or a parent, subsidiary, or affiliate of the investing insurer, licensed to insure obligations in this state and, after considering the insurance, are rated AAA, or the equivalent, by a securities rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners; or

(3) Have been designated as Class One or Class Two by the Securities Valuation Office of the National Association of Insurance Commissioners.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.06 Organization for Economic Cooperation and Development

20 : 06 : 31 : 04.06 . Organization for Economic Cooperation and Development. Trust assets may be invested in obligations issued, assumed, or guaranteed by a solvent non-U.S. institution chartered in a country that is a member of the Organization for Economic Cooperation and Development or in obligations of U.S. corporations issued in a non-U.S. currency, provided that in either case the obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.07 Investment limitations

20 : 06 : 31 : 04.07 . Investment limitations. An investment made pursuant to §§ 20:06:31:04.04 to 20:06:31:04.06, inclusive, shall be subject to the following additional limitations:

(1) An investment in or loan upon the obligations of an institution other than an institution that issues mortgage-related securities may not exceed five percent of the assets of the trust;

(2) An investment in any one mortgage-related security may not exceed five percent of the assets of the trust;

(3) The aggregate total investment in mortgage-related securities may not exceed twenty-five percent of the assets of the trust; and

(4) Preferred or guaranteed shares issued or guaranteed by a solvent U.S. institution are permissible investments if all of the institution's obligations are eligible as investments under subdivisions 20:06:31:04.05(1) and 20:06:31:04.05(3), but may not exceed two percent of the assets of the trust.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.08 Definition of mortgage-related security

20 : 06 : 31 : 04.08 . Definition of mortgage-related security. The term, mortgage-related security, means an obligation that is rated AA or higher, or the equivalent, by a securities rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners, that either:

(1) Represents ownership of one or more promissory notes or certificates of interest or participation in the notes, including any rights designed to assure servicing of, or the receipt or timeliness of receipt by the holders of the notes, certificates, or participation of amounts payable under the notes, certificates, or participation, that:

(a) Are directly secured by a first lien on a single parcel of real estate, including stock allocated to a dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed residential and commercial structure, or on a residential manufactured home as defined in 42 U.S.C. Section 5402(6), whether the manufactured home is considered real or personal property under the laws of the state in which it is located; and

(b) Were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution that is supervised and examined by a federal or state housing authority or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. §§ 1709 and 1715-b or, where the notes involve a lien on the manufactured home, by an institution or by a financial institution approved for insurance by the Secretary of Housing and Urban Development pursuant to 12 U.S.C. § 1703; or

(2) Is secured by one or more promissory notes, certificates of deposit, or participations in the notes (with or without recourse to the insurer of the notes) and, by its terms, provides for payments of principal in relation to payments, or reasonable projections of payments, or notes meeting the requirements of subdivision (1) of this section.

The term, promissory note, when used in connection with a manufactured home, shall also include a loan, advance, or credit sale as evidenced by a retail installment sales contract or other instrument.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.09 Equity interests

20 : 06 : 31 : 04.09 . Equity interests. Trust investments shall be made in accordance with the following requirements:

(1) Investments in common shares or partnership interests of a solvent U.S. institution are permissible if, its obligations and preferred shares, if any, are eligible as investments under this section; and the equity interests of the institution, except an insurance company, are registered on a national securities exchange as provided in the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a to 78kk or otherwise registered pursuant to that Act, and, if otherwise registered, price quotations for them are furnished through a nationwide automated quotations system approved by the Financial Industry Regulatory Authority, or a successor organization. A trust may not invest in equity interests under this section an amount exceeding one percent of the assets of the trust, even though the equity interests are not so registered and are not issued by an insurance company;

(2) Investments in common shares of a solvent institution organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development are permissible if all its obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners and the equity interests of the institution are registered on a securities exchange regulated by the government of a country that is a member of the Organization for Economic Cooperation and Development; and

(3) An investment in or loan upon any one institution's outstanding equity interests may not exceed one percent of the assets of the trust. The cost of an investment in equity interests, when added to the aggregate cost of other investments in equity interests, may not exceed ten percent of the assets in the trust.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.10 Obligations guaranteed by multinational development banks

20 : 06 : 31 : 04.10 . Obligations guaranteed by multinational development banks. Trust assets may be invested in obligations issued, assumed, or guaranteed by a multinational development bank are permissible provided the obligations are rated A or higher, or the equivalent, by a rating agency recognized by the Securities Valuation Office of the National Association of Insurance Commissioners.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11, 58-14-13, 58-14-17, 58-14-20.

ARSD 20:06:31:04.11 Investment companies

20 : 06 : 31 : 04.11 . Investment companies. Securities of an investment company registered pursuant to the Investment Company Act of 1940, 15 U.S.C. § 80a, are permissible investments if the investment company:

(1) Invests at least ninety percent of its assets in the types of securities that qualify as an investment under §§ 20:06:31:04.04 to 20:06:31:06.06, inclusive, or invests in securities that are determined by the director to be substantively similar to the types of securities set forth in §§ 20:06:31:04.04 to 20:06:31:06.06, inclusive; or

(2) Invests at least ninety percent of its assets in the types of equity interests that qualify as an investment under subdivision 20:06:31:04.09(1).

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17, 58-14-20.

ARSD 20:06:31:04.12 Limitations on investment companies

20 : 06 : 31 : 04.12 . Limitations on investment companies. Investments made by a trust in investment companies pursuant to § 20:06:31:04.11 may not exceed the following limitations:

(1) An investment in an investment company qualifying under subdivision 20:06:31:04.11(1) may not exceed ten percent of the assets in the trust and the aggregate amount of investment in qualifying investment companies may not exceed twenty-five percent of the assets in the trust; and

(2) Investments in an investment company qualifying under subdivision 20:06:31:04.11(2) may not exceed five percent of the assets in the trust and the aggregate amount of investment in qualifying investment companies shall be included when calculating the permissible aggregate value of equity interests pursuant to subdivision 20:06:31:04.09(1).

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17, 58-14-20.

ARSD 20:06:31:04.13 Letters of credit

20 : 06 : 31 : 04.13 . Letters of credit. In order for a letter of credit to qualify as an asset of the trust, the trustee shall have the right and the obligation pursuant to the deed of trust or other binding agreement, as duly approved by the director, to immediately draw down the full amount of the letter of credit and hold the proceeds in trust for the beneficiaries of the trust if the letter of credit will otherwise expire without being renewed or replaced.

The trust agreement shall provide that the trustee shall be liable for its negligence, willful misconduct, or lack of good faith. The failure of the trustee to draw against the letter of credit in circumstances where such draw would be required shall be deemed to be negligence or willful misconduct.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17, 58-14-20.

ARSD 20:06:31:05 Jurisdiction defined

For purposes of this chapter, "jurisdiction" means any state, district, or territory of the United States and any lawful national government.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-14, 58-14-17.

ARSD 20:06:31:05.01 Security for risks located in foreign or alien jurisdictions

20 : 06 : 31 : 05.01 . Security for risks located in foreign or alien jurisdictions. A specific security provided to a ceding insurer by an assuming insurer pursuant to SDCL 58-14-14 shall be applied, until exhausted, to the payment of liabilities of the assuming insurer to the ceding insurer holding the specific security prior to, and as a condition precedent for, presentation of a claim by the ceding insurer for payment by a trustee of a trust established by the assuming insurer pursuant to §§ 20:06:31:04.01 to 20:06:31:04.13, inclusive.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17, 58-14-20.

ARSD 20:06:31:06 Reduction from liability for reinsurance ceded to an unauthorized assuming insurer

The director shall allow a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of SDCL 58-14-7 to 58-14-16.1, inclusive, and 58-14-16.16 to 58-14-16.20, inclusive, in an amount not exceeding the liabilities carried by the ceding insurer. The reduction shall be in the amount of funds held by or on behalf of the ceding insurer, including funds held in trust for the exclusive benefit of the ceding insurer, under a reinsurance contract with such assuming insurer as security for the payment of obligations under the reinsurance contract. The security shall be held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer or, in the case of a trust, held in a qualified United States financial institution as defined in SDCL 58-14-23. This security may be in the form of any of the following:

(1) Cash;

(2) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office, and qualifying as admitted assets;

(3) Clean, irrevocable, unconditional, and evergreen letters of credit issued or confirmed by a qualified United States institution, as defined in SDCL 58-14-16.18, effective no later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding insurer on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance or confirmation shall, notwithstanding the issuing or confirming institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs; or

(4) Any other form of security acceptable to the director.

An admitted asset or a reduction from liability for reinsurance ceded to an unauthorized assuming insurer pursuant to this section shall be allowed only when the requirements of § 20:06:31:24 and the applicable portions of §§ 20:06:31:07 to 20:06:31:16, inclusive, or §§ 20:06:31:18 to 20:06:31:23, inclusive, have been satisfied.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-20.

ARSD 20:06:31:07 Trust agreements qualified under SDCL 58-14-16 -- Definitions

The terms used in this chapter as they apply to trust agreements qualified under SDCL 58-14-16 mean:

(1) "Beneficiary," the entity for whose sole benefit the trust has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, the named beneficiary is limited to the court-appointed domiciliary receiver, including the conservator, rehabilitator, or liquidator;

(2) "Grantor," the entity that has established a trust for the sole benefit of the beneficiary. When established in conjunction with a reinsurance agreement, the grantor is the unlicensed, unaccredited assuming insurer;

(3) "Obligations," as used in § 20:06:31:09 include:

(a) Reinsured losses and allocated loss expenses paid by the ceding company, but not recovered from the assuming insurer;

(b) Reserves for reinsured losses reported and outstanding;

(d) Reserves for allocated reinsured loss expenses and unearned premiums.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:08 Trust agreements qualified under SDCL 58-14-16 -- Required conditions

The following required conditions apply to trust agreements qualified under SDCL 58-14-16:

(1) The trust agreement must be entered into between the beneficiary, the grantor, and a trustee which is a qualified United States institution as defined in SDCL 58-14-23;

(2) The trust agreement must create a trust account into which assets are deposited;

(3) All assets in the trust account must be held by the trustee's office in the United States;

(4) The trust agreement shall provide that:

(a) The beneficiary has the right to withdraw assets from the trust account at any time, without notice to the grantor, subject only to written notice from the beneficiary to the trustee;

(b) No other statement or document is required to be presented in order to withdraw assets, except that the beneficiary may be required to acknowledge receipt of withdrawn assets;

(d) It does not contain references to any other agreements or documents except as provided for under §§ 20:06:31:09 to 20:06:31:09.01 of this chapter;

(5) The trust agreement must be established for the sole benefit of the beneficiary;

(6) The trust agreement must require the trustee to:

(a) Receive assets and hold all assets in a safe place;

(b) Determine that all assets are in such a form that the beneficiary, or the trustee upon direction of the beneficiary, may whenever necessary negotiate any assets, without consent or signature from the grantor or any other person or entity;

(c) Furnish to the grantor and the beneficiary a statement of all assets in the trust account upon its inception and at least at the end of each calendar quarter;

(d) Notify the grantor and the beneficiary within ten days of any deposits to or withdrawals from the trust account;

(e) Upon written demand of the beneficiary, immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the beneficiary and deliver physical custody of the assets to the beneficiary; and

(f) Allow no substitutions or withdrawals of assets from the trust account, except on written instructions from the beneficiary. However, the trustee may, without the consent of but with notice to the beneficiary, upon call or maturity of any trust asset, withdraw the asset on condition that the proceeds are paid in the trust account;

(7) The trust agreement must provide that at least 30 days but not more than 45 days before termination of the trust account, written notice of termination must be delivered by the trustee to the beneficiary;

(8) The trust agreement must be made subject to and governed by the laws of the state in which the trust is established;

(9) The trust agreement must prohibit invasion of the trust corpus for the purpose of paying compensation to or reimbursing the expenses of the trustee; and

(10) The trust agreement must provide that the trustee is liable for its own negligence, willful misconduct, or lack of good faith.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11 to 58-14-13, 58-14-17, 58-14-23.

ARSD 20:06:31:09 Trust agreements in conjunction with reinsurance agreements covering certain risks

Notwithstanding other provisions of this chapter, when a trust agreement is established in conjunction with a reinsurance agreement covering risks other than life, annuities, and accident and health, where it is customary practice to provide a trust agreement for a specific purpose, such a trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, for the following purposes:

(1) To pay or reimburse the ceding insurer for the assuming insurer's share under the specific reinsurance agreement regarding any losses and allocated loss expenses paid by the ceding insurer but not recovered from the assuming insurer or for unearned premiums due to the ceding insurer if not otherwise paid by the assuming insurer;

(2) To make payment to the assuming insurer of any amounts held in the trust account that exceed 102 percent of the actual amount required to fund the assuming insurer's obligations under the specific reinsurance agreement; or

(3) If the ceding insurer has received notice of termination of the trust account and the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged ten days before the termination date, to withdraw amounts equal to the obligations and deposit those amounts in a separate account in the name of the ceding insurer in any qualified United States financial institution, as defined in SDCL 58-14-23, apart from its general assets, in trust for the uses and purposes specified in subdivisions (1) and (2) of this section, that may remain executory after the withdrawal and for any period after the termination date.

The reinsurance agreement entered into in conjunction with the trust agreement may contain the provisions required by subdivision 20:06:31:11(2), but need not contain them if these required conditions are included in the trust agreement.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-11 to 58-14-13, 58-14-17, 58-14-23.

ARSD 20:06:31:09.01 Trust agreements established under SDCL 58-14-16

20 : 06 : 31 : 09.01 . Trust agreements established under SDCL 58-14-16. Notwithstanding other provisions of this chapter, when a trust agreement is established to meet the requirements of SDCL 58-14-16 in conjunction with a reinsurance agreement covering life, annuities, or accident and health risks, where it is customary to provide a trust agreement for a specific purpose, the trust agreement may provide that the ceding insurer shall undertake to use and apply amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the assuming insurer, only for the following purposes:

(1) To pay or reimburse the ceding insurer for:

(a) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of the policies; and

(b) The assuming insurer's share under the specific reinsurance agreement of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurer, under the terms and provisions of the policies reinsured under the reinsurance agreement;

(2) To pay to the assuming insurer amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; or

(3) Where the ceding insurer has received notification of termination of the trust and where the assuming insurer's entire obligations under the specific reinsurance agreement remain unliquidated and undischarged ten days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer, and deposit those amounts in a separate account, in the name of the ceding insurer in any qualified U.S. financial institution apart from its general assets, in trust for the uses and purposes specified in subdivisions (1) and (2) of this section as may remain executory after withdrawal and for any period after the termination date.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17.

ARSD 20:06:31:09.02 Assets deposited in trust account

20 : 06 : 31 : 09.02 . Assets deposited in trust account. The reinsurance agreement or the trust agreement must stipulate that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States bank and payable in United States dollars, investments permitted by the Insurance Code, or any combination of the above. However, investments in or issued by an entity controlling, controlled by, or under common control with either the grantor or the beneficiary of the trust may not exceed five percent of total investments in the trust. The agreement may further specify the types of investments to be deposited. If the reinsurance agreement covers life, annuities or accident and health risks, then the provisions required by this section must be included in the reinsurance agreement.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17, 58-14-20.

ARSD 20:06:31:10 Trust agreements qualified under SDCL 58-14-16 -- Permitted conditions

The following permitted conditions apply to trust agreements qualified under SDCL 58-14-16:

(1) The trust agreement may provide that the trustee may resign upon delivery of a written notice of resignation, effective not less than 90 days after receipt by the beneficiary and grantor of the notice and that the trustee may be removed by the grantor by delivery to the trustee and the beneficiary of a written notice of removal, effective not less than 90 days after receipt by the trustee and the beneficiary of the notice. Such a resignation or removal may not be effective until a successor trustee has been appointed and approved by the beneficiary and the grantor and all assets in the trust have been transferred to the new trustee;

(2) The grantor may have the full and unqualified right to vote any shares of stock in the trust account and to receive from time to time payments of any dividends or interest on any shares of stock or obligations included in the trust account. Any interest or dividends must be either forwarded promptly upon receipt to the grantor or deposited in a separate account established in the grantor's name;

(3) The trustee may be given authority to invest and may accept substitutions of any funds in the account, but no investment or substitution may be made without prior approval of the beneficiary unless the trust agreement specifies categories of investments acceptable to the beneficiary and authorizes the trustee to invest funds and to accept substitutions which the trustee determines are at least equal in current fair market value to the assets withdrawn and that are consistent with the restrictions in subdivision 20:06:31:11(2);

(4) The trust agreement may provide that the beneficiary may, at any time, designate a party to which all or part of the trust assets are to be transferred. The transfer may be conditioned upon the trustee receiving, prior to or simultaneously with, other specified assets; and

(5) The trust agreement may provide that, upon termination of the trust account, all assets not previously withdrawn by the beneficiary shall, with written approval by the beneficiary, be delivered over to the grantor.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17, 58-14-20.

ARSD 20:06:31:11 Trust agreements qualified under SDCL 58-14-16 -- Additional conditions applicable to reinsurance agreements -- Assets

A reinsurance agreement which is entered into in conjunction with a trust agreement and the establishment of a trust account may contain provisions that require the following:

(1) Require the assuming insurer to enter into a trust agreement, specifying what the agreement is to cover, and to establish a trust account for the benefit of the ceding insurer;

(2) Require the assuming insurer, before depositing assets with the trustee, to execute assignments or endorsements in blank or to transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may as necessary negotiate these assets without consent or signature from the assuming insurer or any other entity;

(3) Require that all settlements of account between the ceding insurer and the assuming insurer be made in cash or its equivalent; and

(4) Stipulate that the assuming insurer and the ceding insurer agree that the assets in the trust account, established pursuant to the provisions of the reinsurance agreement, may be withdrawn by the ceding insurer at any time and may be utilized and applied only for the following purposes by the ceding insurer or its successors in interest by operation of law, including any liquidator, rehabilitator, receiver, or conservator of the company, without diminution because of insolvency on the part of the ceding insurer or the assuming insurer, only for the following purposes:

(a) To pay or reimburse the ceding insurer for:

(i) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurer, to the owners of policies reinsured under the reinsurance agreement because of cancellations of the policies;

(ii) The assuming insurer's share of surrenders and the benefits or losses paid by the ceding insurer, pursuant to the provisions of the policies reinsured under the reinsurance agreement; and

(iii) Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer; or

(b) To make payment to the assuming insurer of amounts held in the trust account in excess of the amount necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:12 Reinsurance agreements -- Transfer of assets

The reinsurance agreement may also contain the following provisions:

(1) Give the assuming insurer the right to seek approval from the ceding insurer, which may not be unreasonably or arbitrarily withheld, to withdraw from the trust account all or any part of the trust assets and transfer those assets to the assuming insurer, if:

(a) The assuming insurer, at the time of withdrawal, replaces the withdrawn assets with other qualified assets having a current fair market value equal to the market value of the assets withdrawn so as to maintain at all times the deposit in the required amount; or

(b) After withdrawal and transfer, the current fair market value of the trust account is no less than 102 percent of the required amount;

(2) Provide for the return of any amount withdrawn in excess of the actual amounts required for subdivision 20:06:31:11(5) and for interest payments at a rate not in excess of the prime rate of interest on such amounts; and

(3) Permit the award by an arbitration panel or court of competent jurisdiction of the following:

(a) Interest at a rate different from that provided in subdivision (2) of this section;

(b) Court of arbitration costs;

(d) Any other responsible expenses.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:13 Use of trust agreement to reduce liability for reinsurance

A trust agreement may be used to reduce any liability for reinsurance ceded to an unauthorized assuming insurer in financial statements required to be filed with this division in compliance with the provisions of this chapter if it is established by the date of filing of the financial statement of the ceding insurer. The reduction for the existence of an acceptable trust account may be up to the current fair market value of acceptable assets available to be withdrawn from the trust account at that time, but the reduction may be no greater than the specific obligations under the reinsurance agreement that the trust account was established to secure.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:14 Acceptability of existing trust agreements

A trust agreement or underlying reinsurance agreement in existence before January 1, 2018, will continue to be acceptable to the director until renewal of the underlying reinsurance agreement, at which time the agreements must be in full compliance with this chapter.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:15 Actions of director unaffected by failure to identify beneficiary

The failure of a trust agreement to specifically identify the beneficiary as defined in § 20:06:31:07 does not affect any actions or rights which the director may take or possess pursuant to SDCL title 58.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:16 Other security

A ceding insurer may take credit for unencumbered funds withheld by the ceding insurer in the United States that are subject to withdrawal solely by the ceding insurer and under its exclusive control.

History

Source: 22 SDR 52, effective October 25, 1995.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:17 Contracts affected

All new and renewal transactions entered into after December 31, 2017, must conform to the requirements of this chapter if credit for reinsurance is to be given to the ceding insurer.

History

Source: 22 SDR 52, effective October 25, 1995; 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:18 Letters of credit qualified under SDCL 58-14-16

20 : 06 : 31 : 18 . Letters of credit qualified under SDCL 58-14-16. The letter of credit must be clean, irrevocable, unconditional, and issued or confirmed by a qualified United States financial institution as defined in SDCL 58-14-16.18. The letter of credit shall contain an issue date and expiration date and shall stipulate that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds and that no other document need be presented. The letter of credit also shall indicate that it is not subject to any condition or qualifications outside of the letter of credit. The letter of credit may not contain reference to any other agreements, documents, or entities, except as provided in § 20:06:31:21.

The letter of credit shall contain a statement to the effect that the obligation of the qualified United States financial institution under the letter of credit is in no way contingent upon reimbursement with respect thereto.

As used in this section, beneficiary, means the domestic insurer for whose benefit the letter of credit has been established and any successor of the beneficiary by operation of law. If a court of law appoints a successor in interest to the named beneficiary, then the named beneficiary includes and is limited to the court appointed domiciliary receiver, including conservator, rehabilitator, or liquidator.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17.

ARSD 20:06:31:19 Heading and term for letters of credit

20 : 06 : 31 : 19 . Heading and term for letters of credit. The heading of the letter of credit may include a boxed section containing the name of the applicant and other appropriate notations to provide a reference for the letter of credit. The boxed section shall be clearly marked to indicate the information is for internal identification purposes only.

The term of the letter of credit shall be for at least one year and shall contain an evergreen clause that prevents the expiration of the letter of credit without due notice from the issuer. The evergreen clause shall provide for a period of no less than thirty days' notice prior to expiration date or nonrenewal.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17.

ARSD 20:06:31:20 Letter of credit issued by a financial institution

20 : 06 : 31 : 20 . Letter of credit issued by a financial institution. If the letter of credit is issued by a financial institution authorized to issue letters of credit, other than a qualified United States financial institution as described SDCL 58-14-16.18, then the following additional requirements shall be met:

(1) The issuing financial institution shall formally designate the confirming qualified United States financial institution as its agent for the receipt and payment of the drafts; and

(2) The evergreen clause shall provide for thirty days' notice prior to expiration date for nonrenewal.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17.

ARSD 20:06:31:21 Reinsurance agreements in conjunction with letters of credit

20 : 06 : 31 : 21 . Reinsurance agreements in conjunction with letters of credit. The reinsurance agreement in conjunction with which the letter of credit is obtained may contain provisions that:

(1) Require the assuming insurer to provide letters of credit to the ceding insurer and specify what they are to cover;

(2) Stipulate that the assuming insurer and ceding insurer agree that the letter of credit provided by the assuming insurer pursuant to the provisions of the reinsurance agreement may be drawn upon at any time, notwithstanding any other provisions in the agreement, and shall be utilized by the ceding insurer or its successors in interest only for one or more of the following reasons:

(a) To pay or reimburse the ceding insurer for:

(i) The assuming insurer's share under the specific reinsurance agreement of premiums returned, but not yet recovered from the assuming insurers, to the owners of policies reinsured under the reinsurance agreement on account of cancellations of such policies;

(ii) The assuming insurer's share, under the specific reinsurance agreement, of surrenders and benefits or losses paid by the ceding insurer, but not yet recovered from the assuming insurers, under the terms and provisions of the policies reinsured under the reinsurance agreement; and

(iii) Any other amounts necessary to secure the credit or reduction from liability for reinsurance taken by the ceding insurer;

(b) Where the letter of credit will expire without renewal or be reduced or replaced by a letter of credit for a reduced amount and where the assuming insurer's entire obligations under the reinsurance agreement remain unliquidated and undischarged ten days prior to the termination date, to withdraw amounts equal to the assuming insurer's share of the liabilities, to the extent that the liabilities have not yet been funded by the assuming insurer and exceed the amount of any reduced or replacement letter of credit, and deposit those amounts in a separate account in the name of the ceding insurer in a qualified U.S. financial institution apart from its general assets, in trust for such uses and purposes specified in subdivision (2)(a)(i) of this section as may remain after withdrawal and for any period after the termination date.

All of the provisions of this section shall be applied without diminution because of insolvency on the part of the ceding insurer or assuming insurer.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17.

ARSD 20:06:31:22 Interest payments and amounts drawn in excess

20 : 06 : 31 : 22 . Interest payments and amounts drawn in excess. Nothing contained in § 20:06:31:21 shall preclude the ceding insurer and assuming insurer from providing for:

(1) An interest payment, at a rate not in excess of the prime rate of interest, on the amounts held pursuant to subdivision 20:06:31:21(2); or

(2) The return of any amounts drawn down on the letters of credit in excess of the actual amounts required that are subsequently determined not to be due.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17.

ARSD 20:06:31:23 Letters of credit and Uniform Customs and Practice for Documentary Credits

20 : 06 : 31 : 23 . Letters of credit and Uniform Customs and Practice for Documentary Credits. The letter of credit shall state whether it is subject to and governed by the laws of this state or by the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce Publication 600 (UCP 600), the International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98), or any successor publication, and all drafts drawn thereunder shall be presentable at an office located in the United States of a qualified United States financial institution.

If the letter of credit is made subject to the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce Publication 600 (UCP 600), the International Standby Practices of the International Chamber of Commerce Publication 590 (ISP98), or any successor publication, then the letter of credit shall specifically address and provide for an extension of time to draw against the letter of credit in the event that one or more of the occurrences specified in Article 36 of Publication 600, or any other successor publication, occur.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16, 58-14-17.

ARSD 20:06:31:24 Insolvency and intermediary clauses

20 : 06 : 31 : 24 . Insolvency and intermediary clauses. Credit will not be granted, nor an asset or reduction from liability allowed, to a ceding insurer for reinsurance effected with assuming insurers meeting the requirements of §§ 20:06:31:01 to 20:06:31:12, inclusive, 20:06:31:25 to 20:06:31:33, inclusive, or otherwise in compliance with SDCL 58-14-7 to 58-14-16.1, inclusive, and 58-14-16.16 to 58-14-16.20, inclusive, after the effective date of this section, unless the reinsurance agreement:

(1) Includes a proper insolvency clause, which stipulates that reinsurance is payable directly to the liquidator or successor without diminution regardless of the status of the ceding company, in compliance with SDCL chapter 58-29B;

(2) Includes a provision pursuant to SDCL 58-14-7 to 58-14-16.1,inclusive, and 58-14-16.16 to 58-14-16.20, inclusive, whereby the assuming insurer, if an unauthorized assuming insurer, has submitted to the jurisdiction of an alternative dispute resolution panel or court of competent jurisdiction within the United States, has agreed to comply with all requirements necessary to give the court or panel jurisdiction, has designated an agent upon whom service of process may be effected, and has agreed to abide by the final decision of the court or panel; and

(3) Includes a proper reinsurance intermediary clause, if applicable, which stipulates that the credit risk for the intermediary is carried by the assuming insurer.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-17.

ARSD 20:06:31:25 Certified reinsurers

20 : 06 : 31 : 25 . Certified reinsurers. Pursuant to SDCL 58-14-16.1, the director shall allow credit for reinsurance ceded by a domestic insurer to an assuming insurer that has been certified as a reinsurer in this state at all times for which statutory financial statement credit for reinsurance is claimed under this section. The credit allowed shall be based upon the security held by or on behalf of the ceding insurer in accordance with a rating assigned to the certified reinsurer by the director. The security shall be in a form consistent with the provisions of SDCL 58-14-16 and 58-14-16.1 and §§ 20:06:31:07 to 20:06:31:16, inclusive, or §§ 20:06:31:18 to 20:06:31:23, inclusive. The amount of security required in order for full credit to be allowed shall correspond with the following requirements:

Ratings Security Required

Secure - 1 0%

Secure - 2 10%

Secure - 3 20%

Secure - 4 50%

Secure - 5 75%

Vulnerable - 6 100%

Affiliated reinsurance transactions shall receive the same opportunity for reduced security requirements as all other reinsurance transactions.

The director shall require the certified reinsurer to post one hundred percent security, for the benefit of the ceding insurer or its estate, upon the entry of an order of rehabilitation, liquidation, or conservation against the ceding insurer.

In order to facilitate the prompt payment of claims, a certified reinsurer may not be required to post security for catastrophe recoverables for a period of one year from the date of the first instance of a liability reserve entry by the ceding company as a result of a loss from a catastrophic occurrence as recognized by the director. The one year deferral period is contingent upon the certified reinsurer continuing to pay claims in a timely manner. Reinsurance recoverables for only the following lines of business as reported on the National Association of Insurance Commissioners' annual financial statement related specifically to the catastrophic occurrence will be included in the deferral:

Line 1: Fire

Line 2: Allied Lines

Line 3: Farmowners multiple peril

Line 4: Homeowners multiple peril

Line 5: Commercial multiple peril

Line 9: Inland Marine

Line 12: Earthquake

Line 21: Auto physical damage

Credit for reinsurance under this section shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer. Any reinsurance contract entered into prior to the effective date of the certification of the assuming insurer that is subsequently amended after the effective date of the certification of the assuming insurer, or a new reinsurance contract, covering any risk for which collateral was provided previously, shall only be subject to this section with respect to losses incurred and reserves reported from and after the effective date of the amendment or new contract.

Nothing in this section shall prohibit the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this section.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1, 58-14-17, 58-14-20.

ARSD 20:06:31:26 Certified reinsurers - certification procedure

20 : 06 : 31 : 26 . Certified reinsurers - certification procedure. The director shall post notice on the division's website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The director may not take final action on the application until at least thirty days after posting the notice required by this section.

The director shall issue written notice to an assuming insurer that has made application and been approved as a certified reinsurer. Included in such notice shall be the rating assigned the certified reinsurer in accordance with § 20:06:31:25. The director shall publish a list of all certified reinsurers and their ratings.

In order to be eligible for certification, the assuming insurer shall meet the following requirements:

(1) The assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the director pursuant to § 20:06:31:32;

(2) The assuming insurer must maintain capital and surplus, or its equivalent, of no less than $250,000,000, calculated in accordance with subdivision 20:06:31:27(8). This requirement may also be satisfied by an association including incorporated and individual unincorporated underwriters having minimum capital and surplus equivalents, net of liabilities, of at least $250,000,000, and a central fund containing a balance of at least $250,000,000;

(3) The assuming insurer must maintain financial strength ratings from two or more rating agencies deemed acceptable by the director. These ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information. These financial strength ratings will be one factor used by the director in determining the rating that is assigned to the assuming insurer. Acceptable rating agencies include: Standard & Poor's, Moody's Investors Service, Fitch Ratings, A.M. Best Company, or any other Nationally Recognized Statistical Rating Organization; and

(4) The certified reinsurer must comply with any other requirements reasonably imposed by the director.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1, 58-14-17.

ARSD 20:06:31:27 Certified reinsurers -- Ratings

Each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association including incorporated and individual unincorporated underwriters that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating. Factors that may be considered as part of the evaluation process include:

(1) The certified reinsurer's financial strength rating from an acceptable rating agency. The maximum rating that a certified reinsurer may be assigned will correspond to its financial strength rating as outlined in the table below. The director shall use the lowest financial strength rating received from an approved rating agency in establishing the maximum rating of a certified reinsurer. A failure to obtain or maintain at least two financial strength ratings from acceptable rating agencies will result in loss of eligibility for certification;

Ratings

Best

S&P

Moody's

Fitch

Secure - 1

A++

AAA

Aaa

AAA

Secure -2

A+

AA+, AA, AA-

Aa1, Aa2, Aa3

AA+, AA, AA-

Secure - 3

A+, A

A1, A2

A+, A

Secure - 4

A-

Secure - 5

B++, B+

BBB+, BBB, BBB-

Baa1, Baa2, Baa3

BBB+, BBB, BBB-

Vulnerable - 6

B, B-, C++, C+, C, C-, D, E, F

BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, R

Ba1, Ba2, Ba3, B1, Bs, B3, Caa, Ca, C

BB+, BB, BB-, B+, B, B-, CCC+, CC, CCC-, DD

(2) The business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations;

(3) For certified reinsurers domiciled in the U.S., a review of the most recent applicable Form Schedule F, provided by the director, for property/casualty reinsurers or Form Schedule S, provided by the director, for life and health reinsurers;

(4) For certified reinsurers not domiciled in the U.S., a review annually of Form CR-F, provided by the director, for property/casualty reinsurers or Form CR-S, provided by the director, for life and health reinsurers;

(5) The reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of the ceding insurers' Form Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or that are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership;

(6) Regulatory actions against the certified reinsurer;

(7) The report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in subdivision (8) of this section;

(8) Audited financial statements for certified reinsurers not domiciled in the U.S., regulatory filings, and actuarial opinion as filed with the non-U.S. jurisdiction supervisor, with a translation into English. Upon the initial application for certification, the director will consider audited financial statements for the last two years filed with its non-U.S. jurisdiction's supervisor;

(9) The liquidation priority of obligations to a ceding insurer in the certified reinsurer's domiciliary jurisdiction in the context of an insolvency proceeding;

(10) A certified reinsurer's participation in any solvent scheme of arrangement, or similar procedure, involving U.S. ceding insurers. The director shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement; and

(11) Any other information deemed relevant by the director.

History

Source: 44 SDR 71, effective October 23, 2017; 48 SDR 39, effective October 4, 2021.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1.

ARSD 20:06:31:28 Certified reinsurers - prompt payment of claims

20 : 06 : 31 : 28 . Certified reinsurers - prompt payment of claims. Based on the analysis conducted under subdivision 20:06:31:27(5) of a certified reinsurer's reputation for prompt payment of claims, the director may make appropriate adjustments in the security the certified reinsurer is required to post to protect its liabilities to U.S. ceding insurers, provided that the director shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level under subdivision 20:06:31:27(1), if the director finds:

(1) More than fifteen percent of the certified reinsurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of ninety days or more which are not in dispute and which exceed $100,000 for each cedent; or

(2) The aggregate amount of reinsurance recoverables on paid losses which are not in dispute that are overdue by ninety days or more exceeds $50,000,000.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1, 58-14-17.

ARSD 20:06:31:29 Certified reinsurers - form filing

20 : 06 : 31 : 29 . Certified reinsurers - form filing. A certified reinsurer must submit a properly executed Form CR-1, provided by the director, as evidence of its submission to the jurisdiction of this state, appointment of the director as an agent for service of process in this state, and agreement to provide security for one hundred percent of the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers if it resists enforcement of a final U.S. judgment. The director may not certify any assuming insurer that is domiciled in a jurisdiction that the director has determined does not adequately and promptly enforce final U.S. judgments or arbitration awards. The form of the initial and renewal application will be provided by the director.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1, 48-14-17.

ARSD 20:06:31:30 Certified reinsurers -- Filing requirements

The certified reinsurer shall agree to meet applicable information filing requirements as determined by the director, both with respect to an initial application for certification and on an ongoing basis. All information submitted by certified reinsurers shall be investigated by the division. The filing requirements are, as follows:

(1) Notify the director within ten days of any regulatory actions taken against the certified reinsurer, any change in the provisions of its domiciliary license or any change in rating by an approved rating agency, including a statement describing such changes and the reasons therefore;

(2) Annually file the applicable Form CR-F or CR-S, provided by the director;

(3) Annually file the report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in subdivision (4) of this section;

(4) Annually file the most recent audited financial statements, regulatory filings, and actuarial opinion as filed with the certified reinsurer's domiciliary jurisdiction, with a translation into English. Upon the initial certification, the director will consider audited financial statements for the last two years filed with the certified reinsurer' s supervisor;

(5) At least annually, file an updated list of all disputed and overdue reinsurance claims regarding reinsurance assumed from U.S. domestic ceding insurers;

(6) File a certification from the certified reinsurer's domestic regulator that the certified reinsurer is in good standing and maintains capital in excess of the jurisdiction's highest regulatory action level; and

(7) Any other information that the director may reasonably require.

History

Source: 44 SDR 71, effective October 23, 2017; 48 SDR 39, effective October 4, 2021.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1.

ARSD 20:06:31:31 Certified reinsurers - change in rating or revocation of certification

20 : 06 : 31 : 31 . Certified reinsurers - change in rating or revocation of certification. In the case of a downgrade by a rating agency or other disqualifying circumstance, the director shall upon written notice assign a new rating to the certified reinsurer in accordance with the requirements of subdivision 20:06:31:27(1).

The director shall have the authority to suspend, revoke, or otherwise modify a certified reinsurer's certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this section or if other financial or operating results of the certified reinsurer or documented significant delays in payment by the certified reinsurer lead the director to reconsider the certified reinsurer' s ability or willingness to meet its contractual obligations.

If the rating of a certified reinsurer is upgraded by the director, the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the director shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the director, the director shall require the certified reinsurer to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer.

Upon revocation of the certification of a certified reinsurer by the director, the assuming insurer shall be required to post security in accordance with § 20:06:31:06 in order for the ceding insurer to continue to take credit for reinsurance ceded to the assuming insurer. If funds continue to be held in trust, the director may allow additional credit equal to the ceding insurer's pro rata share of such funds, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration. Notwithstanding the change of a certified reinsurer's rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of three months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the director to be at high risk of uncollectibility.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1, 48-14-17.

ARSD 20:06:31:32 Certified reinsurers - qualified jurisdictions

20 : 06 : 31 : 32 . Certified reinsurers - qualified jurisdictions. If, upon conducting an evaluation under this section with respect to the reinsurance supervisory system of any non-U.S. assuming insurer, the director determines the jurisdiction qualifies to be recognized as a qualified jurisdiction, the director shall publish notice and evidence of such recognition in an appropriate manner. The director may establish a procedure to withdraw recognition of those jurisdictions that are no longer qualified.

To determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the director shall evaluate the reinsurance supervisory system of the non-U.S. jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the U.S. The director shall determine the appropriate approach for evaluating the qualifications of such jurisdictions and publish a list of jurisdictions whose reinsurers may be approved by the director as eligible for certification. A qualified jurisdiction must agree to share information and cooperate with the director with respect to all certified reinsurers domiciled within that jurisdiction.

A list of qualified jurisdictions shall be published through the National Association of Insurance Commissioners committee process. The director shall consider the list published by the National Association of Insurance Commissioners in determining qualified jurisdictions. If the director approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, the director shall provide thoroughly documented justification with respect to the criteria provided under the criteria in this section. U.S. jurisdictions that meet the requirements for accreditation under the National Association of Insurance Commissioners financial standards and accreditation program shall be recognized as qualified jurisdictions.

The director may consider additional factors in determining whether to recognize a qualified jurisdiction, including:

(1) The framework under which the assuming insurer is regulated;

(2) The structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance;

(3) The substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction;

(4) The form and substance of financial reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used;

(5) The domiciliary regulator's willingness to cooperate with U.S. regulators in general and the director in particular;

(6) The history of performance by assuming insurers in the domiciliary jurisdiction;

(7) Any documented evidence of substantial problems with the enforcement of final U.S. judgments in the domiciliary jurisdiction. A jurisdiction will not be considered to be a qualified jurisdiction if the director has determined that it does not adequately and promptly enforce final U.S. judgments or arbitration awards;

(8) Any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors, or a successor organization; and

(9) Any other matters deemed relevant by the director.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1, 58-14-16.5, 58-14-17.

ARSD 20:06:31:33 Certified reinsurers - recognition of certification

20 : 06 : 31 : 33 . Certified reinsurers - recognition of certification. If an applicant for certification has been certified as a reinsurer in a National Association of Insurance Commissioners accredited jurisdiction, the director has the discretion to defer to that jurisdiction's certification and to defer to the rating assigned by that jurisdiction, if the assuming

insurer submits a properly executed Form CR-1, provided by the director, and any additional information the director requires. The assuming insurer shall be considered to be a certified reinsurer in this state.

Any change in the certified reinsurer's status or rating in the other jurisdiction shall apply automatically in this state as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the director of any change in its status or rating within ten days after receiving notice of the change.

The director may withdraw recognition of the other jurisdiction's rating at any time and assign a new rating in accordance with § 20:06:31 :31.

The director may withdraw recognition of the other jurisdiction's certification at any time, with written notice to the certified reinsurer. Unless the director suspends or revokes the certified reinsurer's certification in accordance with § 20:06:31:31, the certified reinsurer's certification shall remain in good standing in this state for a period of three months, which shall be extended if additional time is necessary to consider the assuming insurer's application for certification in this state.

In addition to the clauses required in § 20:06:31:24, reinsurance contracts entered into or renewed under this section shall include a proper funding clause, which requires the certified reinsurer to provide and maintain security in an amount sufficient to avoid the imposition of any financial statement penalty on the ceding insurer under this section for reinsurance ceded to the certified reinsurer.

History

Source: 44 SDR 71, effective October 23, 2017.
General Authority: SDCL 58-14-17.
Law Implemented: SDCL 58-14-16.1, 58-14-17.

Chapter 20:06:32 Declaratory rulings

ARSD 20:06:32:01 Petition for declaratory ruling

Any interested party wishing the Division of Insurance to rule on the applicability to that party of any statutory provision or rule or order may file a petition for a declaratory ruling in accordance with SDCL 1-26-15 with the director of the division. The petition must reference the applicable statutory provision or rule or order and state generally the factual situation existing under which the question arises. The petition must be verified by the petitioner, except that matters not within the personal knowledge of the petitioner may be on information or belief. The petition shall identify the class of persons or entities known by the petitioner to have a present interest which would be affected by the declaratory ruling. The petition shall identify any specific persons or entities who have prior to the filing of the petition communicated with the petitioner through written documentation concerning a dispute on the matter to be ruled upon, and the director shall name them as parties. A declaration may not prejudice the rights of persons or entities not parties to the proceeding. This chapter does not create a cause of action against any petitioner.

History

Source: 22 SDR 95, effective January 18, 1996; 23 SDR 179, effective April 27, 1997.
General Authority: SDCL 1-26-15.
Law Implemented: SDCL 1-26-15.

ARSD 20:06:32:02 Repealed

Action on petition.** Repealed.

History

Source: 22 SDR 95, effective January 18, 1996; repealed, 23 SDR 179, effective April 27, 1997.

ARSD 20:06:32:03 Hearings on petition for declaratory ruling

A hearing on a petition for declaratory ruling must be public. Testimony must be tape recorded or preserved by other equivalent means. Any person may request that testimony given at such a hearing be transcribed. Each person requesting a transcript must pay a pro rata share of the transcription expense. Parties may make their own provisions to have court reporters present at the hearing. Briefs may be filed by interested parties at the director's discretion.

History

Source: 23 SDR 179, effective April 27, 1997.
General Authority: SDCL 1-26-15.
Law Implemented: SDCL 1-26-15, 1-26-22.

ARSD 20:06:32:04 Prehearing conference

The director may require a prehearing conference with all parties involved in a contested case.

History

Source: 23 SDR 179, effective April 27, 1997.
General Authority: SDCL 1-26-15.
Law Implemented: SDCL 1-26-15.

ARSD 20:06:32:05 Conduct of hearings

Hearings, unless otherwise required by statute, must be conducted in accordance with this chapter and in accordance with the provisions of SDCL chapter 1-26.

History

Source: 23 SDR 179, effective April 27, 1997.
General Authority: SDCL 1-26-15.
Law Implemented: SDCL 1-26-15.

ARSD 20:06:32:06 Notice of time and place of hearings -- Hearing examiner

Hearings shall be held at the time and place directed by the director. The director shall send written notice of the hearing to all parties at least ten days before the hearing date. For the purpose of the hearing, the director may designate a hearing examiner from the Office of Hearing Examiners.

History

Source: 23 SDR 179, effective April 27, 1997.
General Authority: SDCL 1-26-15.
Law Implemented: SDCL 1-26-15, 1-26-16.

ARSD 20:06:32:07 All parties to be heard

The hearing examiner may order proposed findings of fact and conclusions of law from any party to the hearing on the examiner's own motion or at the request of any party.

History

Source: 23 SDR 179, effective April 27, 1997.
General Authority: SDCL 1-26-15.
Law Implemented: SDCL 1-26-15.

ARSD 20:06:32:08 Decisions

The director shall make a declaratory ruling within 30 days after the hearing examiner submits proposed findings of fact and conclusions of law to the director. The director may take an additional 60 days to make a ruling if written notice of the extension is sent to all of the parties within the original 30-day period.

History

Source: 23 SDR 179, effective April 27, 1997.
General Authority: SDCL 1-26-15.
Law Implemented: SDCL 1-26-15.

ARSD 20:06:32:09 Refusal to rule

The director may refuse to make a declaratory ruling if the ruling would not end the uncertainty or controversy giving rise to the proceeding. The refusal must be sent to all parties in accordance with the time constraints of § 20:06:32:08.

History

Source: 23 SDR 179, effective April 27, 1997.
General Authority: SDCL 1-26-15.
Law Implemented: SDCL 1-26-15.

Chapter 20:06:33 Utilization review organizations and managed care entities

ARSD 20:06:33:01 Registration fee

The fee for initial or annual registration of a utilization review organization or a managed care contractor is $250.

History

Source: 23 SDR 2, effective July 1, 1996; 25 SDR 167, effective July 1, 1999; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17F-16, 58-17F-20, 58-17H-35, 58-17H-39.
Law Implemented: SDCL 58-17F-16, 58-17H-35, 58-18-75.

ARSD 20:06:33:02 Form and content of access plans

20:06:33 :02. Form and content of access plans. Each initial filing of an access plan pursuant to SDCL 58-17F-10 must contain the following:

(1) A complete copy of the entire access plan;

(2) A complete copy of the current provider network in place listed by specialty and location;

(3) Any formalized steps that a covered person must utilize to obtain a referral;

(4) An annual survey, or other method approved by the director, to assess the satisfaction of covered persons that includes, at a minimum, questions designed to elicit how the covered person is generally satisfied and how the covered person feels the managed care plan meets the covered person's health care needs;

(5) In addition to the description of the method for informing covered persons required pursuant to SDCL subdivision 58-17F-10(5), a copy of the disclosure required by SDCL 58-17F-4, a copy of the health carrier's grievance procedures, a summary of utilization review procedures provided to prospective covered persons, and a copy of the membership card pursuant to SDCL 58-17H-33;

(6) A copy of any written materials provided to covered persons that would generally inform such persons of the systems or processes that may be used to change primary care professionals as required by SDCL subdivision 58-17F-10(7);

(7) In conjunction with the plan for providing continuity of care as required by SDCL subdivision 58-17F-10(8), a copy of the language used in any provider contract that pertains to continuity of care; and

(8) A specimen copy of all provider contracts.

Discounted fee for service plans are not required to comply with subdivisions (3), (4), and (7). Discounted fee for service plans are not required to comply with subdivision (6) if the plan does not use or require the use of primary care professionals. Stand-alone dental plans are not required to comply with subdivisions (3), (4), (6), and (7).

History

Source: 26 SDR 64, effective November 14, 1999; 37 SDR 241, effective July 1, 2011; 38 SDR 59, effective October 19, 2011; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17F-10, 58-17F-21.
Law Implemented: SDCL 58-17F-4, 58-17F-10, 58-17F-21.

ARSD 20:06:33:03 Annual filing of access plans

A health insurance issuer is required to either file any changes or an attestation stating no changes have been made, annually on or before September 30^th of each year of their access plan filing.

History

Source: 26 SDR 64, effective November 14, 1999; 37 SDR 241, effective July 1, 2011; 39 SDR 203, effective June 20, 2013.
General Authority: SDCL 58-17F-10, 58-17F-21.
Law Implemented: SDCL 58-17F-4, 58-17F-10, 58-17F-21.

ARSD 20:06:33:04 Centers of Excellence -- Access plans

Each contracted Center of Excellence and each contracted network of a Center of Excellence must be included in a health carrier's access plan. For purposes of network adequacy pursuant to §§ 58-17F-5 to 58-17F-9, inclusive, the health carrier's entire Center of Excellence network including both direct contracted Centers of Excellence and contracted networks shall be considered. A health carrier may not contract with a Center of Excellence network or any other network that is not registered pursuant to § 58-17F-16. Nothing in this section affects the ability of carriers to select network providers as permitted by SDCL subdivision 58-17F-11(3). For purposes of this section a Center of Excellence means a provider of transplant services that is medically recognized as having special expertise to perform a particular transplant or transplants. Transplant providers that separately contract with a health carrier do not constitute a network pursuant to this section.

History

Source: 36 SDR 96, effective December 9, 2009; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17F-10, 58-17F-21(4)(5).
Law Implemented: SDCL 58-17F-5, 58-17F-6, 58-17F-7, 58-17F-8, 58-17F-9.

Chapter 20:06:34 Grievance procedures

ARSD 20:06:34:01 Repealed

Definitions.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1997; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:02 Repealed

Grievance procedure.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1997; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:03 Repealed

Submission of a grievance.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1997; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:04 Repealed

Review of a grievance.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1997; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:05 Repealed

Standard review timetable.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1997; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:06 Repealed

Availability of expedited review.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1997; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:07 Repealed

Expedited review.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1977; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:08 Repealed

Appeal from expedited review decision.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1997; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:09 Repealed

Written decision contents.** Repealed.

History

Source: 24 SDR 85, effective December 31, 1997; 28 SDR 4, effective July 26, 2001; repealed, 30 SDR 39, effective September 28, 2003.

ARSD 20:06:34:10 Requests for urgent care determinations

The provisions of SDCL 58-17H-41 apply only to requests for urgent care determinations.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-41.

ARSD 20:06:34:11 Scope of retrospective review

Retrospective review does not include an audit performed by a carrier subsequent to the adjudication of a claim provided that the audit does not result in any financial liability against the insured.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-30.

ARSD 20:06:34:12 Grievance report required, Repealed

Grievance report required. Repealed.

History

Source: 31 SDR 67, effective November 14, 2004; 37 SDR 241, effective July 1, 2011; 50 SDR 13, effective August 10, 2023.

Chapter 20:06:35 Maternity coverage

ARSD 20:06:35:01 Notice requirements

The notice to policyholders of a change in maternity coverage, whether it is a separate notice or is incorporated within a mailing to policyholders, must contain the following language, with the caption in 14-point bold type or greater:

IMPORTANT NOTICE OF CHANGES IN MATERNITY COVERAGE

"Your health insurance contract now contains additional coverage for maternity. Coverage for at least 48 hours of in-patient care following a vaginal delivery and 96 hours following a delivery by cesarean for the mother and her newborn child is required. However, if the treating physician determines, using appropriate medical criteria, that a shorter length of hospitalization is appropriate, you have coverage for that shorter stay and also for one follow-up visit in the first 48 hours after discharge to verify the condition of the mother and newborn. Deductibles and copayments may still apply to this extension of coverage."

The language, but not the caption, of the actual notice used by insurers may vary from the language of this notice if it is substantially similar to this notice; unless the coverage in question specifically provides for the statutorially required maternity coverage, the notice prominently discloses there is additional coverage; and the notice contains the amount and type of maternity coverage available.

History

Source: 23 SDR 113, effective January 13, 1997.
General Authority: SDCL 58-17-90, 58-18-78, 58-18B-52, 58-38-39, 58-40-36, 58-41-114.
Law Implemented: SDCL 58-17-90, 58-18-78, 58-18B-52, 58-38-39, 58-40-36, 58-41-114.

Chapter 20:06:36 Risk-based capital (RBC) reports

ARSD 20:06:36:01 Definitions

Terms used in this chapter mean:

(1) "Adjusted RBC report," a RBC report that has been adjusted by the director in accordance with § 20:06:36:06;

(2) "Corrective order," an order that has been issued by the director and which specifies the corrective actions;

(3) "Domestic health organization," any health organization domiciled in this state;

(4) "Domestic insurer," any insurance company domiciled in this state or any entity required to comply with RBC pursuant to SDCL 58-4-48;

(5) "Foreign health organization," any health organization that is licensed to do business in this state but not domiciled in this state;

(6) "Foreign insurer," any insurance company that is licensed to do business in this state but not domiciled in this state;

(7) "Health organization," any health maintenance organization; limited health service organization; dental or vision plan; hospital, medical, and dental indemnity or service corporation; or other managed care organization licensed under SDCL title 58, except an organization that is:

(a) Licensed as a life or health insurer or property and casualty insurer; and

(b) Subject to either life or property and casualty RBC requirements;

(8) "Life or health insurer," any:

(a) Insurance company licensed under SDCL title 58 to write life or health insurance; or

(b) Property and casualty insurer licensed to do business in this state writing only accident and health insurance;

(9) "NAIC," the National Association of Insurance Commissioners;

(10) "Negative trend," a negative trend in the level of RBC over a period of time;

(11) "Property and casualty insurer," any insurance company licensed under SDCL title 58 to do business in this state, excluding monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers;

(12) "RBC," risk-based capital;

(13) "RBC instructions," the 2025 editions of the NAIC RBC Forecasting and Instructions-Life/Fraternal, NAIC RBC Forecasting and Instructions-Property/Casualty, and NAIC RBC Forecasting and Instructions-Health;

(14) "RBC plan," a comprehensive financial plan containing the elements specified in § 20:06:36:08;

(15) "RBC report," the report required in §§ 20:06:36:03 to 20:06:36:06, inclusive;

(16) "Revised RBC plan," a RBC plan rejected by the director, which is revised by the insurer or health organization, with or without the director's recommendation; and

(17) "Total adjusted capital," the sum of an insurer's or health organization's statutory capital and surplus as determined in accordance with the statutory accounting applicable to the annual financial statements required to be filed under SDCL 58-6-75 and any other items required by the RBC instructions.

References:

NAIC RBC Forecasting and Instructions-Life/Fraternal, 2025 edition. Cost: $0.
NAIC RBC Forecasting and Instructions-Property/Casualty, 2025 edition. Cost: $0.
NAIC RBC Forecasting and Instructions-Health, 2025 edition. Cost: $0.

Copies of references 1 through 3 may be obtained from the National Association of Insurance Commissioners, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197; (816) 783-8300; http://www.naic.org.

History

Source: 23 SDR 228, effective July 3, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 41 SDR 93, effective December 3, 2014; 42 SDR 52, effective October 13, 2015; 42 SDR 177, effective June 28, 2016; 43 SDR 181, effective July 7, 2017; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:02 RBC levels defined

RBC levels are defined as follows:

(1) Company action level RBC is the product of 2.0 and its authorized control level RBC;

(2) Regulatory action level RBC is the product of 1.5 and its authorized control level RBC;

(3) Authorized control level RBC is the number determined under the risk-based capital formula in accordance with the RBC instructions;

(4) Mandatory control level RBC is the product of .70 and the authorized control level RBC.

History

Source: 23 SDR 228, effective July 3, 1997.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:03 RBC reports

As required by SDCL 58-4-48, each domestic insurer or domestic health organization shall file by March 1 a report of its RBC levels as of the end of the calendar year just ended, in a form and containing the information required by the RBC instructions.

Each domestic insurer or domestic health organization shall file its RBC report with the NAIC in accordance with the RBC instructions and with the insurance director in any state in which the insurer or health organization is authorized to do business if that insurance director has requested in writing that the report be filed. If a request is made, the insurer or health organization shall file its RBC report by the later of 15 days from the receipt of notice to file its RBC report with that state or the filing date.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:04 Life and health insurer's RBC reports

A life and health insurer's RBC report shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account, and may adjust for the covariance between, the following factors determined in each case by applying the factors in the manner set forth in the RBC instructions:

(1) The risk to the insurer's assets;

(2) The risk of adverse insurance experience to the insurer's liabilities and obligations;

(3) The interest rate risk to the insurer's business; and

(4) All other business risks and any other relevant risks as set forth in the RBC instructions.

History

Source: 23 SDR 228, effective July 3, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:05 Property and casualty insurer's and health organization's RBC reports

A property and casualty insurer's or health organization's RBC report shall be determined in accordance with the formula set forth in the RBC instructions. The formula shall take into account, and may adjust for the covariance between, the following factors determined in each case by applying the factors in the manner set forth in the RBC instructions:

(1) Asset risk;

(2) Credit risk;

(3) Underwriting risk; and

(4) All other business risks and any other relevant risks as set forth in the RBC instructions.

History

Source: 23 SDR 228, effective July 3, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 31 SDR 21, effective August 23, 2004; 33 SDR 59, effective October 5, 2006; 34 SDR 271, effective May 6, 2008; 35 SDR 165, effective December 22, 2008; 36 SDR 209, effective July 1, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 219, effective June 25, 2012; 39 SDR 219, effective June 26, 2013; 41 SDR 41, effective September 17, 2014; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:06 Adjusted RBC report

If a domestic insurer or domestic health organization files an RBC report which in the judgment of the director is inaccurate, the director shall adjust the RBC report to correct the inaccuracy and shall notify the insurer or health organization of the adjustment. The notice shall contain a statement of the reason for the adjustment. An RBC report so adjusted is referred to as an adjusted RBC report.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:07 Company action level event

A company action level event is any of the following events:

(1) The filing of an RBC report by an insurer or health organization which indicates one of the following:

(a) The insurer's or health organization's total adjusted capital is greater than or equal to its regulatory action level RBC but less than its company action level RBC;

(b) If the insurer is a life or health insurer, the insurer has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and has a negative trend. A negative trend is determined in accordance with the trend test calculation in the Life RBC instructions;

(c) If the insurer is a property and casualty insurer, the insurer has total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the property and casualty RBC instructions; or

(d) If a health organization, the health organization has a total adjusted capital which is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the health RBC instructions;

(2) The notice by the director to the insurer or health organization of an adjusted RBC report that indicates an event in subdivision (1) of this section, and the insurer or health organization does not challenge the adjusted RBC report under § 20:06:36:21; or

(3) If, pursuant to § 20:06:36:21, an insurer or health organization challenges an adjusted RBC report that indicates the event in subdivision (1) of this section, the notice by the director to the insurer or health organization that the director has, after a hearing, rejected the insurer's or health organization's challenge.

History

Source: 23 SDR 228, effective July 3, 1997; 37 SDR 241, effective July 1, 2011; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:08 Company action level event -- Filing of RBC plan

If a company action level event occurs, the insurer or health organization shall prepare and submit to the director an RBC plan which does the following:

(1) Identifies the conditions which contribute to the company action level event;

(2) Contains proposals of corrective actions which the insurer or health organization intends to take and which would be expected to result in the elimination of the company action level event;

(3) Provide projections of the insurer's or health organization's financial results in the current year and at least the four succeeding years, both in the absence and presence of proposed corrective actions, including projections of statutory operating income, net income, capital, and surplus. The projections for both new and renewal business must include separate projections for each major line of business and separately identify each significant income, expense, and benefit component;

(4) Identifies the key assumptions affecting the insurer's or health organization's projections and the sensitivity of the projections to the assumptions; and

(5) Identifies the quality of, and problems associated with, the insurer's or health organization's business, including its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:09 Time for filing RBC plan

The RBC plan must be submitted within 45 days of the company action level event or, if the insurer or health organization challenges an adjusted RBC report pursuant to § 20:06:36:21, within 45 days after notice to the insurer or health organization that the director has, after a hearing, rejected the insurer's or health organization's challenge.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:10 Review of RBC plan by director

Within 60 days after the submission by an insurer or health organization of an RBC plan to the director, the director may notify the insurer whether the RBC plan shall be implemented or is, in the judgment of the director, unsatisfactory. If the director determines the RBC plan is unsatisfactory, the notice to the insurer or health organization shall set forth the reasons for the determinations and may set forth proposed revisions which will make the RBC plan satisfactory. Upon receiving notice from the director, the insurer or health organization shall prepare a revised RBC plan, which may incorporate by reference any revisions proposed by the director, and shall submit the revised RBC plan to the director within 45 days after the notice from the director or, if the insurer or health organization challenges the notice from the director under § 20:06:36:21, within 45 days after the director notifies the insurer or health organization that the director has, after a hearing, rejected the insurer's or health organization's challenge.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:11 Unsatisfactory RBC plan -- Notice of regulatory action event

If the director notifies an insurer or health organization that the insurer's or health organization's RBC plan or revised RBC plan is unsatisfactory, the director may, at the director's discretion and subject to the insurer's or health organization's right to a hearing under § 20:06:36:21, specify in the notice that the notice constitutes a regulatory action level event.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:12 Additional filing requirements for RBC plan

Each domestic insurer or domestic health organization that files an RBC plan or revised RBC plan with the director shall file a copy of the RBC plan or revised RBC plan with the insurance director in any state in which the insurer is authorized to do business under the following circumstance:

(1) The state has an RBC provision for confidentiality substantially similar to §§ 20:06:36:22 to 20:06:36:22.02, inclusive; and

(2) If the insurance director of that state has requested the insurer or health organization in writing for the filing, the insurer or health organization shall file a copy of the RBC plan or revised RBC plan in that state by the later of 15 days after the receipt of notice to file a copy of its RBC plan or revised RBC plan with that state or the date on which the RBC plan or revised RBC plan is filed under §§ 20:06:36:09 and 20:06:36:10.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:13 Regulatory action level event

A regulatory action level event, for any insurer or health organization, is any of the following:

(1) The filing of an RBC report by the insurer or health organization which indicates that the insurer's or health organization's total adjusted capital is greater than or equal to its authorized control level RBC but less than its regulatory action level RBC;

(2) The notice by the director to an insurer or health organization of an adjusted RBC report that indicates the event in subdivision (1) of this section, and the insurer or health organization does not challenge the adjusted RBC report under § 20:06:36:21;

(3) If, pursuant to § 20:06:36:21, the insurer or health organization challenges an adjusted RBC report that indicates the event in subdivision (1) of this section, the notice by the director to the insurer or health organization that the director has, after a hearing, rejected the insurer's or health organization's challenge;

(4) The failure of the insurer or health organization to file an RBC report by the filing date, unless the insurer or health organization has provided an explanation for the failure which is satisfactory to the director and has cured the failure within 10 days after the filing date;

(5) The failure of the insurer or health organization to submit an RBC plan to the director within the time required in § 20:06:36:09;

(6) Notice by the director to the insurer or health organization that the RBC plan or revised RBC plan submitted by the insurer or health organization is, in the judgment of the director, unsatisfactory, and the notice constitutes a regulatory action level event for the insurer or health organization, and the insurer or health organization has not challenged the determination under § 20:06:36:21;

(7) If, pursuant to § 20:06:36:21, the insurer or health organization challenges a determination by the director under subdivision (6) of this section, the notice by the director to the insurer or health organization that the director has, after a hearing, rejected the challenge;

(8) Notice by the director to the insurer or health organization that the insurer or health organization has failed to adhere to its RBC plan or revised RBC plan, and the failure has a substantial adverse effect on the ability of the insurer or health organization to eliminate the company action level event in accordance with its RBC plan or revised RBC plan and the insurer or health organization has not challenged that determination under § 20:06:36:21; or

(9) If, pursuant to § 20:06:36:21, the insurer or health organization challenges a determination by the director under subdivision (8) of this section, the notice by the director to the insurer or health organization that the director has, after a hearing, rejected the challenge.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:14 Regulatory action level event -- Required actions by director

If a regulatory action level event occurs, the director shall do the following:

(1) Require the insurer or health organization to prepare and submit an RBC plan or, if applicable, a revised RBC plan;

(2) Perform any examination or analysis the director considers necessary of the assets, liabilities, and operations of the insurer or health organization, including a review of its RBC plan or revised RBC plan; and

(3) Subsequent to the examination or analysis, issue a corrective order specifying the corrective actions to be taken by the insurer or health organization. In determining corrective actions, the director may take into account any factors considered relevant to the insurer or health organization based on the director's examination or analysis of the assets, liabilities, and operations of the insurer or health organization, including the results of any sensitivity tests undertaken pursuant to the RBC instructions.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:15 Regulatory action level event -- Time for filing RBC plan or revised RBC plan

The RBC plan or revised RBC plan must be submitted as follows:

(1) Within 45 days after the occurrence of the regulatory action level event;

(2) If the insurer or health organization challenges an adjusted RBC report pursuant to § 20:06:36:21 and the challenge is not frivolous in the judgment of the director, within 45 days after the notice to the insurer or health organization that the director has, after a hearing, rejected the insurer's or health organization's challenge; or

(3) If the insurer or health organization challenges a revised RBC plan pursuant to § 20:06:36:21 and the challenge is not frivolous in the judgment of the director, within 45 days after the notice to the insurer or health organization that the director has, after a hearing, rejected the insurer's or health organization's challenge.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:16 Regulatory action level event -- Hiring of consultants by director

The director may retain actuaries and investment experts and other consultants necessary in the judgment of the director to review the insurer's or health organization's RBC plan or revised RBC plan; examine or analyze the assets, liabilities, and operations of the insurer or health organization; and formulate the corrective order for the insurer or health organization. The fees, costs, and expenses relating to consultants must be borne by the affected insurer or health organization or any other party as directed by the director.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:17 Authorized control level event

An authorized control level event is any of the following events:

(1) The filing of an RBC report by the insurer or health organization which indicates that the insurer's or health organization's total adjusted capital is greater than or equal to its mandatory control level RBC but less than its authorized control level RBC;

(2) The notice by the director to the insurer or health organization of an adjusted RBC report that indicates the event in subdivision (1) of this section, and the insurer or health organization does not challenge the adjusted RBC report under § 20:06:36:21;

(3) If, pursuant to § 20:06:36:21, the insurer or health organization challenges an adjusted RBC report that indicates the event in subdivision (1) of this section, notice by the director to the insurer or health organization that the director has, after a hearing, rejected the insurer's or health organization's challenge;

(4) The failure of the insurer or health organization to respond to a corrective order in a manner satisfactory to the director and the insurer or health organization has not challenged the corrective order under § 20:06:36:21; or

(5) If the insurer or health organization has challenged a corrective order under § 20:06:36:21 and the director has, after a hearing, rejected the challenge or modified the corrective order, the failure of the insurer or health organization to respond to the corrective order in a manner satisfactory to the director subsequent to rejection or modification by the director.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:18 Authorized control level event -- Actions of director

If an authorized control level event occurs, the director shall do the following:

(1) Take actions required under §§ 20:06:36:13 to 20:06:36:16, inclusive, for a regulatory action level event; or

(2) If the director considers it to be in the best interests of the policyholders and creditors of the insurer or health organization and of the public, take the actions necessary to cause the insurer or health organization to be placed under regulatory control under SDCL chapter 58-29B. If the director takes such actions, the authorized control level event is sufficient grounds for the director to take action under SDCL chapter 58-29B, and the director has the rights, powers, and duties regarding the insurer or health organization set forth in SDCL chapter 58-29B. If the director takes actions under this subdivision pursuant to an adjusted RBC report, the insurer or health organization is entitled to the protections afforded to insurers or health organizations under the provisions of SDCL 58-29B-24 to 58-29B-30, inclusive.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:19 Mandatory control level event

A mandatory control level event is any of the following:

(1) The filing of an RBC report which indicates that the insurer's or health organization's total adjusted capital is less than its mandatory control level RBC;

(2) Notice by the director to the insurer or health organization of an adjusted RBC report that indicates the event in subdivision (1) of this section, and the insurer or health organization does not challenge the adjusted RBC report under § 20:06:36:21; or

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:20 Mandatory control level event -- Actions of director

If a mandatory control level event occurs for a life or health insurer or health organization, the director shall take the actions necessary to place the insurer or health organization under regulatory control under SDCL chapter 58-29B. The mandatory control level event is sufficient grounds for the director to take action under SDCL chapter 58-29B, and the director has the rights, powers, and duties regarding the insurer or health organization set forth in SDCL chapter 58-29B. If the director takes actions pursuant to an adjusted RBC report, the insurer or health organization is entitled to the protections of SDCL 58-29B-24 to 58-29B-30, inclusive. However, the director may forego action for up to 90 days after the mandatory control level event if the director finds a reasonable expectation that the mandatory control level event may be eliminated within that period.

If a mandatory control level event occurs for a property and casualty insurer, the director shall take the actions necessary to place the insurer under regulatory control under SDCL chapter 58-29B, or, if an insurer is writing no business and is running off its existing business, may allow the insurer to continue its run-off under the supervision of the director. The mandatory control level event is sufficient grounds for the director to take action under SDCL chapter 58-29B and the director has the rights, powers, and duties regarding the insurer set forth in SDCL chapter 58-29B. If the director takes actions pursuant to an adjusted RBC report, the insurer is entitled to the protections of provisions SDCL 58-29B-24 to 58-29B-30, inclusive. However, the director may forego action for up to 90 days after the mandatory control level event if the director finds a reasonable expectation that the mandatory control level event may be eliminated within that period.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:21 Hearings

An insurer or health organization may challenge any determination or action by the director by requesting the director for a confidential division hearing within five days after notice to an insurer or health organization by the director for one of the following reasons:

(1) Notice of an adjusted RBC report:

(2) Notice that the insurer's or health organization's RBC plan or revised RBC plan is unsatisfactory and the notice constitutes a regulatory action level event;

(3) Notice that the insurer or health organization has failed to adhere to its RBC plan or revised RBC plan and that the failure has a substantial adverse effect on the ability of the insurer or health organization to eliminate the company action level event in accordance with its RBC plan or revised RBC plan; or

(4) Notice of a corrective order.

Upon receipt of the insurer's or health organization's request for a hearing, the director shall set a date for the hearing which is at least 10 but not more than 30 days after the date of the insurer's or health organization's request.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:22 Confidentiality of RBC reports

All RBC reports, to the extent that information in them is not required to be set forth in a publicly available annual statement schedule, and RBC plans, including the results or report of any examination or analysis of an insurer or health organization performed pursuant to § 20:06:36:14 and any corrective order issued by the director pursuant to examination or analysis, for any domestic or foreign insurer, or any domestic or foreign health organization, which are filed with the director are confidential. This information may not be made public and is not subject to subpoena other than by the director. The director may make this information public only for the purpose of enforcement actions pursuant to this chapter or any other provision of SDCL Title 58.

Neither the director nor any person who receives documents, materials, or other information while acting under the authority of the director is permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to this section.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:22.01 Confidentiality of RBC reports -- Sharing and receiving of information by director

In order to assist in the performance of the director's duties, the director:

(1) May share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to this section, with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, or other information; and

(2) May receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the NAIC and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:22.02 Confidentiality of RBC reports -- Waiver

No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information occurs as a result of disclosure to the director or a result of sharing as authorized under §§ 20:06:36:22 or 20:06:36:22.01.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:23 Assertions regarding RBC reports prohibited

Except as otherwise required by this chapter, any person engaged in any manner in the insurance business may not make, either directly or indirectly, an assertion, representation, or statement known to the public in any manner, including radio, television, and any printed form, regarding the RBC level of any insurer or health organization or regarding any component derived in the calculation of the RBC level of any insurer or health organization. Such an action is considered misleading.

If an insurer or health organization is able to prove to the director that a materially false statement comparing the insurer's or health organization's total adjusted capital to any of its RBC levels or an inappropriate comparison of any other amount to the insurer's or health organization's RBC levels has been published in a written publication, the insurer or health organization may publish an announcement in a written publication for the sole purpose of rebutting the materially false statement or inappropriate comparison.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:24 Use of RBC reports in ratemaking and premium setting prohibited

The RBC instructions, RBC reports, adjusted RBC reports, RBC plans, and revised RBC plans may be used by the director only for monitoring the solvency of insurers or health organizations and the need for possible corrective action and may not be used for ratemaking, or considered or introduced as evidence in any rate proceeding, or used to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance which an insurer, health organization, or any affiliate is authorized to write.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:25 Exemption

The director may exempt from the application of this chapter any domestic property and casualty insurer which meets the following requirements:

(1) Writes direct business only in this state;

(2) Writes direct annual premiums of $2,000,000 or less; and

(3) Assumes no reinsurance in excess of five percent of direct premiums written.

The director may exempt from the application of this chapter any domestic health organization which meets the following requirements:

(1) Writes direct business only in this state;

(2) Assumes no reinsurance in excess of five percent of direct premiums written; and

(3) Writes direct annual premiums for comprehensive medical business of $2,000,000 or less; or

(4) Is a limited health service organization that covers less than 2,000 lives.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:26 Foreign insurers and health organizations -- Filing of RBC reports and plans

At the written request of the director, any foreign insurer or foreign health organization shall submit to the director an RBC report as of the end of the calendar year just ended by the later of the date an RBC report would be required to be filed by a domestic insurer or domestic health organization under this chapter or 15 days after the request is received by the foreign insurer or foreign health organization.

At the written request of the director, any foreign insurer or foreign health organization shall promptly submit to the director a copy of any RBC plan that is filed with the insurance director of another state.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:27 Foreign insurers and health organizations -- Filing of RBC plans after certain events

If a company action level event, regulatory action level event, or authorized control level event occurs for any foreign insurer or foreign health organization as determined under the RBC statute applicable in the state of domicile of the insurer or health organization or, if no RBC statute is in force in that state, under the provisions of this chapter and the insurance director of the state of domicile of the foreign insurer or foreign health organization fails to require the foreign insurer or foreign health organization to file an RBC plan in the manner specified under that state's RBC statute or, if no RBC statute is in force in that state, under §§ 20:06:36:07 to 20:06:36:12, inclusive, of this chapter, the foreign insurer or foreign health organization shall file an RBC plan with the director. The failure of the foreign insurer or foreign health organization to file an RBC plan with the director is grounds to order the insurer or health organization to cease and desist from writing new insurance business in this state.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

ARSD 20:06:36:28 Foreign insurers and health organizations -- Mandatory control level event

If a mandatory control level event occurs for any foreign insurer or foreign health organization and no domiciliary receiver has been appointed for the foreign insurer or foreign health organization under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer or foreign health organization, the director may apply to the circuit court of Hughes County, as permitted under SDCL chapter 58-29B, for the liquidation of property of foreign insurers or foreign health organizations found in this state. The occurrence of the mandatory control level event is adequate grounds for the application.

History

Source: 23 SDR 228, effective July 3, 1997; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-4-48.
Law Implemented: SDCL 58-4-48.

Chapter 20:06:37 Actuarial opinions and memorandums

ARSD 20:06:37:01 Definitions

Terms used in this chapter are defined as follows:

(1) "Actuarial opinion," the opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with this chapter and with presently accepted actuarial standards as set forth in Actuarial Standards of Practice ;

(2) "Actuarial Standards Board," the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice;

(3) "Annual statement," the statement required by SDCL 58-6-75 to be filed by the company with the director annually;

(4) "Appointed actuary," an individual who is appointed or retained in accordance with the requirements in § 20:06:37:06 to provide the actuarial opinion and supporting memorandum as required by SDCL 58-26-46 to 58-26-55, inclusive;

(5) "Asset adequacy analysis," an analysis that meets the standards and other requirements referred to in § 20:06:37:07;

(6) "Director," the director of the South Dakota Division of Insurance;

(7) "Company," a life insurance company, fraternal benefit society, or reinsurer subject to this chapter;

(8) "Qualified actuary," an individual who meets the requirements in § 20:06:37:05.

Reference: Actuarial Standards of Practice , American Academy of Actuaries. Copies may be obtained from the American Academy of Actuaries free of charge on the website: http://www.actuarialstandardsboard.org/asops.htm.

History

Source: 23 SDR 236, effective July 16, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46.
Law Implemented: SDCL 58-26-46.

ARSD 20:06:37:02 Scope

This chapter applies to all life insurance companies and fraternal benefit societies doing business in this state and to all life insurance companies and fraternal benefit societies which are authorized to reinsure life insurance, annuities, or accident and health insurance business in this state.

This chapter shall be applied in a manner that allows the appointed actuary to utilize his or her professional judgment in performing the asset analysis and developing the actuarial opinion and supporting memoranda, consistent with relevant actuarial standards of practice. However, the director has the authority to specify particular methods of actuarial analysis and actuarial assumptions if, in the director's judgment, these specifications are necessary for an acceptable opinion to be rendered relative to the adequacy of reserves and related items.

This chapter is applicable to any annual statement filed with the director. A statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with §§ 20:06:37:29 to 20:06:37:39, inclusive, and a memorandum in support thereof in accordance with §§ 20:06:37:40 to 20:06:37:47, inclusive, is required each year.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46.
Law Implemented: SDCL 58-26-46.

ARSD 20:06:37:03 Repealed

Actuarial statements and supporting memorandums required yearly.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:04 Submission of statement of actuarial opinions

Submission of statement of actuarial opinion.** The statement of an appointed actuary, entitled "Statement of Actuarial Opinion," must be included on or attached to page 1 of the annual statement for each year. The statement must set forth an opinion relating to reserves and related actuarial items held in support of policies and contracts in accordance with §§ 20:06:37:29 to 20:06:37:39, inclusive.

Upon written request by the company, the director may grant an extension of the date for submission of the statement of actuarial opinion.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46.
Law Implemented: SDCL 58-26-46.

ARSD 20:06:37:05 Qualified actuary

A qualified actuary is an individual who meets the following requirements:

(1) Is a member in good standing of the American Academy of Actuaries;

(2) Is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the qualification standards of the American Academy of Actuaries for actuaries signing such statements, "Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States," American Academy of Actuaries, effective January 1, 2008;

(3) Is familiar with the valuation requirements applicable to life and health insurance companies;

(4) Has not been found by the director to have done any of the following pursuant to notice and hearing, or if so found and disciplined, has subsequently been reinstated as a qualified actuary:

(a) Violated any provision of, or any obligation imposed by SDCL Title 58 or other law in the course of dealings as a qualified actuary;

(b) Been found guilty of fraudulent or dishonest practices;

(d) Submitted to the director after the effective date of this chapter, an actuarial opinion or memorandum that the director rejected because it did not meet the provisions of this chapter, including standards set by the Actuarial Standards Board in Actuarial Standards of Practice ; or

(e) Resigned or been removed as an actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of failure to adhere to generally accepted actuarial standards; and

(5) Has not failed to notify the director of any action taken by the director of any other state similar to that under subdivision (4) of this section.

References

Actuarial Standards of Practice , American Academy of Actuaries. Copies may be obtained free of charge on the website: http://www.actuarialstandardsboard.org/asops.htm.
Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States , effective January 1, 2008.

History

Source: 23 SDR 236, effective July 16, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-52.
Law Implemented: SDCL 58-26-46.

ARSD 20:06:37:06 Appointed actuary

An appointed actuary is a qualified actuary who is appointed or retained to prepare the statement of actuarial opinion required by this chapter either directly by or by the authority of the board of directors through an executive officer of the company. The company shall give the director timely written notice of the name, title, and, in the case of a consulting actuary, the name of the firms, and the manner of appointment or retention of each person appointed or retained by the company as an appointed actuary. The company must state in the notice that the person meets the requirements of §20:06:37:05. The notice must state if any person appointed or retained as an appointed actuary replaces a previously appointed actuary, and give the reasons for replacement.

Once notice of an appointed actuary is furnished, no further notice is required; however, the company must give the director timely written notice if the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements in § 20:06:37:05.

History

Source: 23 SDR 236, effective July 16, 1997.
General Authority: SDCL 58-26-52.
Law Implemented: SDCL 58-26-46.

ARSD 20:06:37:07 Standards for asset adequacy analysis

The asset adequacy analysis required by this chapter:

(1) Must conform to the standards of practice in Actuarial Standard of Practice No. 22, "Statements of Opinion Based on Asset Adequacy Analysis by Appointed Actuaries for Life or Health Insurers" adopted by the Actuarial Standards Board, September 2001, and on any additional standards under this chapter. These standards must form the basis of the statement of actuarial opinion in accordance with §§ 20:06:37:29 to 20:06:37:39, inclusive;

(2) Shall be based on methods of analysis as are deemed appropriate for such purposes by the Actuarial Standards Board.

Reference: Actuarial Standards of Practice , American Academy of Actuaries. Copies may be obtained free of charge on the website: http://www.actuarialstandardsboard.org/asops.htm.

History

Source: 23 SDR 236, effective July 16, 1997; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-47.
Law Implemented: SDCL 58-26-47.

ARSD 20:06:37:08 Liabilities to be covered

Pursuant to SDCL 58-26-46 to 58-26-55, inclusive, the statement of actuarial opinion applies to all business in force on the statement date, whether directly issued or assumed, regardless of when or where issued.

If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in SDCL 58-26-75, 58-26-76, and 58-26-81 to 58-26-84, inclusive, the company must establish the additional reserve.

Additional reserves established under this section and considered not necessary in subsequent years may be released. Any amounts released must be disclosed in the actuarial opinion for the applicable year. The release of such reserves is not considered an adoption of a lower standard of valuation.

Example: Statement of actuarial opinion would apply to reserves of Exhibits 5, 6, and 7, and claim liabilities in Exhibit 8, Part I of the annual statement and equivalent items in the separate account statement or statements pursuant to SDCL chapter 58-28.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:09 Repealed

Required opinions.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:10 Repealed

Company categories.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:11 Repeated

Criteria for Category A company exemption.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:12 Repealed

Criteria for Category B company exemption.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:13 Repealed

Category A or Category B companies -- Required filing of actuarial opinion.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:14 Repealed

Criteria for Category C company exemption -- Required filing of actuarial opinion.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:15 Repealed

Required filing of actuarial opinion.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:16 Repealed

Category D company -- Required filing of actuarial opinion.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:17 Repealed

Contents of statement of actuarial opinion not including an asset adequacy analysis.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:18 Repealed

Recommended language.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:19 Repealed

Opening paragraph.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:20 Repealed

Regulatory paragraph.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:21 Repealed

Scope paragraph -- General requirements.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:22 Repealed

Scope paragraph -- Review of underlying records completed.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:23 Repealed

Scope paragraph -- Review of underlying records not completed.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:24 Repealed

Opinion paragraph.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:25 Repealed

Concluding paragraph.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:26 Repealed

Notation of change in actuarial assumptions.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:27 Repealed

Notation if actuary is unable to form an opinion.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:28 Repealed

Opinion as to the accuracy and completeness of the listings and summaries of policies in force.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:29 Contents of statement of actuarial opinion based on asset adequacy analysis

The statement of actuarial opinion based on an asset adequacy analysis submitted in accordance with this section consists of the following:

(1) A paragraph identifying the appointed actuary and the actuary's qualifications (see § 20:06:37:31);

(2) A scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items which have been analyzed for asset adequacy and the method of analysis (see § 20:06:37:32) and identifying the reserves and related actuarial items covered by the opinion which have not been analyzed;

(3) A reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, e.g., anticipated cash flows from currently owned assets, including variation in cash flows according to economic scenarios (see § 20:06:37:33). supported by a statement of each such expert in the form prescribed by § 20:06:37:39;

(4) An opinion paragraph expressing the appointed actuary's opinion about the adequacy of the supporting assets to mature the liabilities (see § 20:06:37:36); and

(5) One or more additional paragraphs as needed in individual company cases, as follows:

(a) If the appointed actuary considers it necessary to state a qualification of the opinion;

(b) If the appointed actuary must disclose an inconsistency between the method of analysis or basis of asset allocation used at the prior opinion date, and that used for this opinion;

(c) If the appointed actuary must disclose whether additional reserves of the prior opinion date are released as of this opinion date, and the extent of the release;

(d) If the appointed actuary chooses to add a paragraph briefly describing the assumptions which form the basis for the actuarial opinion.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:30 Recommended language

The paragraphs contained in §§ 20:06:37:31 to 20:06:37:39, inclusive, must be included in the statement of actuarial opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary must use language which clearly expresses the actuary's professional judgment while retaining all pertinent aspects of the language provided in §§ 20:06:37:31 to 20:06:37:39, inclusive.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:31 Opening paragraph

The opening paragraph must generally indicate the appointed actuary's relationship to the company and the actuary's qualifications to sign the opinion. For a company actuary, the opening paragraph of the actuarial opinion must read as follows:

I, [name], am [title] of [insurance company name] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of the insurer to render this opinion as stated in the letter to the director dated [insert date]. I meet the academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies.

For a consulting actuary, the opening paragraph must contain a sentence similar to the following:

I, [name], a member of the American Academy of Actuaries, am associated with the firm of [name of consulting firm]. I have been appointed by, or by the authority of, the Board of Directors of [name of company] to render this opinion as stated in the letter to the director dated [insert date] I meet the academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies.

History

Source: 23 SDR 236, effective July 16, 1997.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:32 Scope paragraph

20:06:37:32 Scope paragraph. The scope paragraph must indicate a statement such as the following:

I have examined the actuarial assumptions and actuarial methods used in determining reserves and related actuarial items listed below, as shown in the annual statement of the company, as prepared for filing with state regulatory officials, as of December 31, 19[ ]. Tabulated below are those reserves and related actuarial items which have been subjected to asset adequacy analysis. [Insert tables of items subject to asset adequacy analysis contained in Appendix A at the end of this chapter].

History

Source: 23 SDR 236, effective July 16, 1997.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:33 Notation of actuary's reliance upon experts

20:06:37 :33. Notation of actuary's reliance upon experts. If the appointed actuary has relied on other experts to develop certain portions of the analysis, the reliance paragraph must include a statement such as the following:

I have relied on [name], [title] for [e.g., anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios or certain critical aspects of the analysis performed in conjunction with forming my opinion], as certified in the attached statement. I have reviewed the information relied upon for reasonableness.

The statement of reliance on other experts must be accompanied by a statement by each of the experts in the form prescribed by § 20:06:37:39.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:34 Reliance paragraph -- Examination of underlying assets and liability records completed

If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph must also include the following:

My examination included review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and those tests of the actuarial calculations that I considered necessary. I also reconciled the underlying basic asset and liability records to [exhibits and schedules listed as applicable] of the company's current annual statement.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:35 Reliance paragraph -- Examination of underlying records not completed

Reliance paragraph -- Examination of underlying records not completed.** If the appointed actuary has not examined the underlying records, but has relied upon data (e.g., listings and summaries of policies in force or asset records) prepared by the company, the reliance paragraph shall include a sentence such as the following:

In forming my opinion on [specify types of reserves] I relied upon data prepared by [name and title of company officer certifying in force records or other data] as certified in the attached statements. I evaluated that data for reasonableness and consistency. I also reconciled that data to [exhibits and schedules to be listed as applicable] of the company's current annual statement. In other aspects, my examination included review of the actuarial assumptions and actuarial methods used and tests of the calculations I considered necessary.

Such a section must be accompanied by a statement by each person relied upon in the form prescribed in § 20:06:37:39.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:36 Opinion paragraph

The opinion paragraph must include the following:

In my opinion the reserves and related actuarial values concerning the statement items identified above:

(1) Are computed in accordance with presently accepted actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles;

(2) Are based on actuarial assumptions which produce reserves at least as great as those called for in any contract provision as to reserve basis and method and are in accordance with all other contract provisions;

(3) Meet the requirements of the insurance law and regulation of the state of [state of domicile] and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed;

(4) Are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year-end (with any exceptions noted below);

(5) Include provision for all actuarial reserves and related statement items which ought to be established.

The reserves and related items, when considered in light of the assets held by the company with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts, make adequate provision, according to presently accepted actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the company.

The actuarial methods, considerations and analyses used in forming my opinion conform to the applicable standards of practice as promulgated by the Actuarial Standards Board which standards are the basis of this statement of opinion.

This opinion is updated annually as required by statute. To the best of my knowledge, there have been no material changes from the applicable date of the annual statement to the date of the rendering of this opinion which should be considered in reviewing this opinion.

The following material change which occurred between the date of the statement for which this opinion is applicable and the date of this opinion should be considered in reviewing this opinion: (Describe the change or changes.)

[ Note: Choose one of the two preceding paragraphs, as applicable.]

The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all of the assumptions used in the analysis.

Signature of Appointed Actuary

Address of Appointed Actuary

Telephone Number of Appointed Actuary

Date

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:37 Assumptions for new issues

The adoption for new issues or new claims or other new liabilities of an actuarial assumption which differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of §§ 20:06:37:29 to 20:06:37:39, inclusive.

History

Source: 23 SDR 236, effective July 16, 1997.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:38 Adverse opinions

If the appointed actuary is unable to form an opinion, then the actuary shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then the actuary shall issue an adverse or qualified actuarial opinion explicitly stating the reason or reasons for that opinion. This statement follows the scope paragraph and precedes the opinion paragraph.

History

Source: 23 SDR 236, effective July 16, 1997.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:39 Reliance on information furnished by other persons

If the appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion shall indicate any person the actuary has relied upon and a precise identification of the items subject to reliance. In addition, any person on whom the appointed actuary has relied shall provide a certification that precisely identifies the items on which the person is providing information and a statement as to the accuracy, completeness, or reasonableness, as applicable, of the items. This certification shall include the signature, title, company, address, and telephone number of the person rendering the certification, as well as the date on which it is signed.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:40 Description of actuarial memorandum including an asset adequacy analysis and a regulatory asset adequacy issues summary

In accordance with SDCL 58-26-46 to 58-26-55, inclusive, the appointed actuary shall prepare a memorandum to the company describing the analysis done in support of the actuary's opinion regarding the reserves under §§ 20:06:37:29 to 20:06:37:39, inclusive. The memorandum must be made available for examination by the director upon the request of the director. The director shall return the memorandum to the company after examining it. The memorandum is not considered a record of the insurance division or subject to automatic filing with the director.

In preparing the memorandum, the appointed actuary may rely on, and include as a part of the actuary's own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of § 20:06:37:05 regarding the areas covered in the memoranda and who so state in their memoranda.

If the director requests a memorandum and no such memorandum exists or if the director finds that the analysis described in the memorandum fails to meet the standards of the Actuarial Standards Board or the standards and requirements of this chapter, the director may designate a qualified actuary to review the opinion and prepare a supporting memorandum. The reasonable and necessary expense of the independent review must be paid by the company but is directed and controlled by the director.

The reviewing actuary has the same status as an examiner for purposes of obtaining data from the company, and the work papers and documentation of the reviewing actuary are retained by the director. However, any information provided by the company to the reviewing actuary and included in the work papers is considered to be material provided by the company to the director and must be kept confidential to the same extent as prescribed by SDCL chapter 58-3 for other material provided by the company to the director. The reviewing actuary may not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer pursuant to this chapter for either the current year or any of the preceding three years.

In accordance with SDCL 58-26-46 to 58-26-55, inclusive, the appointed actuary shall prepare a regulatory asset adequacy issues summary, the contents of which are specified in § 20:06:37:41.01. The regulatory asset adequacy issues summary shall be submitted no later than March 15 of the year following the year for which a statement of actuarial opinion based on asset adequacy is required. The regulatory asset adequacy issues summary is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-49.
Law Implemented: SDCL 58-26-46, 58-26-47.

ARSD 20:06:37:41 Details of the memorandum section documenting asset adequacy analysis

If an actuarial opinion is provided, the memorandum must demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in § 20:06:37:07 and any additional standards under this chapter. It must specify the following:

(1) For reserves:

(a) Product descriptions, including a market description, underwriting and other aspects of a risk profile, and the specific risks the appointed actuary considers significant;

(b) Source of liability in force;

(d) Investment reserves;

(e) Reinsurance arrangements;

(f) Identification of any explicit or implied guarantees made by the general account in support of benefits provided through a separate account or under a separate account policy or contract and the methods used by the appointed actuary to provide for the guarantees in the asset adequacy analysis;

(g) Documentation of assumptions to test reserves for the following:

(i) Lapse rates (both base and excess);

(ii) Interest crediting rate strategy;

(iii) Mortality;

(iv) Policyholder dividend strategy;

(v) Competitor or market interest rate;

(vi) Annuitization rates;

(vii) Commissions and expenses; and

(viii) Morbidity.

The documentation of the assumption shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions;

(2) For assets:

(a) Portfolio descriptions, including a risk profile disclosing the quality, distribution, and types of assets;

(b) Investment and disinvestment assumptions;

(d) Asset valuation bases;

(e) Documentation of assumptions made for:

(i) Default costs;

(ii) Bond call function;

(iii) Mortgage prepayment function;

(iv) Determining market value for assets sold due to disinvestment strategy; and

(v) Determining yield on assets acquired through the investment strategy.

The documentation of the assumptions shall be such that an actuary reviewing the actuarial memorandum could form a conclusion as to the reasonableness of the assumptions;

(3) For the analysis basis:

(a) Methodology;

(b) The rationale for the inclusion or the exclusion of different blocks of business and how pertinent risks were analyzed;

(c) The rationale for the degree of rigor in analyzing different blocks of business (include in the rationale the level of materiality that was used in determining how rigorously to analyze different blocks of business);

(d) The criteria for determining asset adequacy (include in the criteria the precise basis for determining if assets are adequate to cover reserves under moderately adverse conditions or other conditions as specified in relevant actuarial standards of practice); and

(e) Whether the impact of federal income taxes was considered and the method of treating reinsurance in the asset adequacy analysis;

(4) Summary of material changes in methods, procedures, or assumptions from prior year's asset adequacy analysis;

(5) A summary of results; and

(6) Conclusion.

History

Source: 23 SDR 236, effective July 16, 1997; 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-49.
Law Implemented: SDCL 58-26-46, 58-26-47.

ARSD 20:06:37:41.01 Details of the regulatory asset adequacy issues summary

The regulatory asset adequacy issues summary shall be signed and dated by the appointed actuary rendering the actuarial opinion and shall include:

(1) Description of the scenarios tested, including whether those scenarios are stochastic or deterministic, and the sensitivity testing done relative to those scenarios. If negative ending surplus results under certain tests in the aggregate, the actuary should describe those tests and the amount of additional reserve as of the valuation date which, if held, would eliminate the negative aggregate surplus values. Ending surplus values shall be determined by either extending the projection period until the in-force and associated assets and liabilities at the end of the projection period are immaterial or by adjusting the surplus amount at the end of the projection period by an amount that appropriately estimates the value that can reasonably be expected to arise from the assets and liabilities in force;

(2) The extent to which the appointed actuary uses assumptions in the asset adequacy analysis that are materially different than the assumptions used in the previous asset adequacy analysis;

(3) The amount of reserves and the identity of the product lines that had been subjected to asset adequacy analysis in the prior opinion but were not subject to analysis for the current opinion;

(4) Comments on any interim results that may be of significant concern to the appointed actuary;

(5) The methods used by the actuary to recognize the impact of reinsurance on the company's cash flows, including both assets and liabilities, under each of the scenarios tested;

(6) Whether the actuary has been satisfied that all options whether explicit or embedded, in any asset or liability, including but not limited to those affecting cash flows embedded in fixed income securities, and equity-like features in any investments have been appropriately considered in the asset adequacy analysis; and

(7) The name of the company for which the regulatory asset adequacy issues summary is being supplied.

History

Source: 34 SDR 297, effective June 2, 2008.
General Authority: SDCL 58-26-49.
Law Implemented: SDCL 58-26-46, 58-26-47.

ARSD 20:06:37:42 Conformity to standards of practice

The memorandum must include the following statement concerning conformity to standards of practice:

Actuarial methods, considerations, and analyses used in the preparation of this memorandum conform to the applicable standards of practice, as promulgated by the Actuarial Standards Board, which form the basis for this memorandum.

History

Source: 23 SDR 236, effective July 16, 1997.
General Authority: SDCL 58-26-49.
Law Implemented: SDCL 58-26-46, 58-26-47.

ARSD 20:06:37:43 Repealed

Additional consideration for analysis -- Aggregation.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:44 Repealed

Selection of assets for analysis.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:45 Use of assets supporting the interest maintenance reserve and the asset valuation reserve

An appropriate allocation of assets in the amount of the interest maintenance reserve (IMR), whether positive or negative, must be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the asset valuation reserve (AVR); these AVR assets may not be applied for any other risks related to reserve adequacy. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent that these are not used for risk analysis and reserve support.

The amount of the assets used for the AVR must be disclosed in the table of reserves and liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets must be disclosed in the memorandum.

History

Source: 23 SDR 236, effective July 16, 1997.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

ARSD 20:06:37:46 Repealed

Required interest scenarios.** Repealed.

History

Source: 23 SDR 236, effective July 16, 1997; repealed, 34 SDR 297, effective June 2, 2008.

ARSD 20:06:37:47 Documentation

The appointed actuary must retain on file, for at least seven years, sufficient documentation to determine the procedures followed, the analyses performed, the bases for assumptions, and the results obtained.

History

Source: 23 SDR 236, effective July 16, 1997.
General Authority: SDCL 58-26-46, 58-26-47, 58-26-50.
Law Implemented: SDCL 58-26-46, 58-26-47, 58-26-50.

Chapter 20:06:38 Life insurance illustrations

ARSD 20:06:38:01 Definitions

Terms used in this chapter mean:

(1) Actuarial Standards Board," the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice;

(2) "Assumed expenses," expenses as calculated in § 20:06:38:34 that may be used in the calculation of the disciplined current scale for a policy form;

(3) "Basic Illustration," a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements;

(4) "Contract premium," the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration;

(5) "Currently payable scale," a scale of nonguaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next 95 days;

(6) "Generic name," a short title descriptive of the policy being illustrated, such as "whole life," "term life," or "flexible premium adjustable life" ;

(7) "Guaranteed elements," the premiums, benefits, values, credits, or charges under a policy of life insurance that are guaranteed and determined at issue;

(8) "Illustrated scale," a scale of nonguaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of the disciplined current scale or the currently payable scale;

(9) "Illustration," a presentation or depiction that includes nonguaranteed elements of a policy of life insurance over a period of years and that is either a "basic illustration," a "supplemental illustration," or an "in-force illustration";

(10) "Illustration actuary," an actuary meeting the requirements of § 20:06:38:25 who certifies to illustrations based on the standard of practice contained in the Actuarial Standard of Practice No. 24 - Compliance With The NAIC Life Insurance Illustrations Model Regulation , effective March 31, 1996;

(11) "In-force illustration," an illustration furnished at any time after the policy that it depicts has been in force for one year or more;

(12) "Lapse-supported illustration," an illustration of a policy form failing the test of self-supporting as defined in this section, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first 5 years and 100 percent policy persistency thereafter;

(13) "Minimum assumed expenses," the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form;

(14) "Nonterm group life," a group policy or individual policies of life insurance which are issued to members of an employer group or another permitted group and which meet the following requirements:

(a) Every plan of coverage was selected by the employer or another group representative;

(b) Some portion of the premium is paid by the group or through payroll deduction; and

(15) "Nonguaranteed elements," the premiums, benefits, values, credits, or charges under a policy of life insurance that are not guaranteed and determined at issue;

(16) "Policy owner," the owner named in the policy or the certificate holder in the case of a group policy;

(17) "Premium outlay," the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket;

(18) "Second-or-later-to-die policies," life insurance policies which insure two or more lives and pay the death proceeds upon the death of the second or last insured to die;

(19) "Self-supporting illustration," an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or-later-to-die policies, or upon policy expiration if sooner, the accumulated value of all policy cash flows equals or exceeds the total policy owner value available, including cash surrender values and any other illustrated benefit amounts available at the policy owner’s election.

Reference: Actuarial Standards of Practice , American Academy of Actuaries. Copies may be obtained free of charge on the website: http://www.actuarialstandardsboard.org/asops.htm.

History

Source: 23 SDR 228, effective July 1, 1997; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:02 Applicability and scope

This chapter applies to all group and individual life policies and certificates sold on or after the effective date of this chapter except the following:

(1) Variable life insurance;

(2) Individual and group annuity contracts;

(3) Credit life insurance; and

(4) Life insurance policies with no illustrated death benefits on any individual exceeding $10,000.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:03 Policies to be illustrated

Each insurer marketing policies to which this chapter is applicable shall notify the director whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this chapter, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this chapter, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the director.

If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited.

If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this chapter is required. However, a basic illustration need not be provided to individual members of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered.

Potential enrollees of nonterm group life subject to this chapter must be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and nonguaranteed basis applicable to the group and the coverage. This quotation is not considered an illustration for purposes of this chapter, but all information provided must be consistent with the illustrated scale. A basic illustration must be provided at delivery of the certificate to enrollees for nonterm group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer must make a basic illustration available to any non-term group life enrollee who requests it.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:04 Information required in illustration

An illustration used in the sale of a life insurance policy must satisfy the applicable requirements of this chapter, be clearly labeled “life insurance illustration,” and contain the following basic information:

(1) The name of the insurer;

(2) The name and business address of the agent or the insurer’s authorized representative, if any;

(3) The name, age, and sex of the proposed insured, unless a composite illustration is permitted under this chapter;

(4) The underwriting or rating classification on which the illustration is based;

(5) The generic name of the policy, the company product name, if different, and the form number;

(6) The initial death benefit; and

(7) The dividend option election or application of nonguaranteed elements, if applicable.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:05 Prohibited practices

When using an illustration in the sale of a life insurance policy, an insurer or its agents or other authorized representatives may not do any of the following:

(1) Represent the policy as anything other than a life insurance policy;

(2) Use or describe nonguaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;

(3) State or imply that the payment or amount of nonguaranteed elements is guaranteed;

(4) Use an illustration that does not comply with the requirements of this chapter;

(5) Use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;

(6) Provide an applicant with an incomplete illustration;

(7) Represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact;

(8) Use the term “vanish” or “vanishing premium,” or a similar term that implies the policy becomes paid up, to describe a plan for using nonguaranteed elements to pay a portion of future premiums;

(9) Except for policies that can never develop nonforfeiture values, use an illustration that is lapse-supported; or

(10) Use an illustration that is not self-supporting.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5, 58-33-5.1, 58-33-6.

ARSD 20:06:38:06 Interest rate illustrations

If an interest rate used to determine the illustrated non-guaranteed elements is shown, it may not be greater than the earned interest rate underlying the disciplined current scale.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:07 Standards for basic illustrations -- Format

A basic illustration must conform with the following requirements:

(1) The illustration must be labeled with the date on which it was prepared;

(2) Each page, including any explanatory notes or pages, must be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration must be labeled, "page 4 of 7 pages");

(3) The assumed dates of payment receipt and benefit payout within a policy year must be clearly identified;

(4) If the age of the proposed insured is shown as a component of the tabular detail, it must be the issue age plus the numbers of years the policy is assumed to have been in force;

(5) The assumed payments on which the illustrated benefits and values are based must be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments must be identified as premium outlay;

(6) Guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium must be shown and clearly labeled guaranteed;

(7) If the illustration shows any nonguaranteed elements, they may not be based on a scale more favorable to the policy owner than the insurer’s illustrated scale at any duration. These elements must be clearly labeled nonguaranteed;

(8) The guaranteed elements, if any, must be shown before corresponding non-guaranteed elements and must be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., "see page one for guaranteed elements");

(9) The account or accumulation value of a policy, if shown, must be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender;

(10) The value available upon surrender must be identified by the name this value is given in the policy being illustrated and must be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans, and policy loan interest, as applicable;

(11) Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form;

(12) Any illustration of nonguaranteed elements must be accompanied by a statement indicating the following:

(a) The benefits and values are not guaranteed;

(b) The assumptions on which they are based are subject to change by the insurer; and

(13) If the illustration shows that the premium payer has the option to allow policy charges to be paid using nonguaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure must be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display may not be left blank or show zero unless it is accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up;

(14) If the applicant plans to use dividends or policy values, guaranteed or nonguaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration may reflect those plans and the impact on future policy benefits and values.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:08 Standards for basic illustrations -- Narrative summary

A basic illustration must include the following in the narrative summary:

(1) A brief description of the policy being illustrated, including a statement that it is a life insurance policy;

(2) A brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration must show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of § 7702 of the Internal Revenue Code as in effect on June 1, 1997;

(3) A brief description of any policy features, riders, or options, guaranteed or nonguaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy;

(4) Identification and a brief definition of column headings and key terms used in the illustration; and

(5) A statement containing in substance the following: "This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown."

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:09 Standards for basic illustrations -- Numeric summary

Following the narrative summary, a basic illustration must include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. For a policy that provides for a contract premium, the guaranteed death benefits and values must be based on the contract premium. This summary must be shown for at least policy years 5, 10 and 20 and at age 70, if applicable, on the three bases listed in this section. For multiple life policies the summary must show policy years 5, 10, 20 and 30. The three bases are as follows:

(1) Policy guarantees;

(2) Insurer’s illustrated scale;

(3) Insurer’s illustrated scale used but with the nonguaranteed elements reduced as follows:

(a) Dividends at 50 percent of the dividends contained in the illustrated scale used;

(b) Nonguaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and

(c) All nonguaranteed charges, including charges for term insurance, mortality, and expenses, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.

In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases must be identified for each of the three bases.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:10 Standards for basic illustrations -- Statements

Statements substantially similar to the following must be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery, as required in this chapter:

(1) A statement to be signed and dated by the applicant or policy owner reading as follows: "I have received a copy of this illustration and understand that any nonguaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed."; and

(2) A statement to be signed and dated by the insurance agent or other authorized representative of the insurer reading as follows: "I certify that this illustration has been presented to the applicant and that I have explained that any nonguaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration."

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:11 Standards for basic illustrations -- Tabular detail

A basic illustration must include the following tabular detail for at least each policy year from one to ten and for every fifth policy year thereafter ending at age 100, policy maturity, or final expiration and, except for term insurance beyond the twentieth year, for any year in which the premium outlay and contract premium, if applicable, is to change:

(1) The premium outlay and mode the applicant plans to pay and the contract premium, as applicable;

(2) The corresponding guaranteed death benefit, as provided in the policy; and

(3) The corresponding guaranteed value available upon surrender, as provided in the policy.

For a policy that provides for a contract premium, the guaranteed death benefit and value available upon surrender must correspond to the contract premium. Nonguaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer’s current practice is to pay terminal dividends. If any nonguaranteed elements are shown, they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a nonguaranteed benefit or value is shown, a zero must be displayed in the guaranteed column.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:12 Standards for supplemental illustrations

The supplemental illustration must include a notice referring to the basic illustration for guaranteed elements and other important information. A supplemental illustration may be provided as long as:

(1) It is appended to, accompanied by, or preceded by a basic illustration that complies with this chapter;

(2) The nonguaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration;

(3) It contains the same statement required of a basic illustration that nonguaranteed elements are not guaranteed; and

(4) For a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration must be equal to the premium outlay shown in the basic illustration.

The supplemental illustration may be presented in a format differing from the basic illustration, but may only depict a scale of nonguaranteed elements that is permitted in a basic illustration.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:13 Basic illustration -- Use in sale of policy

If a basic illustration is used by an insurance agent or other authorized representative of the insurer in the sale of a life insurance policy and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with this chapter, must be submitted to the insurer at the time of policy application. A printed copy also must be delivered to the applicant no later than at the time the application is submitted to the insurer.

However, if the illustration is displayed on a computer screen, the insurance agent or other representative of the insurer may provide the applicant with an acknowledgment in lieu of the illustration. The acknowledgment must meet the following requirements:

(1) The acknowledgment must be signed by the applicant and the agent;

(2) One copy of the signed acknowledgment must be left with the applicant, and one copy must be submitted with the application. However, if the acknowledgement is presented electronically, the replacing insurer shall mail the applicant a copy of the acknowledgement within five business days after the application is submitted to the replacing insurer;

(3) The personal and policy information on which the computer screen illustration was based must be itemized in accordance with § 20:06:38:04;

(4) The acknowledgment must list the guaranteed and nonguaranteed interest rates illustrated;

(5) The acknowledgment must include the generic name of any rider illustrated, the company product name, if different, and the form number;

(6) The acknowledgment must contain a certification by the agent that the illustration used conforms to the information in the acknowledgment; and

(7) The acknowledgment must state that an illustration conforming to the policy as issued will be prepared and personally delivered by the agent on or before delivery of the policy.

A sample acknowledgment is contained in Appendix B at the end of this chapter. If an acknowledgment is used, an illustration conforming to the policy as issued must be sent with the policy.

If the policy is issued other than as applied for, a revised basic illustration conforming to the policy as issued must be sent with the policy. The revised illustration must conform to the requirements of this chapter, must be labeled "Revised Illustration" and must be signed and dated by the applicant or policy owner and agent or another authorized representative of the insurer no later than the time the policy is delivered. A printed copy must be delivered to the insurer and the policy owner.

History

Source: 23 SDR 228, effective July 1, 1997; 24 SDR 33, effective September 22, 1997; 31 SDR 214, effective July 6, 2005.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:14 Basic illustration -- Not used in sale of policy

If no illustration is used by an insurance agent or other authorized representative in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the agent or representative must certify to that effect in writing on a form provided by the insurer. On the same form, the applicant must acknowledge that no illustration conforming to the policy applied for was delivered and must further acknowledge an understanding that an illustration conforming to the policy as issued will be delivered no later than at the time of policy delivery. This form must be submitted to the insurer at the time of policy application.

If the policy is issued, a basic illustration conforming to the policy as issued shall be sent with the policy and signed no later than the time the policy is delivered. A copy must be delivered to the insurer and the policy owner.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:15 Basic illustration -- Delivery by mail

If the basic illustration or revised illustration is sent to the applicant or policy owner by mail from the insurer, it must include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued and return the signed copy to the insurer. The insurer’s obligation under this section is satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort is satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:16 Basic illustration -- Retention by insurer

A copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, must be retained by the insurer until three years after the policy is no longer in force. A copy need not be retained if no policy is issued.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:17 Annual report -- Requirement

If a policy is designated as one for which illustrations will be used, the insurer must provide each policy owner with an annual report on the status of the policy.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:18 Annual report -- Content for universal life policies

The annual report for universal life policies must include the following:

(1) The beginning and end date of the current report period;

(2) The policy value at the end of the previous report period and at the end of the current report period;

(3) The total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense, and riders);

(4) The current death benefit at the end of the current report period on each life covered by the policy;

(5) The net cash surrender value of the policy as of the end of the current report period;

(6) The amount of outstanding loans, if any, as of the end of the current report period; and

(7) For fixed premium policies, assuming guaranteed interest, mortality, and expense loads and continued scheduled premium payments, the policy’s net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect must be included in the report; or

(8) For flexible premium policies, assuming guaranteed interest, mortality, and expense loads, the policy’s net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect must be included in the report.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:19 Annual report -- Content for all other policies

The annual report for policies other than universal life must include the following:

(1) The current death benefit;

(2) The annual contract premium;

(3) The current cash surrender value;

(4) The current dividend;

(5) The application of current dividend; and

(6) The amount of outstanding loan.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:20 Annual report -- Policies without nonforfeiture values

Insurers writing life insurance policies that do not build nonforfeiture values must provide an annual report on these policies only for those years when a change has been made to nonguaranteed policy elements by the insurer.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:21 Annual report -- Notice if in-force illustration not included

If the annual report does not include an in-force illustration, it must contain the following notice displayed prominently: " IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling [insurer’s phone number], writing to [insurer’s name] at [insurer’s address], or contacting your agent. If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department." The insurer may vary the sequential order of the methods for obtaining an in-force illustration.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:22 Annual report -- Notice of change in nonguaranteed elements

If an adverse change in nonguaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report must contain a notice of that fact and the nature of the change prominently displayed.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:23 In-force illustration -- Furnished at policy owner’s request

Upon the request of the policy owner, the insurer must furnish an in-force illustration of current and future benefits and values based on the insurer’s present illustrated scale. This illustration must comply with the requirements of §§ 20:06:38:04, 20:06:38:05, 20:06:38:07, and 20:06:38:11. No signature or other acknowledgment of receipt of this illustration may be required.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:24 Annual certification -- Disciplined current scale and illustrated scales

The board of directors of each insurer shall appoint one or more illustration actuaries to certify the following:

(1) The disciplined current scale used in illustrations is in conformity with standards contained in the Actuarial Standard of Practice No. 24 - Compliance with the NAIC Life Insurance Illustrations Model Regulation , effective March 31, 1996, to the extent that those standards are consistent with provisions of this chapter; and

(2) The illustrated scales used in insurer-authorized illustrations meet the requirements of this chapter.

Reference: Actuarial Standards of Practice , American Academy of Actuaries. Copies may be obtained free of charge on the website: http://www.actuarialstandardsboard.org/asops.htm.

History

Source: 23 SDR 228, effective July 1, 1997; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:25 Illustration actuary requirements

The illustration actuary must meet the following requirements:

(1) Be a member in good standing of the American Academy of Actuaries;

(2) Be familiar with the standard of practice regarding life insurance policy illustrations;

(3) Not have been found by the director, following notice and hearing, to have done any of the following:

(a) Violated any provision of, or any obligation imposed by, SDCL Title 58 or other law in the course of dealings as an illustration actuary;

(b) Been found guilty of fraudulent or dishonest practices;

(d) Resigned or been removed as an illustration actuary within the past five years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards;

(4) Not fail to notify the director of any action taken by a commissioner of another state for an action similar to that under subdivision (3) of this section.

Cross-Reference: Definitions, § 20:06:37:01.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:26 Change of illustration actuary

If an insurer changes the illustration actuary responsible for all or a portion of the company’s policy forms, the insurer must notify the director of that fact promptly and disclose the reason for the change.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:27 Annual certification -- Currently payable scale

The illustration actuary must disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If nonguaranteed elements illustrated for new policies are not consistent with those illustrated for similar in-force policies, this must be disclosed in the annual certification. If nonguaranteed elements illustrated for both new and in-force policies are not consistent with the nonguaranteed elements actually being paid, charged, or credited to the same or similar forms, this must be disclosed in the annual certification.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:28 Annual certification -- Expenses

The illustration actuary must disclose in the annual certification the method used to allocate overhead expenses for all illustrations and the method of determining assumed expenses for all policy forms.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:29 Annual certification -- Additional certifications

The illustration actuary must file a certification with the board and with the director annually for all policy forms for which illustrations are used and before a new policy form is illustrated.

If an error in a previous certification is discovered, the illustration actuary must notify the board of directors of the insurer and the director promptly.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:30 Annual certification -- Inability to certify scale

If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary must notify the board of directors of the insurer and the director promptly of the inability to certify.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:31 Annual certification -- Officer of the insurer

A responsible officer of the insurer, other than the illustration actuary, must certify annually that the illustration formats meet the requirements of this chapter and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary and that the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in § 20:06:38:28.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:32 Annual certification -- Date due

The annual certification must be provided to the director each year by a date determined by the insurer.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:33 Disciplined current scale

The disciplined current scale is a scale of nonguaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience. The disciplined current scale must meet the following requirements:

(1) Be in conformity with actuarially accepted standards;

(2) Reflect only actions that have already been taken or events that have already occurred;

(3) Not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and

(4) Not permit assumed expenses to be less than minimum assumed expenses.

History

Source: 23 SDR 228, effective July 1, 1997; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 30 SDR 39, effective September 28, 2003; 33 SDR 59, effective October 5, 2006.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:34 Expenses

Each year, the insurer shall choose the method used to allocate overhead expenses for all illustrations and the method of determining assumed expenses for all policy forms from the following:

(1) Fully allocated expenses;

(2) Marginal expenses;

(3) The generally recognized expense table in Appendix A at the end of this chapter; or

(4) Another generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies and approved by the director pursuant to § 20:06:38:35.

For the purpose of determining assumed expenses, marginal expenses may be used only if greater than a generally recognized expense table. If no generally recognized expense table is approved, fully allocated expenses must be used.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

ARSD 20:06:38:35 Generally recognized expense table -- Approval

The director may approve any generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies if the expense table has been approved by the National Association of Insurance Commissioners and the director determines that the expense table provides adequate protection for the insurance buying public of this state.

History

Source: 23 SDR 228, effective July 1, 1997.
General Authority: SDCL 58-33-5.1.
Law Implemented: SDCL 58-33-5.1.

Chapter 20:06:39 Individual plans

ARSD 20:06:39:01 Dual eligibility

An individual who is otherwise eligible may not be denied coverage under SDCL 58-17-85 for the reason that the individual is also eligible for a conversion policy or other individual coverage. Individuals eligible for coverage under this section may not be required to provide proof that coverage was denied by another carrier in order to obtain coverage under SDCL 58-17-85.

History

Source: 24 SDR 35, effective September 29, 1997
General Authority: SDCL 58-17-87(2).
Law Implemented: SDCL 58-17-85, 58-17-87.

ARSD 20:06:39:02 Creditable coverage and preexisting waiting periods for newborn and adopted children

A child who was covered as a dependent within 31 days after the date of birth under the policy of a parent, or within 31 days after the start of the adoption bonding period under the policy of a prospective parent in the case of a child who has been placed for adoption, is not subject to the creditable coverage requirement of 12 months and qualifies as having 12 months of creditable coverage pursuant to SDCL 58-17-85 if any creditable coverage has been in force within the preceding 63 days. Waiting periods for preexisting conditions may not be imposed on children who meet the requirements of this section.

The requirements of this section apply to any health benefit plan as defined in SDCL subdivision 58-17-66(9).

History

Source: 24 SDR 35, effective September 29, 1997; 29 SDR 107, effective February 5, 2003.
General Authority: SDCL 58-17-30.2, 58-17-87(2).
Law Implemented: SDCL 58-17-30.2, 58-17-84, 58-17-85, 58-17-87.

ARSD 20:06:39:03 Permissible rating factors

A health benefit plan may use health status and weight in determining the rate charged for an individual when issuing a new policy or certificate. The application of rating factors based on health status or weight is limited to a 30 percent deviation from the index rate. Adjustments in the rating factors based on health status or weight may not be made after coverage is issued.

Cross-Reference: Definition of index rate, SDCL 58-17-66.

History

Source: 24 SDR 35, effective September 29, 1997.
General Authority: SDCL 58-17-75.
Law Implemented: SDCL 58-17-74.

ARSD 20:06:39:04 Repealed

Certificates required upon loss of coverage.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:39:04.01 Certificates required upon loss of coverage

A health insurance issuer must provide a certificate of creditable coverage or simply certify that the individual has creditable coverage to any individual losing coverage upon requests by or on behalf of an individual. At any time within 24 months after coverage ceases, a health insurance issuer must also provide additional certificates or certifications upon requests by or on behalf of an individual. Each certificate or certification must be provided in a reasonable and prompt fashion. A separate fee may not be charged for the provision of a certificate or certification, but the cost of this service may be factored into the policy premium.

If a health insurance issuer provides coverage in connection with another type of creditable coverage, the health insurance issuer must provide a certificate or certification as required by this section.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-17-87(2).
Law Implemented: SDCL 58-11-1, 58-17-85, 58-17-87, 58-33-36.

ARSD 20:06:39:05 Standards for determinations on length of preexisting waiting periods

A carrier must determine whether an individual is eligible for coverage pursuant to SDCL 58-17-85. In making that determination a carrier must use reasonable diligence. Reasonable diligence may include questions on an application for insurance designed to elicit information on the individual’s eligibility for coverage under SDCL 58-17-85. A carrier may not use the absence of a certificate as required by § 20:06:39:04 or 20:06:40:03 as the only method for determining eligibility for coverage pursuant to SDCL 58-17-85. The carrier must take into account all information presented by the individual. The carrier must consider the individual to have furnished a certificate if the individual attests to the period of creditable coverage, the individual presents relevant corroborating evidence of some creditable coverage during the period, and the individual cooperates with the carrier’s efforts to verify the individual’s coverage. The provisions of this section also apply to complete or partial waivers of preexisting condition waiting periods.

History

Source: 24 SDR 35, effective September 29, 1997.
General Authority: SDCL 58-17-87(2).
Law Implemented: SDCL 58-17-84, 58-17-85, 58-17-87.

ARSD 20:06:39:06 Repealed

College plans -- Bona fide association plans.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:39:06.01 Student health plans -- Bona fide association plans

Student health plans -- Bona fide association plans (effective January 1, 2014).** A student health plan is an association plan that provides coverage to students of a college or university. A student health plan that is a bona fide association plan under SDCL 58-18B-48 is not required to renew coverage once the covered individual is no longer a student.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87(1),(2),(3),(4).
Law Implemented: SDCL 58-17-69, 58-17-70, 58-17-82, 58-17-85, 58-17-87.

ARSD 20:06:39:07 Requirements for breaks in coverage when applying for a new policy

The maximum break in coverage of 63 days does not apply to the period of time after an individual applies for an individual policy if coverage is actually issued pursuant to that application.

History

Source: 24 SDR 35, effective September 29, 1997.
General Authority: SDCL 58-17-87(2),(3).
Law Implemented: SDCL 58-17-84, 58-17-85, 58-17-87.

ARSD 20:06:39:08 Repealed

Active marketing required.** Repealed.

History

Source: 24 SDR 86, effective December 31, 1997; 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:39:08.01 Active marketing required

No health insurance issuer may employ marketing practices or benefit designs that will have the effect of discouraging applicants from exercising their open enrollment rights under § 20:06:39:59. No health insurance issuer may, in any manner penalize agents for submitting applications for those qualifying for open enrollment under § 20:06:39:59. If a health insurance issuer in the individual market offers health insurance coverage in any level of coverage specified under section 1302(d)(1) of PPACA as defined in § 20:06:55:32, the issuer must offer coverage in that level to individuals who, as of the beginning of a plan year, have not attained the age of 21.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87(6).
Law Implemented: SDCL 58-17-87(6).

ARSD 20:06:39:09 Prohibited practices

No carrier or agent may, directly or indirectly, engage in the following activities:

(1) Encouraging or directing eligible individuals to refrain from filing an application for coverage with the carrier because of the health status, claims experience, industry, occupation, or geographic location of the individual; or

(2) Encouraging or directing eligible individuals to seek coverage from another carrier because of the health status, claims experience, industry, occupation, or geographic location of the individual.

History

Source: 24 SDR 86, effective December 31, 1997.
General Authority: SDCL 58-17-87(6).
Law Implemented: SDCL 58-17-87(6).

ARSD 20:06:39:10 Prohibited compensation arrangements

Each carrier must provide reasonable compensation to an insurance producer for the sale of a basic or standard health benefit plan or those plans the carrier has chosen to offer on a guaranteed issue basis in lieu of the basic and standard plans. No carrier may, directly or indirectly, enter into any contract, agreement, or arrangement with an insurance producer which provides for or results in the compensation paid to an insurance producer for the sale of a health benefit plan to be reduced because the insured qualified for coverage pursuant to SDCL 58-17-85. A carrier may pay a commission percentage that does not vary based upon health status. A carrier may reimburse producers for insureds qualified pursuant to SDCL 58-17-85 on a basis that varies the commission percentage or that is based only upon the premium of a lesser rated risk provided that the aggregate compensation received by the producer is not less than would have been paid by the carrier for a similarly situated individual who qualified for a lower rate. No compensation is required if the insurance producer is compensated by the carrier on a noncommission basis for selling its products other than basic or standard plans.

History

Source: 24 SDR 86, effective December 31, 1997; 28 SDR 105, effective February 3, 2002.
General Authority: SDCL 58-17-87(8).
Law Implemented: SDCL 58-17-87(8).

ARSD 20:06:39:11 Repealed

Guaranteed issue -- Criteria for meeting the exception for issuing coverage to high-risk individuals.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 28 SDR 105, effective February 3, 2002; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:12 Repealed

Guaranteed issue -- Premiums counted toward statutory threshold.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 28 SDR 105, effective February 3, 2002; repealed, 32 SDR 232, effective July 10, 2006

ARSD 20:06:39:13 Repealed

Guaranteed issue -- Formula for calculating percentage of premiums attributable to high-risk individuals.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 28 SDR 105, effective February 3, 2002; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:14 Repealed

Guaranteed issue -- High-risk individuals.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 28 SDR 105, effective February 3, 2002; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:15 Repealed

Guaranteed issue -- Report of meeting statutory threshold.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 28 SDR 105, effective February 3, 2002; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:16 Repealed

Guaranteed issue -- Application for determination of disproportionate share.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:17 Repealed

Guaranteed issue -- Filing of application.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:18 Repealed

Guaranteed issue -- Director’s determination.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:19 Guaranteed issue -- Effective date of coverage

Upon receipt of an application for any major medical coverage subject to SDCL 58-17-66 to 58-17-87, inclusive, from an individual eligible under SDCL 58-17-85, whether or not the product applied for is on a guaranteed issue basis, the carrier must issue the policy with an effective date corresponding to the date of the application. If an eligible person makes the application prior to the actual date of termination of existing creditable coverage, the carrier may issue the coverage with an effective date coinciding with the termination date of the creditable coverage.

History

Source: 25 SDR 13, effective August 13, 1998.
General Authority: SDCL 58-17-85, 58-17-87(14).
Law Implemented: SDCL 58-17-85, 58-17-87(14).

ARSD 20:06:39:20 Guaranteed issue -- Tolling of 63-day time frame

Any substantially completed application, whether an underwritten application or one specifically designed for guaranteed issue products, will toll the 63-day time frame for persons eligible pursuant to SDCL 58-17-85 not only for the carrier to which the application was submitted but also for any subsequent carriers from which the individual is seeking coverage.

History

Source: 25 SDR 13, effective August 13, 1998.
General Authority: SDCL 58-17-87(2)(14).
Law Implemented: SDCL 58-17-85, 58-17-87(2)(14).

ARSD 20:06:39:20.01 Required timeframe in which to submit subsequent applications for guaranteed issue plans if rejection was received after February 24, 2002

Repealed.

History

Source: 28 SDR 158, effective May 19, 2002; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:20.02 Required timeframe in which to submit subsequent applications for guaranteed issue plans if rejection was received prior to February 25, 2002

Repealed.

History

Source: 28 SDR 158, effective May 19, 2002; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:20.03 Subsequent rejections and timeframes

Repealed.

History

Source: 28 SDR 158, effective May 19, 2002; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:20.04 Exceptions for those applying during 63-day timeframe following loss of creditable coverage

Repealed.

History

Source: 28 SDR 158, effective May 19, 2002; repealed, 32 SDR 232, effective July 10, 2006.

ARSD 20:06:39:20.05 Effective date of guaranteed issue plan

Any eligible applicant that makes timely application pursuant to SDCL 58-17-85 and §§ 20:06:39:19 to 20:06:39:20.04, inclusive, must be issued coverage with an effective date consistent with the original application regardless of which carrier the application was made with or which type of benefit plan was applied for. If the original application was made prior to the date of loss of prior creditable coverage, the effective date of the guaranteed issue plan shall coincide with the date of loss of creditable coverage. For those making an initial timely application during the 63-day timeframe following loss of creditable coverage a guaranteed issue plan must be issued with an effective date that coincides with the date of the initial application. For those making application during the 63-day timeframe following loss of creditable coverage where an initial application is rejected and where a subsequent application is made within the 63-day timeframe, but more than 30 days following the rejection of the initial application, the date of the subsequent application is the effective date of the guaranteed issue plan. If the carrier and the applicant wish to make the plan's effective date other than what is required by this section, then any mutually agreeable effective date may be used.

History

Source: 28 SDR 158, effective May 19, 2002.
General Authority: SDCL 58-17-85, 58-17-87(2).
Law Implemented: SDCL 58-17-85.

ARSD 20:06:39:20.06 Repealed

Notice requirements regarding guaranteed issue when rejecting applications.** Repealed.

History

Source: 28 SDR 158, effective May 19, 2002; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:21 Definition of ordinarily prudent person in preexisting condition clauses

For diseases that include symptoms of denial or failure to recognize the disease or illness, a carrier shall define an ordinarily prudent person within the definition of a preexisting condition in terms of the claimant's health-related circumstances and how a similarly situated person would be expected to act in seeking medical treatment or advice for that disease or illness. Nothing in this section prohibits a carrier from investigating the existence of denial symptoms or failure to recognize such disease or illnesses on a case by case basis. This section applies to the definition of an ordinarily prudent person within the preexisting condition clauses in SDCL 58-17-84 and 58-17-97 and does not apply to the contestability clause of a contract.

History

Source: 25 SDR 90, effective January 3, 1999.
General Authority: SDCL 58-17-87(3)(4)(11)(15).
Law Implemented: SDCL 58-17-84, 58-17-97.

ARSD 20:06:39:22 Fair market standards for carriers

A carrier may not terminate, fail to renew, or limit its contract or agreement of representation with an agent for any reason related to the health status, claims experience, occupation, or geographic location of the individuals placed or sought to be placed by the agent with the carrier.

History

Source: 25 SDR 85, effective December 23, 1998.
General Authority: SDCL 58-17-87(6)(8).
Law Implemented: SDCL 58-17-87(6)(8).

ARSD 20:06:39:23 Group applicability to individual market

The provisions of §§ 20:06:40:17 to 20:06:40:17.02, inclusive, apply to health insurance coverage offered by a health insurance issuer in the individual market in the same manner as they apply to a health insurance issuer in connection with a group health plan in small or large groups.

History

Source: 27 SDR 15, effective September 6, 2000.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:24 Repealed

Requirements for standard plan -- Schedule of benefits.** Repealed.

History

Source: 27 SDR 69, effective January 15, 2001; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:25 Repealed

Requirements for standard plan -- Eligible expenses.** Repealed.

History

Source: 27 SDR 69, effective January 15, 2001; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:26 Repealed

Requirements for standard plan -- Allowable exceptions and limitations.** Repealed.

History

Source: 27 SDR 69, effective January 15, 2001; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:27 Repealed

Requirements for basic plan -- Schedule of benefits.** Repealed.

History

Source: 27 SDR 69, effective January 15, 2001; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:28 Repealed

Requirements for basic plan -- Eligible expenses.** Repealed.

History

Source: 27 SDR 69, effective January 15, 2001; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:29 Repealed

Requirements for basic plan -- Allowable exceptions and limitations.** Repealed.

History

Source: 27 SDR 69, effective January 15, 2001; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:30 Usual, customary, and reasonable charges for standard and basic plans

For any claim for which the usual, customary, and reasonable policy or contract provision is used, the eligible benefits must be paid at no less than the eightieth percentile of the usual, customary, and reasonable amount for the standard and basic plans. Benefits obtained from network providers may not use the usual, customary and reasonable provisions.

History

Source: 27 SDR 69, effective January 15, 2001.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-85.

ARSD 20:06:39:31 Repealed

Network available for standard and basic plans.** Repealed.

History

Source: 27 SDR 69, effective January 15, 2001; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:32 Contract of more than six months -- Defined

The phrase, contract of more than six months duration, means any contract that provides for renewal by the insured for a period beyond six months after the inception date. The phrase does not include short-term major medical plan that is nonrenewable.

History

Source: 30 SDR 39, effective September 28, 2003.
General Authority: SDCL 58-17-87(4).
Law Implemented: SDCL 58-17-66(9).

ARSD 20:06:39:33 Repealed

Coverages prior to August 1, 2003.** Repealed.

History

Source: 32 SDR 232, effective July 10, 2006; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:39:34 Repealed

Disclosure requirements.** Repealed.

History

Source: 34 SDR 200, effective January 28, 2008; 37 SDR 215, effective May 31, 2011; 39 SDR 203, effective June 10, 2013, repealed, January 1, 2014.

ARSD 20:06:39:34.01 Disclosure requirements

Any policy or certificate of specified disease, short-term hospital-surgical care having a duration of six months or less but not including short-term major medical, hospital confinement indemnity, limited benefit health insurance, or other policy or certificate that provides less than essential health benefits, must clearly and prominently disclose that the policy is a limited benefit health insurance plan. The following is an example of a disclosure for limited benefit coverages that is in compliance, provided it is prominent and otherwise meets the requirements of this section:

This limited health benefits plan does not provide comprehensive medical coverage. It is a basic or limited benefits policy and is not intended to cover all medical expenses. This plan is not designed to cover the costs of a serious or chronic illness.

For short-term major medical policies clear and prominent disclosure of the preexisting condition limitation and the short-term duration of the product must be made. The following notice is an example of a short-term major medical disclosure that is in compliance provided it is prominent and otherwise meets the requirements of this section:

This policy is a short-term medical insurance [policy/certificate] that provides coverage for less than 12 months and excludes coverage for preexisting conditions. Short-term major medical plans do not satisfy the requirement for individuals to have insurance under the Patient Protection and Affordable Care Act and individuals who have purchased short-term major medical coverage may be subject to federal penalties for not having minimum essential coverage.

The disclosures required by this section must be contained on the first page of the policy. The requirements of this section also apply to outlines of coverage. Nothing in this section applies to Medicare supplement, or to long-term care, disability, or credit health insurance coverages.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014; 47 SDR 68, effective December 7, 2020.
General Authority: SDCL 58-17-87(6), 58-33A-7(13).
Law Implemented: SDCL 58-17-70.

ARSD 20:06:39:34.02 Renewability of short term major medical plans

20 : 06 : 39 : 34.02 . Renewability of short term major medical plans . For short term major medical plans, as defined in SDCL subdivision 58-17-66(14), the policy must specify an expiration date that is less than 12 months after the original effective date of the policy and, taking into account renewals or extensions, may have a duration of no more than 36 months in total.

History

Source: 47 SDR 68, effective December 7, 2020.
General Authority: SDCL58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:35 Policy not subject to group requirements

If a carrier upon application for an individual health benefit plan takes reasonable steps to ensure that premiums are not paid by an employer, then a carrier, upon becoming aware of a premium payment by an employer for an individual health benefit plan, must request substitute payment from the individual insured which is not paid by an employer

A carrier which fails to either take reasonable steps to ensure premiums are not paid by an employer during the application process or fails to request substitute payment from the individual insured which is not paid by an employer must treat the policy or policies as group contracts if a payment is received from an employer unless the employer has only one employee.

History

Source: 34 SDR 200, effective January 28, 2008.
Law Implemented: SDCL 58-17-87.
General Authority: SDCL 58-17-70, 58-18B-2.

ARSD 20:06:39:36 Medically necessary leave of absence defined

For purposes of §§ 20:06:39:37 to 20:06:39:39, inclusive, the phrase medically necessary leave of absence means a leave of absence from an accredited institution of higher learning or any other change in enrollment at such an institution that

(1) Commences while a qualifying child is suffering from a serious illness or injury;

(2) Is medically necessary; and

(3) Causes the qualifying child to lose student status for purposes of coverage under the terms of the plan.

History

Source: 36 SDR 96, effective December 9, 2009.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:37 Dependent coverage

Any health insurance issuer issuing a health benefit plan that provides dependent coverage for any qualifying child may not terminate coverage due to a medically necessary leave of absence for a period of twelve months after the first day of leave or the date on which such coverage would otherwise terminate under the terms of the plan, whichever is earlier. A qualifying child whose benefits are continued under this section is entitled to the same benefits as if the qualifying child continued to be a covered student and was not on a medically necessary leave of absence.

The health benefit plan must receive written certification of the medically necessary leave of absence by a treating physician of the qualifying child that states that the child is suffering from a serious illness or injury and that the leave of absence or other change of enrollment is medically necessary.

History

Source: 36 SDR 96, effective December 9, 2009; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:38 Notification

Any health insurance carrier providing health insurance coverage, shall include, with any notice regarding a requirement for certification of student status for coverage under the plan, a description of the terms of § 20:06:39:37 for continued coverage during any medically necessary leave of absence. Such description shall be in language that is understandable to the typical plan participant.

History

Source: 36 SDR 96, effective December 9, 2009.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:39 Continued application in case of changed coverage

The provisions of §§ 20:06:39:37 and 20:06:39:38 apply if there is a change in coverage for the dependent child and if the following occur:

(1) Dependent child of a participant or beneficiary is in a period of coverage under a health benefit plan offered in connection with such a plan, pursuant to a medically necessary leave of absence of the child;

(2) The manner in which the participant or beneficiary is covered under the plan changes, whether through a change in health insurance coverage or health insurance issuer, a change between health insurance coverage and self-insured coverage, or otherwise; and

(3) The coverage as so changed continues to provide coverage of beneficiaries as dependent children.

This section applies to coverage of the child under the changed coverage for the remainder of the period of the medically necessary leave of absence of the dependent child under the plan in the same manner as it would have applied if the changed coverage had been the previous coverage.

History

Source: 36 SDR 96, effective December 9, 2009.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:40 Effective date

Sections 20:06:39:36 to 20:06:39:39, inclusive, apply to plan years beginning after December 31, 2009.

History

Source: 36 SDR 96, effective December 9, 2009.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:41 Creditable coverage -- Children's Health Insurance Program

Coverage provided pursuant to a state's Children's Health Insurance Program (CHIP) under Title XXI of the Social Security Act is creditable coverage.

History

Source: 36 SDR 127, effective March 1, 2010.
General Authority: SDCL 58-17-87(13).
Law Implemented: SDCL 58-17-69, 58-17-85, 58-18-44.

ARSD 20:06:39:42 Association health insurance plans subject to individual market rating requirements

A health insurance issuer issuing health policies or certificates to an association must file its premium rates in accordance with the requirements of SDCL 58-17-4.1 to 58-17-4.3, inclusive, and chapter 20:06:22. The requirements of this section apply to rates for any newly approved policies or certificates to be offered in this state and to any increase in premium rates for previously issued certificates that take effect after June 30, 2010. This section does not apply to any association plan exclusively issued to employers as members of an association, to any association plan that is an excepted benefit as defined by SDCL 58-17-69(13), or to any association plan which provides blanket health insurance.

Student health plans must comply with the applicable requirements of this chapter for policy years beginning after December 31, 2013. For purposes of student plans, policy year is not dependent upon the effective date of coverage of individual students or dependents.

History

Source: 36 SDR 209, effective July 1, 2010; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87(5).
Law Implemented: SDCL 58-17-4.1, 58-17-4.2, 58-17-4.3.

ARSD 20:06:39:43 Definitions

Unless otherwise provided, the following terms are defined for purposes of §§ 20:06:39:43 to 20:06:39:56, inclusive:

(1) "Collect," with respect to information, to request, require, or purchase such information;

(2) "Family member," with respect to an individual, a dependent of the individual or any other person who is a first-degree, second-degree, third-degree, or fourth-degree relative of the individual or of a dependent of the individual. Relatives by affinity such as by marriage or adoption are treated the same as relatives by consanguinity that is, relatives who share a common biological ancestor. In determining the degree of the relationship, relatives by less than full consanguinity such as half-siblings, who share only one parent are treated the same as relatives by full consanguinity such as siblings who share both parents;

(3) "First-degree relatives," parents, spouses, siblings, and children;

(4) "Fourth-degree relatives," great-great grandparents, great-great grandchildren, and children of first cousins;

(5) "Genetic information:"

(a) The individual's genetic tests;

(b) The genetic tests of family members of the individual;

(d) Any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by the individual or any family member of the individual.

With respect to a pregnant woman or a family member of the pregnant woman, the term includes genetic information of any fetus carried by the pregnant woman. With respect to an individual or a family member of the individual who is utilizing an assisted reproductive technology, the term includes genetic information of any embryo legally held by the individual or family member. However, the term does not include information about sex or age of any individual;

(6) "Genetic services," genetic test; genetic counseling including obtaining, interpreting, or assessing genetic information; or genetic education;

(7) "Genetic test," an analysis of human DNA, RNA, chromosomes, proteins, or metabolites, if the analysis detects genotypes, mutations, or chromosomal changes. However, a genetic test does not include an analysis of proteins or metabolites that is directly related to a manifested disease, disorder, or pathological condition. Therefore, a test to determine whether an individual has a BRCA1 or BRCA2 variant is a genetic test. Similarly, a test to determine whether an individual has a genetic variant associated with hereditary nonpolyposis colorectal cancer is a genetic test. However, an HIV test, complete blood count, cholesterol test, liver function test, or test for the presence of alcohol or drugs is not a genetic test;

(8) "Manifestation or manifested," with respect to a disease, disorder, or pathological condition, that an individual has been or could reasonably be diagnosed with the disease, disorder, or pathological condition by a health care professional with appropriate training and expertise in the field of medicine involved. A disease, disorder, or pathological condition is not manifested if a diagnosis is based principally on genetic information;

(9) "Payment," with respect to the activities undertaken by a health plan, to obtain premiums or to determine or fulfill its responsibility for coverage and the provision of benefits under the health plan, or by a health care provider or health plan, to obtain or provide reimbursement for the provision of health care. However, these activities include:

(a) Determinations of eligibility or coverage including coordination of benefits or the determination of cost sharing amounts, and adjudication or subrogation of health benefit claims;

(b) Risk adjusting amounts due based on enrollee health status and demographic characteristics;

(c) Billing, claims management, collection activities, obtaining payment under a contract for reinsurance including stop-loss insurance and excess of loss insurance, and related health care data processing;

(d) Review of health care services with respect to medical necessity, coverage under a health plan, appropriateness of care, or justification of charges;

(e) Utilization review activities, including precertification and preauthorization of services, and concurrent and retrospective review of services; and

(f) Disclosure to consumer reporting agencies of the name and address, date of birth, social security number, payment history, account number or name and address of the health care provider or health plan, or both, relating to collection of premiums or reimbursement;

(10) "Second-degree relatives," grandparents, grandchildren, aunts, uncles, nephews, and nieces;

(11) "Third-degree relatives," great-grandparents, great-grandchildren, great aunts, great uncles, and first cousins;

(12) "Underwriting purposes," with respect to an issuer offering health insurance coverage in the individual market:

(a) Rules for or determination of eligibility, including enrollment and continued eligibility for benefits under the plan or coverage, including changes in deductibles or other cost-sharing mechanisms in return for activities such as completing a health risk assessment or participating in a wellness program;

(b) The computation of premium or contribution amounts under the plan or coverage, including discounts, rebates, payments in kind, or other premium differential mechanisms in return for activities such as completing a health risk assessment or participation in a wellness program;

(d) Other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87, 58-17-87(4).
Law Implemented: SDCL 58-17-87, 58-33-13.

ARSD 20:06:39:44 Prohibition on genetic information in setting premium rates

An issuer offering health insurance coverage in the individual market may not adjust premium amounts for an individual on the basis of genetic information regarding the individual or a family member of the individual.

Nothing in this section precludes an issuer from adjusting premium amounts for an individual on the basis of a manifestation of a disease or disorder in that individual, or on the basis of a manifestation of a disease or disorder in a family member of that individual if the family member is covered under the policy that covers the individual.

However, the manifestation of a disease or disorder in one individual may not also be used as genetic information about other individuals covered under the policy issued to that individual or used to further increase premium amounts.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-11-1, 58-17-4.2, 48-17-74.1, 58-17-87, 58-33-13.

ARSD 20:06:39:45 Limitation on requesting or requiring genetic testing

20:06:39 :45. Limitation on requesting or requiring genetic testing. Except as otherwise provided, an issuer offering health insurance coverage in the individual market may not request or require an individual or a family member of the individual to undergo a genetic test.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:46 Exceptions to requiring genetic testing

20:06:39 :46. Exceptions to requiring genetic testing. Nothing in § 20:06:39:45 limits the authority of a health care professional who is providing health care services to an individual to request that the individual undergo a genetic test.

Nothing in § 20:06:39:45 precludes an issuer offering health insurance in the individual market from obtaining and using the results of a genetic test in making a determination regarding payment. Therefore, if an issuer conditions payment for an item or service based on its medical appropriateness and the medical appropriateness of the item or service depends on a covered individual's genetic makeup, the issuer is permitted to condition payment on the outcome of a genetic test and may refuse payment if the covered individual does not undergo the genetic test. An issuer in the individual market may only request the minimum amount of information necessary to make a determination regarding payment. The minimum amount of information necessary is determined in accordance with the minimum necessary standard in 45 CFR 164.502(b) of the privacy regulations issued under the Health Insurance Portability and Accountability Act.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:47 Research exception

An issuer may request, but not require, that an individual or family member covered under the same policy undergo a genetic test if all of the following conditions are met:

(1) The issuer makes the request pursuant to research, as defined in 45 CFR 46.102(d), that complies with 45 CFR Part 46 or equivalent federal regulations, and any applicable state or local law or regulations for the protection of human subjects in research; and

(2) The issuer makes the request in writing, and the request clearly indicates to each individual or, in the case of a minor child, to the legal guardian of the child that:

(a) Compliance with the request is voluntary; and

(b) Noncompliance will have no effect on eligibility for benefits or premium amounts. The issuer must complete a copy of the Notice of Research Exception form found in Appendix B and submit the form to the federal Secretary of Health and Human Services. No genetic information collected or acquired under this section may be used for underwriting purposes.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:48 Prohibitions on collection of genetic information for underwriting purposes

20:06:39 :48. Prohibitions on collection of genetic information for underwriting purposes. An issuer offering health insurance coverage in the individual market may not collect genetic information for underwriting purposes.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:49 Medical appropriateness

An issuer in the individual market may limit or exclude a benefit based on whether the benefit is medically appropriate. The determination of whether the benefit is medically appropriate is not within the meaning of underwriting purposes. Therefore, if an issuer conditions a benefit based on its medical appropriateness and the medical appropriateness of the benefit depends on a covered individual's genetic information, the issuer may condition the benefit on the genetic information. An issuer may only request the minimum amount of genetic information necessary to determine medical appropriateness and may deny the benefit if the covered individual does not provide the genetic information required to determine medical appropriateness.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:50 Collection of genetic information prior to or in connection with enrollment

An issuer offering health insurance coverage in the individual market may not collect genetic information with respect to any individual prior to the individual's enrollment under the coverage or in connection with that individual's enrollment. Whether or not an individual's information is collected prior to that individual's effective date of coverage is determined based upon the time of collection.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:51 Incidental collection exception

If an issuer offering health insurance coverage in the individual market obtains genetic information incidental to the collection of other information concerning any individual, the collection is not a violation of § 20:06:39:50, as long as the collection is not for underwriting purposes in violation of §§ 20:06:39:48 and 20:06:39:49. The incidental collection exception in this section does not apply to any collection where it is reasonable to anticipate that health information will be received, unless the issuer explicitly provides that genetic information should not be provided to the issuer.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:52 Prohibition on genetic information as a condition of eligibility

An issuer offering health insurance coverage in the individual market may not establish rules for the eligibility, including continued eligibility, of any individual to enroll in individual health insurance coverage based on genetic information.

Nothing in this section precludes an issuer from establishing rules for eligibility for an individual to enroll in individual health insurance coverage based on the manifestation of a disease or disorder in that individual, or in a family member of that individual when the family member is covered under the policy that covers the individual.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87, 58-17-87(2).
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:53 Prohibition on genetic information as preexisting condition

An issuer offering health insurance coverage in the individual market may not, on the basis of genetic information, impose any preexisting condition exclusion with respect to that coverage.

Nothing in this section precludes an issuer from imposing any preexisting condition exclusion for an individual with respect to health insurance coverage on the basis of a manifestation of a disease or disorder in that individual.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-84(4), 58-17-87.

ARSD 20:06:39:54 Medicare supplemental health insurance

The requirements of §§ 20:06:39:43 to 20:06:39:56, inclusive, do not apply to Medicare supplemental health insurance policies. However, Medicare supplemental health insurance policies are subject to §§ 20:06:13:87 to 20:06:13:92, inclusive.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:55 Applicability to excepted benefits

Sections 20:06:39:43 to 20:06:39:54, inclusive, do not apply to excepted benefits as defined by 42 USC 300gg-91(c), as of August 1, 2010.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:56 Effective date

Sections 20:06:39:43 to 20:06:39:54 apply for plan years beginning on or after the effective date of those sections.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:57 Guaranteed availability of coverage in the individual market

After December 31, 2013, a health insurance issuer that offers health insurance coverage in the individual market in this state must offer to any individual in the state all products that are approved for sale in the applicable market, and must accept any individual that applies for any of those products. Nothing in this section requires an issuer to offer or provide coverage outside its approved service area.

A health insurance issuer offering health insurance coverage in the individual market, other than excepted benefits, must ensure that such coverage includes the essential health benefits package as defined in § 20:06:56:03 effective for plan or policy years beginning after December 31, 2013. Except for catastrophic plans, any plans not providing at least a bronze level of coverage or not providing essential health benefits as defined in § 20:06:56:03 must be issued as a supplement to other health insurance coverage and may not be used to replace essential health benefits coverage, a grandfathered health benefit plan or a catastrophic plan.

An issuer may but is not required to confirm residence of any applicant or insured to confirm eligibility. Nothing requires an issuer to exclude nonresidents or international students or their dependents from coverage on a student health plan.

Nothing in this section applies to long-term care, medicare supplement, short-term major medical, accident only, stand-alone dental, TRICARE, disability income, or other policies providing coverage based upon a disability trigger.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:58 Denial of coverage

After December 31, 2013, a health insurance issuer may deny health insurance coverage in the individual market outside the Exchange if the issuer has demonstrated to the director the following:

(1) The health insurance issuer does not have the financial reserves necessary to underwrite additional coverage;

(2) The health insurance issuer is applying the denial uniformly to all individuals in the individual market without regard to the claims experience of those individuals, and their dependents or any health status-related factor relating to such individuals, and dependents.

An issuer that denies coverage to any individual may not offer coverage in the individual market before the later of the following dates: the 181^st day after the date the issuer denies coverage or the date the issuer demonstrates to the director that the issuer has sufficient financial reserves to underwrite additional coverage.

Nothing in this section limits an issuer's ability to renew coverage already in force or relieve the issuer of the responsibility to renew that coverage. Coverage offered after the 180-day period specified in this section is subject to the requirements of this section and § 20:06:55:42. The ability to offer or renew coverage as specified by this section and § 20:06:55:42 is subject to all applicable service area requirements and restrictions.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:59 Open enrollment

After December 31, 2013, a health insurance issuer must provide an initial open enrollment period and annual open enrollment periods outside the individual Exchange, during which qualified individuals may enroll in a non-grandfathered plan or enrollees may change plans. Except as provided by § 20:06:39:63, a health insurance issuer may restrict enrollment to a qualified individual or an enrollee to change plans during the initial open enrollment period, the annual open enrollment period, or a special enrollment period for which the qualified individual or enrollee has been determined eligible.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:60 Initial open enrollment period

The initial open enrollment period in the individual market outside the individual market Exchange begins October 1, 2013, and extends through March 31, 2014. The effective coverage dates for the initial open enrollment period are as follows:

(1) For a person enrolling on or before December 15, 2013, the issuer must make the coverage effective on January 1, 2014;

(2) For a person enrolling between the first and fifteenth day of January 1, 2014, to March 15, 2014, the issuer must make coverage effective on the first day of the following month; and

(3) For a person enrolling between the sixteenth and last day of the month for any month between December 2013 and March 31, 2014, the issuer must make coverage effective on the first day of the second following month.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:61 Annual open enrollment period

Health insurance issuers must provide an annual open enrollment period for the individual market.

History

Source: 39 SDR 203, effective June 10, 2013; 41 SDR 93, effective December 3, 2014; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:62 Special enrollment period effective dates

After December 31, 2013, a health insurance issuer must provide special enrollment periods consistent with this section outside the Exchange, during which qualified individuals and enrollees may enroll in nongrandfathered health plans or change enrollment from one plan to another. Once a qualified individual is determined eligible for a special enrollment period, the health insurance issuer must ensure that the qualified individual's effective date of coverage is:

(1) Between the first and the fifteenth day of any month, the plan must ensure a coverage effective date of the first day of the following month;

(2) Between the sixteenth and the last day of any month, the plan must ensure a coverage effective date of the first day of the second following month;

(3) In the case of birth, adoption or placement for adoption, the plan must ensure that coverage is effective on the date of birth, adoption, or placement for adoption; and

(4) In the case of marriage, or in the case where a qualified individual loses minimum essential coverage, the plan must ensure coverage is effective on the first day of the following month.

Unless specifically stated otherwise herein, a qualified individual or enrollee has 60 days from the date of a triggering event to select a nongrandfathered health plan.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:63 Coverage issued outside open enrollment

A health insurance issuer may issue a health plan to any individual applying for coverage outside of an insurance Exchange and outside of an open enrollment period. For health plans offered outside the exchange and outside an open enrollment the following apply:

(1) For those that are uninsured the issuer may require a waiting period of not more than 90 days from the date of application until coverage is effective;

(2) For uninsured applicants only a bronze level plan or, if eligible, a catastrophic plan may be issued with an effective date consistent with open enrollment standards;

(3) For those with creditable coverage within 63 days of the date of application, only coverage in the same metal level as the applicant's prior coverage may be issued. This section applies to all applications received after March 31, 2014, in the individual market outside the Exchange that are not received during an open enrollment period. For purposes of this section an uninsured does not include a person who lapsed or voluntarily terminated coverage in the past 12 months prior to applying.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:64 Enrollment in catastrophic plans

A health plan is a catastrophic plan if it meets the following conditions:

(1) Meets all applicable requirements for health insurance coverage in the individual market and is offered only in the individual market;

(2) Does not provide a bronze, silver, gold, or platinum level of coverage described in § 20:06:56:11;

(3) Provides coverage of the essential health benefits under § 20:06:56:03 once the annual limitation on cost sharing is reached;

(4) Provides coverage for at least three primary care visits per year before reaching the deductible; and

(5) Covers only individuals who meet either of the following conditions:

(a) Have not attained the age of 30 prior to the first day of the plan year;

(b) Have received a certificate of exemption for the reasons identified in section 1302(e)(2)(B)(i) or (ii) of PPACA as defined in § 20:06:55:32.

A catastrophic plan may not impose any cost-sharing requirements, such as a copayment, coinsurance, or deductible, for preventive services, in accordance with § 20:06:56:03. For other than self-only coverage, each individual enrolled must meet the requirements.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:65 Student health insurance coverage

Student health insurance coverage is considered to be available only through a bona fide association. A health insurance issuer that offers student health insurance coverage is not required to accept persons who are not students or dependents of students in such coverage.

A health insurance issuer that offers student health insurance coverage is not required to renew or continue coverage for individuals who are no longer students or dependents of students.

This section applies to any non-grandfathered student health coverage issued or renewed after December 31, 2013.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:66 Clinical trial

After December 31, 2013, a health insurance issuer that offers a health benefit plan providing health insurance coverage individual market in this state may not:

(1) Deny participation by a qualified individual in an approved clinical trial;

(2) Deny, limit or impose additional conditions on the coverage of routine patient costs for items or services furnished in connection with participation in the trial; or

(3) Discriminate against an individual on the basis of the individual's participation in an approved clinical trial.

A network plan may require a qualified individual who wishes to participate in an approved clinical trial to participate in a trial that is offered through a health care provider who is part of the network plan if the provider is participating in the trial and the provider accepts the individual as a participant in the trial.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:67 Nonrenewal of coverage

After December 31, 2013, a health insurance issuer offering health insurance coverage in the individual market is required to renew or continue in force the coverage at the option of the individual. An issuer may nonrenew or discontinue health insurance coverage offered in the individual market based only on the occurrence of one or more of the following:

(1) Nonpayment of premiums. The plan sponsor or individual, as applicable, has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage, including any timeliness requirements;

(2) Fraud. The plan sponsor or individual, as applicable, has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact in connection with the coverage;

(3) Termination of plan. The issuer is ceasing to offer coverage in the market in accordance with § 20:06:39:58;

(4) Enrollees' movement outside service area. For network plans, there is no longer any enrollee under the plan who lives, resides, or works in the service area of the issuer; and

(5) Association membership ceases. For coverage made available in the small or large group market only through one or more bona fide associations, if the employer's membership in the bona fide association ceases, but only if the coverage is terminated uniformly without regard to any health status-related factor relating to any covered individual.

This section does not apply to grandfathered plans.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:68 Discontinuing a particular product

After December 31, 2013, in any case in which a health insurance issuer elects to discontinue offering a particular product in the individual market, that product may only be discontinued by the issuer if the following occurs:

(1) The issuer provides notice in writing to each individual provided that particular product in that market covered under such coverage of the discontinuation at least 90 calendar days before the date the coverage will be discontinued;

(2) The issuer offers to each individual provided that particular product the option, on a guaranteed issue basis, to purchase all health insurance coverage currently being offered by the issuer to an individual health insurance coverage; and

(3) In exercising the option to discontinue that product and in offering the option of coverage, the issuer acts uniformly without regard to the claims experience of those individuals, or any health status-related factor relating to any participant or beneficiary covered or new participant or beneficiary who may become eligible for such coverage.

This section does not apply to grandfathered plans.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:69 Discontinuing all coverage

After December 31, 2013, an issuer may elect to discontinue offering all health insurance coverage in the individual market, or all markets, in a state in accordance with applicable state law only if the issuer meets all of the following conditions:

(1) The issuer provides notice in writing to the director and to each individual covered under the discontinued coverage at least 180 calendar days prior to the date the coverage will be discontinued; and

(2) All health insurance policies issued or delivered for issuance by the issuer in the state in the applicable market or markets are discontinued and not renewed.

An issuer that elects to discontinue offering all health insurance coverage in a market or markets in a state may not issue coverage in the applicable market or markets in the state for a period of five years beginning on the date of discontinuation for the last coverage discontinued.

This section does not apply to grandfathered plans.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:70 Special enrollment periods for marriage, birth, and adoption

After December 31, 2013, a special enrollment period occurs for the individual, the individual's spouse, and the individual's dependents if the following conditions are met:

(1) A group health benefit plan makes coverage available with respect to a dependent of an individual;

(2) The individual is an employee; and

(3) The individual becomes married or a child becomes a new dependent as a result of marriage, birth, adoption, or placement for adoption.

The special enrollment period must be at least 60 days in length and must begin 30 days after the qualifying event. If coverage required pursuant to this section is applied for, the effective date for coverage in the case of a marriage may be no later than the first day of the first calendar month after the date the completed request is received by the plan or, in the case of a dependent, the date of birth or the start of the adoption bonding period.

This section does not apply to grandfathered plans.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:71 Special enrollment triggers

After December 31, 2013, a health insurance issuer offering health insurance coverage in the individual market outside the Exchange must allow for an individual or dependent to enroll or change from one plan to another as a result of the following qualifying events:

(1) The death of the covered individual;

(2) The termination of individual's employer coverage other than by reason of gross misconduct, or reduction of hours of the covered employee's spouse;

(3) The divorce or legal separation;

(4) Individual becoming entitled to benefits under XVII of the Social Security Act;

(5) Dependent child ceasing to be dependent child;

(6) A proceeding in a case under Title 11, United States Code, commencing on or after July 1, 1986, with respect to the employer from whose employment the covered individual retired at any time;

(7) An individual gains a dependent or becomes a dependent through marriage, birth, adoption, or placement for adoption; and

(8) A qualified individual or enrollee gains access to nongrandfathered health plan as a result of a permanent move.

A health insurance issuer in the individual market must provide, with respect to individuals enrolled in non-calendar year, a limited open enrollment period beginning on the date that is 30 calendar days prior to the date the policy year ends in 2014.

This section does not apply to grandfathered plans.

History

Source: 39 SDR 203, effective June 10, 2013; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:72 Preexisting condition exclusion and waiting period prohibited

No health insurance issuer offering an individual health benefit plan may impose any preexisting condition exclusion or preexisting condition waiting period with respect to such coverage.

Grandfathered plans are not required to remove preexisting condition waiting periods on exclusionary riders.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:73 Health insurance issuer defined

A health insurance issuer is any person that provides health insurance in this state including an insurance company, a prepaid hospital, or similar plan, a health maintenance organization, a multiple employer welfare arrangement, and any other entity providing a plan of health insurance or health benefits subject to state insurance regulation. A health insurance issuer does not include a person providing only excepted benefits.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:39:74 Applicability

Effective January 1, 2014, §§ 20:06:39:03, 20:06:39:05, 20:06:39:07, 20:06:39:10, 20:06:39:19, 20:06:39:20, 20:06:39:20.05, and 20:06:39:30, only apply to grandfathered plans.

Sections 20:06:39:04, 20:06:39:06, 20:06:39:08, and 20:06:39:34 are repealed effective January 1, 2014.

Sections 20:06:39:04.01, 20:06:39:06.01, 20:06:39:08.01, and 20:06:39:34.01 are effective January 1, 2014.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

Chapter 20:06:40 Employer plans

ARSD 20:06:40:01 Repealed

Waiting periods, affiliation periods, and applications relating to breaks in coverage.** Repealed.

History

Source: 24 SDR 35, effective September 19, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:40:01.01 Waiting periods and affiliation periods relating to breaks in coverage

Waiting periods and affiliation periods relating to breaks in coverage** . Waiting periods and delays in the provision of coverage by the employer do not count toward the maximum break in coverage of 63 days for purposes of individual market enrollment. An affiliation period may not be used in counting toward the maximum break in coverage. For employees who have a waiting period after employment to qualify for coverage under the employer's health benefit plan, the enrollment date is the date of employment. For late enrollees, the enrollment date is the date coverage begins.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-43, 58-18-44, 58-18-45, 58-18-48, 58-18-79.

ARSD 20:06:40:02 Short-term, limited duration policies

Creditable coverage includes short-term limited duration policies. Short-term, limited duration insurance means health insurance coverage that is provided under a contract with a health insurance issuer and which specifies in the contract an expiration date that is less than 12 months after the original effective date of the contract and, taking into account renewals or extensions, may have a duration of no more than 36 months in total. The renewals or extensions referenced in this section may be offered by the issuer or elected by the policyholder without the health insurance issuer's consent.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, effective June 10, 2013; 47 SDR 68, effective December 7, 2020.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-44, 58-18-79.

ARSD 20:06:40:03 Repealed

Certificates required upon losing coverage.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:40:03.01 Certificates required upon losing coverage

A health insurance issuer must provide a certificate or simply certify that the individual has creditable coverage to any individual losing coverage or qualifying for continuation under the Consolidated Omnibus Budget Reconciliation Act (COBRA), 29 U.S.C.S. § 1163, as in effect July 1, 1997, or SDCL chapter 58-18 upon requests by or on behalf of an individual. At any time within 24 months after coverage ceases, a health insurance issuer must also provide additional certificates or certifications upon requests by or on behalf of an individual. Each certificate or certification must be provided in a reasonable and prompt fashion. A separate fee may not be charged for the provision of a certificate or certification, but the cost of this service may be factored into the policy premium.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014; 42 SDR 83, effective December 3, 2015.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-11-1, 58-18-44, 58-18-45, 58-18-48, 58-18-79, 58-33-36.

ARSD 20:06:40:04 Standards for determinations on length of preexisting waiting periods

A carrier must determine whether an individual is eligible for coverage pursuant to SDCL 58-18-48. In making that determination a carrier must exercise reasonable diligence. Reasonable diligence may include questions on an application for insurance designed to elicit information on the individual’s eligibility for coverage under SDCL 58-18-48. A carrier may not use the absence of a certificate described in § 20:06:39:04 or 20:06:40:03 as the only method of determining eligibility for coverage pursuant to SDCL 58-18-48. The carrier must take into account all information presented by the individual. The carrier must consider the individual to have furnished a certificate if the individual attests to the period of creditable coverage, presents relevant corroborating evidence of some creditable coverage during the period, and cooperates with the carrier’s efforts to verify the individual’s coverage. The provisions of this section also apply to complete or partial waivers of preexisting condition waiting periods.

History

Source: 24 SDR 35, effective September 29, 1997.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-44, 58-18-45, 58-18-48, 58-18-79.

ARSD 20:06:40:05 Special enrollment periods for marriage, birth, and adoption

A special enrollment period occurs for the individual, the individual's spouse, and the individual's dependents if the following conditions are met:

(1) A group health benefit plan makes coverage available with respect to a dependent of an individual;

(2) The individual is an employee; and

(3) The individual becomes married or a child becomes a new dependent as a result of marriage, birth, adoption, or placement for adoption.

The special enrollment period must be at least 31 days in length and must begin 30 days after the qualifying event. If coverage required pursuant to this section is applied for, the effective date for coverage in the case of a marriage may be no later than the first day of the first calendar month after the date the completed request is received by the plan or, in the case of a dependent, the date of birth or the start of the adoption bonding period.

History

Source: 24 SDR 35, effective September 29, 1997; 28 SDR 157, effective May 19, 2002; 30 SDR 189, effective June 7, 2004; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-43, 58-18-44, 58-18-45, 58-18-48, 58-18-79.

ARSD 20:06:40:05.01 Special enrollment periods for loss of other coverage

20:06:40 :05.01. Special enrollment periods for loss of other coverage. If an individual was eligible for coverage and declined coverage due to the existence of other coverage in force, the individual, the individual's spouse, and the individual's dependents are eligible for a special enrollment period on loss of the other coverage, in addition to those events listed as exceptions to being a late enrollee under SDCL 58-18-43.

The special enrollment period must be at least 31 days in length. If coverage required pursuant to this section is applied for, the effective date for coverage may be no later than the first day of the first calendar month after the date the completed request is received by the plan.

A plan may require an employee who declines coverage during the initial enrollment period to declare the reason in writing to be eligible for a special enrollment period as described in this section. If a declaration is required, the plan must provide notice of the requirement and disclose the consequences of the employee's failure to provide the statement.

History

Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-43, 58-18-44, 58-18-45, 58-18-48, 58-18-79.

ARSD 20:06:40:06 Repealed

Affiliation periods for health maintenance organizations.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:40:07 Repealed

Nondiscrimination in determining eligibility for coverage.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; repealed, 29 SDR 48, effective October 10, 2002.

ARSD 20:06:40:08 Repealed

Standards for determining when a condition is preexisting.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:40:09 Repealed

Notification of determinations on preexisting waiting periods and appeal and reconsideration procedures.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 13, 2013, repealed January 1, 2014.

ARSD 20:06:40:10 Repealed

Creditable coverage and preexisting waiting periods for newborn and adopted children.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:40:11 Repealed

Renewal rights under association plans.** Repealed.

History

Source: 23 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:40:12 Repealed

Health benefit arrangement defined.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.

ARSD 20:06:40:13 Public health plan defined

A public health plan for purposes of SDCL 58-18-44 is any plan established or maintained by a state, county, or other political subdivision of a state that provides health insurance coverage to enrolled individuals.

History

Source: 24 SDR 35, effective September 29, 1997.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-44, 58-18-79.

ARSD 20:06:40:14 Repealed

Carrier defined.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed, effective January 1, 2014.

ARSD 20:06:40:15 Repealed

Permissible methods of crediting coverage -- Alternative method prohibited.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:40:16 Notice describing plan’s special enrollment required

By the time an employee is offered the opportunity to enroll in a group health plan, the plan must provide the employee with a written notice containing a description of the plan’s special enrollment rules. A plan or health insurance issuer may use the following model notice:

"If you are declining enrollment for yourself or your dependents (including your spouse) because of other health insurance coverage, you may in the future be able to enroll yourself or your dependents in this plan if you request enrollment within 30 days after your other coverage ends. In addition, if you have a new dependent as a result of marriage, birth, adoption, or placement for adoption, you may be able to enroll yourself and your dependents if you request enrollment within 30 days after the marriage, birth, adoption, or placement for adoption."

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-48, 58-18-79.

ARSD 20:06:40:17 Group health plans to offer breast reconstruction options after covered mastectomy

A group health plan, as defined by SDCL 58-18-42, and a health insurance issuer providing health insurance coverage in connection with a group health plan that provides medical and surgical benefits with respect to a mastectomy, shall provide, in a case of a participant or beneficiary who is receiving benefits in connection with a mastectomy and who elects breast reconstruction in connection with such mastectomy, coverage for:

(1) Reconstruction of the breast on which the mastectomy has been performed;

(2) Surgery and reconstruction of the other breast to produce a symmetrical appearance; and

(3) Prostheses and physical complications at all stages of a mastectomy, including lymphedemas.

Coverage shall be provided in a manner determined in consultation with the attending physician and the patient. Such coverage may be subject to annual deductibles and coinsurance provisions as may be deemed appropriate and as are consistent with those established for other benefits under the plan or coverage. Written notice of the availability of such coverage shall be delivered to the participant upon enrollment and annually thereafter.

History

Source: 27 SDR 15, effective September 6, 2000.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:17.01 Written notification regarding coverage of reconstructive surgery after a mastectomy required

A group health plan, and a health insurance issuer providing insurance coverage in connection with a group health plan, shall provide notice to each participant and beneficiary under such plan regarding the coverage required by § 20:06:40:17. Such notice shall be in writing and prominently positioned in any literature or correspondence made available or distributed by the plan or issuer and shall be transmitted:

(1) In the first mailing made by the plan or issuer to the participant or beneficiary after September 6, 2000; and

(2) As a part of any yearly informational packet sent to the participant or beneficiary.

If a plan or issuer has made a mailing prior to September 6, 2000, that complies with subdivision (1), the requirement of subdivision (1) is met.

History

Source: 27 SDR 15, effective September 6, 2000.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:17.02 Prohibited practices

A group health plan, and a health insurance issuer offering group health insurance coverage in connection with a group health plan, may not:

(1) Deny to a patient eligibility, or continued eligibility, to enroll or to renew coverage under the terms of the plan, solely for the purpose of avoiding the requirements of § 20:06:40:17; or

(2) Penalize or otherwise reduce or limit the reimbursement of an attending provider, or provide incentives (monetary or otherwise) to an attending provider, to induce such provider to provide care to an individual participant or beneficiary in a manner inconsistent with § 20:06:40:17.

History

Source: 27 SDR 15, effective September 6, 2000.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:17.03 Not a termination of collective bargaining agreement

In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers, any plan amendment which amends the plan solely to conform to any requirement added by §§ 20:06:40:17 to 20:06:40:17.02, inclusive, may not be treated as a termination of such collective bargaining agreement.

History

Source: 27 SDR 15, effective September 6, 2000.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:17.04 Applicability

The provisions of §§ 20:06:40:17 to 20:06:40:17.03, inclusive, apply to all group plans issued or renewed.

History

Source: 27 SDR 15, effective September 6, 2000.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:18 Claims experience defined

For employers with one to fifty enrolled employees, claims experience is the amount of paid claims for the employer and the time period that the claims were incurred and paid. For employers with fifty-one or more enrolled employees, claims experience is the amount of paid claims for the employer, the time period that the claims were incurred and paid, and a listing of claims of $10,000 or more for any person covered by the employer in a manner consistent with applicable state and federal laws. A paid claim is the actual payment or settlement amount paid by the health insurance issuer and excludes all noncovered services, provider discounts, and member liability amounts. The change from one to two, regarding the size of an employer, is effective after December 31, 2013.

History

Source: 31 SDR 21, effective August 23, 2004; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79(1).
Law Implemented: SDCL 58-18-82.

ARSD 20:06:40:19 Repealed

Additional continuation election.** Repealed.

History

Source: 35 SDR 234, effective April 2, 2009; 35 SDR 306, effective July 1, 2009; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:40:20 Repealed

Period of special continuation.** Repealed.

History

Source: 34 SDR 234, effective April 2, 2009; 35 SDR 306, effective July 1, 2009; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:40:21 Repealed

Treatment of special continuation.** Repealed.

History

Source: 35 SDR 234, effective April 2, 2009; 35 SDR 306, effective July 1, 2009; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:40:22 Repealed

Premium subsidy.** Repealed.

History

Source: 35 SDR 234, effective April 2, 2009; 35 SDR 306, effective July 1, 2009; repealed, 39 SDR 203, effective June 10, 2013.

ARSD 20:06:40:23 Medically necessary leave of absence defined

For purposes of §§ 20:06:40:24 to 20:06:40:26, inclusive, the phrase medically necessary leave of absence means a leave of absence from an accredited institution of higher learning or any other change in enrollment of such child at such an institution, that

(1) Commences while a qualifying child is suffering from a serious illness or injury;

(2) Is medically necessary; and

(3) Causes the qualifying child to lose student status for purposes of coverage under the terms of the plan.

History

Source: 36 SDR 96, effective December 9, 2009.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:24 Dependent coverage

A health insurance issuer issuing a health benefit plan that provides dependent coverage for any qualifying child may not terminate coverage due to a medically necessary leave of absence for a period of twelve months after the first day of leave or the date on which such coverage would otherwise terminate under the terms of the plan, whichever is earlier. A qualifying child whose benefits are continued under this section is entitled to the same benefits as if the qualifying child continued to be a covered student and was not on a medically necessary leave of absence.

History

Source: 36 SDR 96, effective December 9, 2009; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:25 Notification

Any health insurance issuer providing health insurance coverage in connection with a group health plan shall include, with any notice regarding a requirement for certification of student status for coverage under the plan, a description of the terms of § 20:06:40:24 for continued coverage during any medically necessary leave of absence. Such description shall be in language that is understandable to the typical plan participant.

History

Source: 36 SDR 96, effective December 9, 2009; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:26 Continued application in case of changed coverage

The provisions of §§ 20:06:40:24 and 20:06:40:25 apply if there is a change in coverage for the dependent child and the following occur:

(3) The coverage as so changed continues to provide coverage of beneficiaries as dependent children.

History

Source: 36 SDR 96, effective December 9, 2009.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:27 Effective date

Sections 20:06:40:23 to 20:06:40:26, inclusive, apply to plan years beginning after December 31, 2009.

History

Source: 36 SDR 96, effective December 9, 2009.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:28 Creditable coverage -- Children's Health Insurance Program

Coverage provided pursuant to a state's Children's Health Insurance Program (CHIP) under Title XXI of the Social Security Act is creditable coverage.

History

Source: 36 SDR 127, effective March 1, 2010.
General Authority: SDCL 58-17-87(13).
Law Implemented: SDCL 58-17-69, 58-17-85, 58-18-44.

ARSD 20:06:40:29 Definitions

Unless otherwise provided, the following terms are defined for purposes of §§ 20:06:40:29 to 20:06:40:41, inclusive:

(1) "Collect," with respect to information, to request, require, or purchase such information;

(3) "First-degree relatives," parents, spouses, siblings, and children;

(4) "Fourth-degree relatives," great-great grandparents, great-great grandchildren, and children of first cousins;

(5) "Genetic information":

(a) The individual's genetic tests;

(b) The genetic tests of family members of the individual;

(d) Any request for, or receipt of, genetic services, or participation in clinical research which includes genetic services, by the individual or any family member of the individual.

With respect to a pregnant woman (or a family member of the pregnant woman), the term includes genetic information of any fetus carried by the pregnant woman. With respect to an individual (or a family member of the individual) who is utilizing an assisted reproductive technology, the term includes genetic information of any embryo legally held by the individual or family member. However, the term does not include information about sex or age of any individual;

(6) "Genetic services," genetic test; genetic counseling including obtaining, interpreting, or assessing genetic information; or genetic education;

(8) "Group health plan," a plan of, or contributed to by, an employer including a self-employed person or employee organization to provide health care directly or otherwise to the employees, former employees, the employer, others associated or formerly associated with the employer in a business relationship, or the families of employees, former employees, the employer, and others associated with the employer;

(9) "Manifestation or manifested," with respect to a disease, disorder, or pathological condition, that an individual has been or could reasonably be diagnosed with the disease, disorder, or pathological condition by a health care professional with appropriate training and expertise in the field of medicine involved. A disease, disorder, or pathological condition is not manifested if a diagnosis is based principally on genetic information;

(10) "Payment," with respect to the activities undertaken by a health plan, to obtain premiums or to determine or fulfill its responsibility for coverage and the provision of benefits under the health plan, or by a health care provider or health plan, to obtain or provide reimbursement for the provision of health care. However, these activities include:

(a) Determinations of eligibility or coverage including coordination of benefits or the determination of cost sharing amounts, and adjudication or subrogation of health benefit claims;

(b) Risk adjusting amounts due based on enrollee health status and demographic characteristics;

(c) Billing, claims management, collection activities, obtaining payment under a contract for reinsurance (including stop-loss insurance and excess of loss insurance), and related health care data processing;

(d) Review of health care services with respect to medical necessity, coverage under a health plan, appropriateness of care, or justification of charges;

(e) Utilization review activities, including precertification and preauthorization of services, and concurrent and retrospective review of services; and

(f) Disclosure to consumer reporting agencies of the name and address, date of birth, social security number, payment history, account number or name and address of the health care provider and/or health plan relating to collection of premiums or reimbursement;

(11) "Second-degree relatives," grandparents, grandchildren, aunts, uncles, nephews, and nieces;

(12) "Third-degree relatives," great-grandparents, great-grandchildren, great aunts, great uncles, and first cousins;

(13) "Underwriting purposes," with respect to any group health plan, or health insurance coverage offered in connection with a group health plan:

(d) Other activities related to the creation, renewal, or replacement of a contract of health insurance or health benefits.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-79(1), 58-18-87.
Law Implemented: SDCL 58-18-79, 58-33-13.

ARSD 20:06:40:30 Group rating based on health factors

Nothing in §§ 20:06:40:29 to 20:06:40:41, inclusive, restricts the aggregate amount that an employer may be charged for coverage under a group health plan, but § 20:06:40:31 prohibits adjustments in group premium or contribution rates based on genetic information.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-87.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:31 No group-based discrimination based on genetic information

A group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, may not adjust premium or contribution amounts for the plan, or any group of similarly situated individuals under the plan, on the basis of genetic information. Similarly situated individuals are determined pursuant to §§ 20:06:46:09 to 20:06:46:12, inclusive. Nothing in this section limits the ability of a health insurance issuer offering health insurance coverage in connection with a group health plan to increase the premium for a group health plan, or any group of similarly situated individuals under the plan based on the manifestation of a disease or disorder of an individual who is enrolled in the plan. In such a case, however, the manifestation of a disease or disorder in one individual cannot be used as genetic information about other group members to further increase the premium for a group health plan or a group of similarly situated individuals under the plan.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 59-18-79(9), 58-18-87.
Law Implemented: SDCL 58-18-79, 58-33-13.

ARSD 20:06:40:32 Limitation on requesting or requiring genetic testing

Except as otherwise provided, a group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, may not request or require an individual or a family member of the individual to undergo a genetic test.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-87.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:33 Exceptions to requiring genetic testing

Nothing in § 20:06:40:32 limits the authority of a health care professional who is providing health care services to an individual to request that the individual undergo a genetic test.

Additionally, nothing in § 20:06:40:32 precludes a plan or issuer from obtaining and using the results of a genetic test in making a determination regarding payment. Therefore, if a plan or issuer conditions payment for an item or service based on its medical appropriateness and the medical appropriateness of the item or service depends on the genetic makeup of a patient, then the plan or issuer is permitted to condition payment for the item or service on the outcome of a genetic test. The plan or issuer may also refuse payment if the patient does not undergo the genetic test.

A plan or an issuer may only request the minimum amount of information necessary to make a determination regarding payment. The minimum amount of information necessary is determined in accordance with the minimum necessary standard in 45 CFR 164.502(b) of the privacy regulations issued under the Health Insurance Portability and Accountability Act.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-87.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:34 Research exception

A plan or an issuer may request, but not require, that a participant or beneficiary undergo a genetic test if all of the following conditions are met:

(1) The plan or issuer makes the request pursuant to research, as defined in 45 CFR 46.102(d), that complies with 45 CFR Part 46 or equivalent federal regulations, and any applicable state or local law or regulations for the protection of human subjects in research; and

(2) The plan or issuer makes the request in writing, and the request clearly indicates to each participant or beneficiary or, in the case of a minor child, to the legal guardian of the beneficiary that:

(a) Compliance with the request is voluntary; and

(b) Noncompliance will have no effect on eligibility for benefits or premium or contribution amounts.

The issuer must complete a copy of the Notice of Research Exception form found in Appendix B and submit the form to the federal Secretary of Health and Human Services. No genetic information collected or acquired under this section may be used for underwriting purposes.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-87.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:35 Prohibitions on collection of genetic information for underwriting purposes

A group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, may not collect genetic information for underwriting purposes.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-87.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:36 Medical appropriateness

If an individual seeks a benefit under a group health plan or other health insurance coverage, the plan or coverage may limit or exclude the benefit based on whether the benefit is medically appropriate. The determination of whether the benefit is medically appropriate is not within the meaning of underwriting purposes. Therefore, if an individual seeks a benefit under the plan and the plan or issuer conditions the benefit based on its medical appropriateness and the medical appropriateness of the benefit depends on genetic information of the individual, then the plan or issuer may condition the benefit on the genetic information. A plan or issuer may only request the minimum amount of genetic information necessary to determine medical appropriateness. The plan or issuer may deny the benefit if the patient does not provide the genetic information required to determine medical appropriateness. If an individual is not seeking a benefit, the medical appropriateness exception of this section to the definition of underwriting purposes does not apply.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-87.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:37 Collection of genetic information prior to or in connection with enrollment

A group health plan, and a health insurance issuer offering health insurance coverage in connection with a group health plan, may not collect genetic information with respect to any individual prior to that individual's effective date of coverage under that plan, nor in connection with the rules for eligibility that apply to the individual. Whether or not an individual's information is collected prior to that individual's effective date of coverage is determined based upon the time of collection.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-87.
Law Implemented: SDCL 58-18-48, 58-18-79.

ARSD 20:06:40:38 Incidental collection exception

If a group health plan, or a health insurance issuer offering health insurance coverage in connection with a group health plan, obtains genetic information incidental to the collection of other information concerning any individual, the collection is not a violation of § 20:06:40:37, as long as the collection is not for underwriting purposes in violation of §§ 20:06:40:35 and 20:06:40:36.

The incidental collection exception in this section does not apply with respect to any collection where it is reasonable to anticipate that health information will be received, unless the issuer explicitly states that genetic information should not be provided to the issuer.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79, 58-18-87.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:39 General exception for certain small group health plans

The requirements of §§ 20:06:40:29 to 20:06:40:41, inclusive, do not apply to any group health plan and group health insurance coverage for any plan year, if on the first day of the plan year, the plan has fewer than two participants who are current employees. However, the following requirements apply without regard to this exception:

(1) SDCL 58-18-45(4);

(2) §§ 20:06:46:03 to 20:06:46:08, inclusive, as they apply with respect to genetic information as a health factor;

(3) § 20:06:46:04, as it applies with respect to genetic information as a health factor;

(4) §§ 20:06:46:10 and 20:06:46:13 to 20:06:46:15, inclusive, as they apply with respect to genetic information as a health factor;

(5) § 20:06:40:31;

(6) §§ 20:06:40:32 and 20:06:40:33;

(7) §§ 20:06:40:35 to 20:06:40:38, inclusive, and § 20:06:40:29(12).

This section applies to group health plans, and health insurance issuers offering group health insurance coverage, for plan years beginning on or after the effective date of those sections.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:40 Applicability to excepted benefits

Sections 20:06:40:29 to 20:06:40:41, inclusive, do not apply to excepted benefits as defined by 29 USC 1191b(c), as of August 1, 2010.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:41 Effective date

Sections 20:06:40:29 to 20:06:40:41, inclusive, apply for plan years beginning on or after the effective date of those sections.

History

Source: 37 SDR 47, effective September 20, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:40:42 Repealed

Definitions.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:43 Repealed

Parity requirements with respect to aggregate lifetime and annual dollar limits.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:44 Repealed

Plan with no limit or limits on less than one-third of all medical or surgical benefits.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:45 Repealed

Plan with a limit on at least two-thirds of all medical or surgical benefits.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:46 Repealed

Determining one-third and two-thirds of all medical or surgical benefits.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:47 Repealed

Plan not described in sections 20:06:40:44 or 20:06:40:45 of this chapter.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:48 Repealed

Parity requirements with respect to financial requirements and treatment limitations -- Clarification of classification of benefits.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:49 Repealed

Parity requirements with respect to financial requirements and treatment limitations -- Clarification of type of financial requirement or treatment limitation.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:50 Repealed

Parity requirements with respect to financial requirements and treatment limitations -- Clarification of level of a type of financial requirement or treatment limitation.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:51 Repealed

Parity requirements with respect to financial requirements and treatment limitations -- Clarification of coverage unit.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:52 Repealed

General parity requirement.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:53 Repealed

Classifications of benefits used for applying rules.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:54 Repealed

Application to out-of-network providers.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:55 Repealed

Financial requirements and quantitative treatment limitations -- Determining substantially all.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:56 Repealed

Financial requirements and quantitative treatment limitations -- Determining predominant.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:57 Repealed

Financial requirements and quantitative treatment limitations -- Determining portion based on plan payments.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:58 Repealed

Financial requirements and quantitative treatment limitations -- Determining clarifications for certain threshold requirements.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:59 Repealed

Application to different coverage units.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:60 Repealed

Special rule for multi-tiered prescription drug benefits.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:61 Repealed

No separate cumulative financial requirements or cumulative quantitative treatment limitations.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:62 Repealed

Nonquantitative treatment limitations.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:63 Repealed

Illustrative list of nonquantitative treatment limitations.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:64 Repealed

Exemptions.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:65 Repealed

Availability of plan information -- Criteria for medical necessity determinations.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:66 Repealed

Availability of plan information -- Reasons for denial.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:67 Repealed

Applicability -- Group health plans.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:68 Repealed

Applicability -- Health insurance issuers.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:69 Repealed

Scope.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:70 Repealed

Small employer exemption.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:71 Repealed

Determining employer size.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:72 Repealed

Sale of nonparity health insurance coverage.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:73 Repealed

Special effective date for certain collectively-bargained plans.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:74 Repealed

Establishment of sub-classifications for determining parity for outpatient benefits.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; 39 SDR 219, effective June 26, 2013; repealed, 41 SDR 93, effective December 3, 2014.

ARSD 20:06:40:75 Definitions

(1) "Employer contribution rule," a requirement relating to the minimum level or amount of employer contribution toward the premium for enrollment of participants and beneficiaries;

(2) "Group participation rule," a requirement relating to the minimum number of participants or beneficiaries that must be enrolled in relation to a specified percentage or number of eligible individuals or employees of an employer;

(3) "Health insurance issuer," any person that provides health insurance in this state including an insurance company, a prepaid hospital or similar plan, a health maintenance organization, a multiple employer welfare arrangement, and any other entity providing a plan of health insurance or health benefits subject to state insurance regulation. A health insurance issuer does not include a person providing only excepted benefits; and

(4) "Small employer," in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least one but not more than 50 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18B-36(7)(8)(11), 58-18B-46.
Law Implemented: SDCL 58-18B-36, 58-18B-37, 58-18B-46.

ARSD 20:06:40:76 Guaranteed issue

A small employer health insurance issuer must offer each of its small employer plans to any eligible small employer on a guaranteed issue basis without medical underwriting. A small employer health insurance issuer may use reasonable contribution and participation requirements that are consistent between small employers and which do not relate to the health status or health history of the employees or dependents of a small employer or the risk characteristics of the small employer as a whole. A health insurance issuer may limit the availability of health insurance coverage offered in the small group market to an annual enrollment period that begins November 15 and extends through December 15 of each year if a plan sponsor is unable to comply with a material plan provision relating to employer contribution or group participation rules as required by SDCL 58-18B-24 to 58-18B-26, inclusive. With respect to coverage in the small group market, and in the large group market if such coverage is offered in a Small Business Health Options Program (SHOP) as defined in § 20:06:55:32 in this state, coverage must become effective consistent with the dates described in 45 CFR § 155.725(h).

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18B-36(7)(8)(11), 58-18B-46.
Law Implemented: SDCL 58-18B-36, 58-18B-37, 58-18B-46.

ARSD 20:06:40:77 Disclosure requirements

In its sales and solicitation materials, a health insurance issuer must disclose that the following specific materials are available upon request:

(1) A statement detailing the health insurance issuer's right to change premium rates and the factors that may affect changes in premium rates;

(2) A notice detailing renewability of coverage;

(3) A description of the geographic area served by the Health Maintenance Organization; and

(4) A statement of the benefits and premiums available for all health insurance coverage for which the employer is qualified under permitted contribution and participation requirements.

This section does not require the disclosure of proprietary information or trade secrets. The disclosure information provided must be in a format that is understandable by the average small employer and sufficient to reasonably inform small employers of their rights and obligations under the health insurance coverage. Examples of reasonable information that may be provided pursuant to this section include rating schedules for each product for which more than one rate applies and maps of the service areas or lists of counties served by a network plan.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18B-36(8),(9), 58-18B-46.
Law Implemented: SDCL 58-18B-6, 58-18B-36, 58-18B-46.

ARSD 20:06:40:78 Guaranteed availability of coverage in the group market

A health insurance issuer that offers health insurance in the group market in this state must offer to any individual or employer in the state all products that are approved for sale in the applicable market, and must accept any individual or employer that applies for any of those products.

A health insurance issuer offering health insurance coverage in the small group market must ensure that such coverage includes the essential health benefits package as defined in § 20:06:56:03 effective for plan or policy years beginning after December 31, 2013. Except for catastrophic plans, any plans not providing at least a bronze level of coverage or not providing essential health benefits as defined in § 20:06:56:03 must be issued as a supplement to other health insurance coverage and may not be used to replace essential health benefits coverage, a grandfathered health benefit plan or a catastrophic plan.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:79 Denial of coverage

A health insurance issuer may deny health insurance coverage in the group market if the issuer demonstrates to the director the following:

(1) The health insurance issuer does not have the financial reserves necessary to underwrite additional coverage; and

(2) The health insurance issuer is applying the denial uniformly to all employers or individuals in the group or individual market, as applicable, in this state without regard to the claims experience of those individuals, employers, and their employees and their employees' dependents or any health status-related factor relating to such individuals, employees, and dependents.

An issuer that denies group health insurance coverage to any employer may not offer coverage in the group market in this state before the later of the following dates:

(1) The 181^st day after the date the issuer denies coverage, or

(2) The date the issuer demonstrates to the applicable state authority that the issue has sufficient financial reserves to underwrite additional coverage.

Nothing in this section limits the issuer's ability to renew coverage already in force or relieve the issuer of the responsibility to renew that coverage. Coverage offered after the 180-day period specified in this section is subject to the requirements of this section and § 20:06:55:42. The ability to offer or renew coverage as specified by this section and § 20:06:55:42 is subject to all applicable service area requirements and restrictions.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:80 Special enrollment period effective dates

A health insurance issuer must provide special enrollment periods consistent with this section, during which qualified individuals and enrollees may enroll in plans or change enrollment from one nongrandfathered health plan to another. Once a qualified individual is determined eligible for a special enrollment period, the health insurance issuer must ensure that the qualified individual's effective date of coverage is:

(1) Between the first and the fifteenth day of any month, the plan must ensure a coverage effective date of the first day of the following month;

(2) Between the sixteenth and the last day of any month, the plan must ensure a coverage effective date of the first day of the second following month;

(3) In the case of birth, adoption, or placement for adoption, the plan must ensure that coverage is effective on the date of birth, adoption, or placement for adoption; and

(4) In the case of marriage, or in the case where a qualified individual loses minimum essential coverage, the plan must ensure coverage is effective on the first day of the following month.

Unless specifically stated otherwise herein, a qualified individual or enrollee has 30 days from the date of a triggered event to select a plan.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:81 Special enrollment triggers

A health insurance issuer offering health insurance coverage in the group market and SHOP Exchange as defined in § 20:06:55:32 must allow for an individual to enroll or change from one nongrandfathered health plan to another as a result of the following triggers:

(1) The death of the covered individual;

(2) The termination of individual's employer coverage other than by reason of gross misconduct, or reduction of hours of the covered employee's spouse;

(3) The divorce or legal separation;

(4) Individual becoming entitled to benefits under XVII of the Social Security Act;

(5) Dependent child ceasing to be dependent child;

(6) A proceeding in a case under Title 11, United States Code, commencing on or after July 1, 1986, with respect to the employer from whose employment the covered individual retired at any time;

(7) An individual gains a dependent or becomes a dependent through marriage, birth adoption or placement for adoption;

(8) An individual, who was not previously a citizen, national, or lawfully present individual gains such status; and

(9) A qualified individual or enrollee gains access to nongrandfathered health plan as a result of a permanent move.

This section does not apply to grandfathered plans.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:82 Nonrenew or discontinuance of coverage

A health insurance issuer offering health insurance coverage in the group market is required to renew or continue in force the coverage at the option of the plan sponsor or the employer, as applicable. An issuer may nonrenew or discontinue health insurance coverage offered in the group market based only on one or more of the following:

(1) Nonpayment of premiums. The plan sponsor or employer, as applicable, fails to pay premiums or contributions in accordance with the terms of the health insurance coverage, including any timeliness requirements;

(2) Fraud. The plan sponsor or employer, as applicable, performs an act or practice that constitutes fraud or makes an intentional misrepresentation of material fact in connection with the coverage;

(3) Violation of participation or contribution rules. In the case of group health insurance coverage, the plan sponsor has failed to comply with a material plan provision relating to employer contribution or group participation rules;

(4) Termination of plan. The issuer ceases to offer coverage in the market;

(5) Enrollees' movement outside service area. For network plans, there is no longer any enrollee under the plan who lives, resides, or works in the service area of the issuer or in the area for which the issuer is authorized to do business; and in the case of the small group market, the issuer applies the same criteria it would apply in denying enrollment in the plan under 45 CFR § 147.104(c)(1)(i);

(6) Association membership ceases. For coverage made available in the small or large group market only through one or more bona fide associations, if the employer's membership in the bona fide association ceases, but only if the coverage is terminated uniformly without regard to any health status-related factor relating to any covered individual.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:83 Discontinuing a particular product

If an issuer discontinues offering a particular product in the group market, that product may be discontinued by the issuer in the applicable market only if the following occurs:

(1) The issuer provides notice in writing to each plan sponsor, as applicable, provided that particular product in that market and to all participants and beneficiaries covered under such coverage of the discontinuation at least 90 calendar days before the date the coverage will be discontinued;

(2) The issuer offers to each plan sponsor, as applicable, provided that particular product the option, on a guaranteed issue basis, to purchase all or, in the case of the large group market, any other health insurance coverage currently being offered by the issuer to a group health plan or individual health insurance coverage in that market; and

(3) In exercising the option to discontinue that product and in offering the option of coverage, the issuer acts uniformly without regard to the claims experience of those sponsors or individuals, as applicable, or any health status-related factor relating to any participants or beneficiaries covered or new participants or beneficiaries who may become eligible for such coverage.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:84 Discontinuing all coverage

An issuer may elect to discontinue offering all health insurance coverage in the group market, or all markets, in a state in accordance with applicable state law only if the issuer meets all of the following conditions:

(1) The issuer provides notice in writing to the applicable state authority and to each plan sponsor or individual, as applicable, and all participants and beneficiaries covered under the coverage of the discontinuation at least 180 calendar days prior to the date the coverage will be discontinued;

(2) All health insurance policies issued or delivered for issuance in the state in the applicable market or markets are discontinued and not renewed; and

(3) An issuer that elects to discontinue offering all health insurance coverage in a market or markets may not issue coverage in the applicable market or markets and state involved during the 5-year period beginning on the date of discontinuation of the last coverage not renewed.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:85 Exception for uniform modification of coverage

Only at the time of coverage renewal may issuers modify the health insurance coverage for a product offered to a group health plan in the following:

(1) Large group market; and

(2) Small group market if, for coverage available in this market other than only through one or more bona fide associations, the modification is consistent with state law and is effective uniformly among group health plans with that product.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:86 Preexisting condition exclusion and waiting period prohibited

A health insurance issuer offering a group health benefit plan may not impose any preexisting condition exclusion or preexisting condition waiting period with respect to such coverage.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:87 Clinical trial

A health insurance issuer that offers a health benefit plan providing group market health insurance coverage in this state may not:

(1) Deny participation by a qualified individual in an approved clinical trial;

(2) Deny, limit or impose additional conditions on the coverage of routine patient costs for items or services furnished in connection with participation in the trial; or

(3) Discriminate against an individual on the basis of the individual's participation in an approved clinical trial.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:88 Full-time equivalents treated as full-time employees

Solely for purposes of determining whether an employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:40:89 Applicability

The provisions of §§ 20:06:40:75 to 20:06:40:88 apply for plan years beginning after December 31, 2013. Except as otherwise specified in this chapter, the chapter applies to small and large employers. Sections 20:06:40:75 to 20:06:40:88 do not apply to grandfathered health plans.

Sections 20:06:40:01, 20:06:40:03, 20:06:40:06, 20:06:40:08, 20:06:40:09, 20:06:40:10, 20:06:40:11, 20:06:40:12, and 20:06:40:14 are repealed effective January 1, 2014.

Sections 20:06:40:01.01 and 20:06:40:03.01 are effective January 1, 2014.

Section 20:06:40:04 only applies to grandfathered plans.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79, 58-18-80.

Chapter 20:06:41 HIPAA rules -- Small employer

ARSD 20:06:41:01 Repealed

Guaranteed issue.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:02 Repealed

Disclosure requirements.** Repealed.

History

Source: 24 SDR 35, effective September 29, 1997; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:03 Repealed

Guaranteed issue -- Criteria for meeting the exception for issuing coverage to high-risk small employers.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 39 SDR 203 adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:04 Repealed

Guaranteed issue -- Premiums counted toward 2 percent threshold.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:05 Repealed

Guaranteed issue -- Formula for calculating percentage of premiums attributable to high-risk small employers.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:06 Repealed,

Guaranteed issue -- High-risk small employers.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:07 Repealed

Guaranteed issue -- Report of meeting 2 percent threshold.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:08 Repealed

Guaranteed issue -- Application for determination of disproportionate share.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:09 Repealed

Guaranteed issue -- Filing of application.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:10 Repealed

Guaranteed issue -- Director’s determination.** Repealed.

History

Source: 25 SDR 13, effective August 13, 1998; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:41:11 Effective dates

Sections 20:06:41:01 to 20:06:41:11, inclusive, are repealed effective January 1, 2014.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18B-20.
Law Implemented: SDCL 58-18B-20.

Chapter 20:06:42 Associations eligible for group health insurance

ARSD 20:06:42:01 Eligible associations defined

A bona fide association is a group of persons who have joined for some common purpose or goal. A bona fide association is eligible for the issuance of group health insurance if all of the following factors are met and filed for approval by the director:

(1) There is a shared or common purpose that is not generally applicable to the population at large;

(2) There is a constitution and by-laws which indicate a legitimate purpose other than the purchase of insurance with at least one substantial business purpose unrelated to obtaining insurance;

(3) The primary method of obtaining new members is not through, or in conjunction with, the solicitation of insurance. However, solicitation of insurance may be one of the methods of obtaining new members;

(4) If the association includes employer members, the following additional requirements apply:

(a) The functions and activities of the association are controlled by its employer members. The association's employer members that participate in the group health plan must control the plan in form and in substance;

(b) Employer members must be in the same trade, industry, line of business, or profession; and

When determining eligibility for the issuance of group health insurance, the division may consider whether the association ever existed independently of an insurance product.

History

Source: 26 SDR 44, effective October 6, 1999; 41 SDR 41, effective September 17, 2014; 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-62; 58-18-79, 58-18-89.
Law Implemented: SDCL 58-18-3, 58-18-6; 58-18-88.

ARSD 20:06:42:01.01 Notification to association members

20 : 06 : 42 : 01.01 . Notification to association members. Each application for insurance and each policy and certificate issued by an insurer through an association plan with employer members shall contain in ten-point type on the front page the following notice prominently displayed:

NOTICE

This policy is issued through an association. By accepting coverage, you must participate in this plan for a minimum of three years to avoid penalties for early departure.

History

Source: 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-62, 58-18-79, 58-18-89.
Law Implemented: SDCL 58-18-3, 58-18-6, 58-18-88.

ARSD 20:06:42:02 Credit unions

Credit unions formed pursuant to state or federal law are associations eligible for the issuance of group health insurance.

History

Source: 26 SDR 44, effective October 6, 1999.
General Authority: SDCL 58-18-62.
Law Implemented: SDCL 58-18-3, 58-18-6.

Chapter 20:06:43 Annuity mortality tables

ARSD 20:06:43:01 Definitions

Definitions** . Terms used in this chapter mean:

(1) "1983 Table 'a'," a mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation and adopted as a recognized mortality table for annuities by the National Association of Insurance Commissioners;

(2) "1983 GAM Table," a mortality table developed by the Society of Actuaries Committee on Annuities and adopted as a recognized mortality table for annuities by the National Association of Insurance Commissioners;

(3) "1994 GAR Table," a mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force and adopted as a recognized mortality table for annuities by the National Association of Insurance Commissioners;

(4) "Annuity 2000 Mortality Table," a mortality table developed by the Society of Actuaries Committee on Life Insurance Research and adopted as a recognized mortality table by the National Association of Insurance Commissioners;

(5) "Period Table," a table of mortality rates applicable to a given calendar year (the period);

(6) "Generational Mortality Table," a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period Table and a projection scale containing rates of mortality improvement;

(7) "2012 IAR Table," a Generational Mortality Table developed by the Society of Actuaries Committee on Life Insurance Research and containing rates, qx²⁰¹²⁺ⁿ, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in § 20:06:43:02.01;

(8) "2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table," the Period Table containing loaded mortality rates for calendar year 2012. This table contains rates, qx²⁰¹², developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices A-B;

(9) "Projection Scale G2 (Scale G2)," a table of annual rates, G2_x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012 developed by the Society of Actuaries Committee on Life Insurance Research and is shown in Appendices C-D.

References: For 1983 Table "a", 1982 Proceedings of the NAIC , Volume II, page 454, National Association of Insurance Commissioners. Copies of the entire volume may be obtained from the National Association of Insurance Commissioners, Attention Publications Department, 120 West Twelfth Street, Suite 1100, Kansas City, MO 64105, Telephone Number (816) 374-7259. Cost: Free for members; $180 for nonmembers. Copies of individual pages may be obtained from the National Association of Insurance Commissioners, Attention Research Library, 120 West Twelfth Street, Suite 1100, Kansas City, MO 64105, Telephone Number (816) 374-7175. Cost: Free for members; $10 flat fee plus 30 cents per page certain for nonmembers (with a higher charge for pages uncertain). For 1983 GAM Table, 1984 Proceedings of the NAIC , Volume I, pages 414-415, National Association of Insurance Commissioners. Copies of the entire volume may be obtained from the National Association of Insurance Commissioners, Attention Publications Department, 120 West Twelfth Street, Suite 1100, Kansas City, MO 64105, Telephone Number (816) 374-7259. Cost: Free for members; $180 for nonmembers. Copies of individual pages may be obtained from the National Association of Insurance Commissioners, Attention Research Library, 120 West Twelfth Street, Suite 1100, Kansas City, MO 64105, Telephone Number (816) 374-7175. Cost: Free for members; $10 flat fee plus 30 cents per page certain for nonmembers (with a higher charge for pages uncertain). For 1994 GAR Table, Transactions of the Society of Actuaries , Volume XLVII, 1995, pages 865-919, Society of Actuaries. Copies may be obtained from the Society of Actuaries, Attention Publications Department, 475 North Martingale Road, Suite 800, Schaumburg, IL 60173-2226, Telephone Number (847) 706-3526. Cost: $55 per book. For copies of tables, first 40 pages, $10 for members and $20 for nonmembers; each additional page, 25 cents for members and 50 cents for nonmembers. For Annuity 2000 Mortality Table, Transactions of the Society of Actuaries , Volume XLVII, 1995, pages 211-249, Society of Actuaries. Copies may be obtained from Society of Actuaries, Attention Publications Department, 475 North Martingale Road, Suite 800, Schaumburg, IL 60173-2226, Telephone Number (847) 706-3526. Cost: $55 per book. For copies of tables, first 40 pages, $10 for members and $20 for nonmembers; each additional page, 25 cents for members and 50 cents for nonmembers.

History

Source: 26 SDR 55, effective October 24, 1999; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-26-66, 58-26-67, 58-26-69.
Law Implemented: SDCL 58-26-66, 58-26-67, 58-26-69.

ARSD 20:06:43:02 Individual annuity or pure endowment contracts

(1) Except as provided in subdivision 2 of this section, the 1983 Table "a" and the Annuity 2000 Mortality Table are recognized and approved as individual annuity mortality tables for valuation and, at the option of the company, either of these tables may be used for purposes of determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 1978.

(2) Except as provided in subdivision 3 of this section, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2001.

(3) Except as provided in subdivision 4 of this section, the 2012 IAR Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015.

(4) The 1983 Table "a" without projection is to be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after January 1, 2001, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

(a) Settlements of various forms of claims pertaining to court settlements or out of court settlements from tort actions;

(b) Settlements involving similar actions such as worker’s compensation claims; or

(c) Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

History

Source: 26 SDR 55, effective October 24, 1999; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-26-66, 58-26-67.
Law Implemented: SDCL 58-26-66, 58-26-67.

ARSD 20:06:43:02.01 Application of the 2012 IAR Mortality Table

In using the 2012 IAR Mortality Table, the mortality rate for a person age x in year (2012 + n) is calculated as follows:

q_x²⁰¹²⁺ⁿ=q_x²⁰¹²(1-G2_x)ⁿ

The resulting q_x²⁰¹²⁺ⁿ shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the formula above, starting at the 2012 period table rate.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-26-69.
Law Implemented: SDCL 58-26-69.

ARSD 20:06:43:03 Group annuity or pure endowment contracts

(1) Except as provided in subdivision 2 of this section, the 1983 GAM Table, the 1983 Table "a", and the 1994 GAR Table are recognized and approved as group annuity mortality tables for valuation and, at the option of the company, any one of these tables may be used for the purposes of valuation for an annuity or pure endowment purchased on or after July 1, 1978, under a group annuity or pure endowment contract.

(2) The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after July 1, 2001, under a group annuity or pure endowment contract.

References: For 1983 Table "a", 1982 Proceedings of the NAIC , Volume II, page 454, National Association of Insurance Commissioners. Copies of the entire volume may be obtained from the National Association of Insurance Commissioners, Attention Publications Department, 120 West Twelfth Street, Suite 1100, Kansas City, MO 64105, Telephone Number (816) 374-7259. Cost: Free for members; $180 for nonmembers. Copies of individual pages may be obtained from the National Association of Insurance Commissioners, Attention Research Library, 120 West Twelfth Street, Suite 1100, Kansas City, MO 64105, Telephone Number (816) 374-7175. Cost: Free for members; $10 flat fee plus 30 cents per page certain for nonmembers (with a higher charge for pages not certain). For 1983 GAM Table, 1984 Proceedings of the NAIC , Volume I, pages 414-415, National Association of Insurance Commissioners. Copies of the entire volume may be obtained from the National Association of Insurance Commissioners, Attention Publications Department, 120 West Twelfth Street, Suite 1100, Kansas City, MO 64105, Telephone Number (816) 374-7259. Cost: Free for members; $180 for nonmembers. Copies of individual pages may be obtained from the National Association of Insurance Commissioners, Attention Research Library, 120 West Twelfth Street, Suite 1100, Kansas City, MO 64105, Telephone Number (816) 374-7175. Cost: Free for members; $10 flat fee plus 30 cents per page certain for nonmembers (with a higher charge for pages uncertain). For 1994 GAR Table, Transactions of the Society of Actuaries , Volume XLVII, 1995, pages 865-919, Society of Actuaries. Copies may be obtained from the Society of Actuaries, Attention Publications Department, 475 North Martingale Road, Suite 800, Schaumburg, IL 60173-2226, Telephone Number (847) 706-3526. Cost: $55 per book. For copies of tables, first 40 pages, $10 for members and $20 for nonmembers; each additional page, 25 cents for members and 50 cents for nonmembers.

History

Source: 26 SDR 55, effective October 24, 1999.
General Authority: SDCL 58-26-69.
Law Implemented: SDCL 58-26-69.

ARSD 20:06:43:04 Application of the 1994 GAR Table

In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follow:

q_x¹⁹⁹⁴⁺ⁿ=q_x¹⁹⁹⁴(1-AA_x)ⁿ

where the q_x¹⁹⁹⁴s and AA_xs are as specified in the 1994 GAR Table.

Reference: Transactions of the Society of Actuaries , Volume XLVII, 1995, pages 865-919, Society of Actuaries. Copies may be obtained from Society of Actuaries, Attention Publications Department, 475 Martingale Road, Suite 800, Schaumburg, IL 60173-2226, Telephone Number (847) 706-3526. Cost: $55 per book. For copies of tables, first 40 pages, $10 for members and $20 for nonmembers; each additional page, 25 cents for members and 50 cents for nonmembers.

History

Source: 26 SDR 55, effective October 24, 1999.
General Authority: SDCL 58-26-69.
Law Implemented: SDCL 58-26-69.

Chapter 20:06:44 Insurance fraud prevention unit

ARSD 20:06:44:01 Definitions

Terms used in this chapter mean:

(1) "Director," the director of the Division of Insurance, Department of Labor and Regulation;

(2) "Division," the Division of Insurance, Department of Labor and Regulation;

(3) "Department," the Department of Labor and Regulation;

(4) "Designee," the Department of Labor and Regulation, the attorney general, any state's attorney, any duly constituted criminal investigative department or agency of the state of South Dakota or of the United States, any county or municipal law enforcement agency having investigative jurisdiction, and any other person whose services are contracted for by the insurance fraud prevention unit;

(5) "Insurer," in addition to those persons defined under SDCL subdivision 58-1-2 (12), any person or entity transacting insurance with a certificate of authority issued by the director. The term also means health maintenance organizations, legal service insurance corporations, prepaid limited health service organizations, dental and other similar health service plans, and, notwithstanding SDCL subdivision 58-1-3 (1), fraternal benefit societies;

(6) "Criminal intelligence information," information associated with an identifiable individual, group, organization, or event, which information was compiled by a law enforcement agency in the course of conducting an investigation into a criminal conspiracy, projecting a potential criminal operation, or producing an estimate of future criminal activities; or in relation to the reliability of information derived from reports of informants or investigators or from any type of surveillance; and

(7) "Criminal investigative records," any document compiled or recorded pursuant to statutory authority that is associated with an individual, group, organization, or event, which record was compiled by a law enforcement agency in the course of conducting an investigation of a crime. This includes records or files about a crime derived from reports of officers, deputies, agents, informants, or investigators or from any type of surveillance.

History

Source: 26 SDR 109, effective March 5, 2000; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-4A-13.
Law Implemented: SDCL 58-4A-13.

ARSD 20:06:44:02 Standards and criteria for qualification as a nonprofit organization

Standards** and criteria for qualification as a nonprofit organization. To qualify as a nonprofit organization as described under SDCL subdivision 58-4A-13(7) the organization must:

(1) Be organized as a not for profit organization under the laws of the state in which its principal place of business is;

(2) Have as its principal purpose either the detection and prevention of insurance fraud or the detection and prevention of crime, or both;

(3) Either limit its membership to designees or insurers or to any entity or person described in SDCL 58-4A-13 or agree not to release any criminal intelligence information which it may possess to any of its members who are not designees or insurers or any entity or person described in SDCL 58-4A-13; and

(4) If the organization transmits information on-line, it must have a system that meets industry standard security measures for the storing and transmission of criminal intelligence information.

History

Source: 26 SDR 109, effective March 5, 2000.
General Authority: SDCL 58-4A-13.
Law Implemented: SDCL 58-4A-13.

ARSD 20:06:44:03 Procedures for recognition as a nonprofit organization

Any organization that seeks recognition as a nonprofit organization under SDCL subdivision 58-4A-13(7) shall comply with the following procedure:

(1) Submit a written request to the director;

(2) Include documentation to establish that it meets the standards and criteria to become recognized as a nonprofit organization; and

(3) Sign an acknowledgement form proscribed by the director that its organization will not release any criminal intelligence information within its possession to any person or entity other than designees or insurers or any entity or person described in SDCL 58-4A-13.

Upon receipt of the request to become recognized as a nonprofit organization, the director shall conduct a timely review of the request and documentation to determine if the organization meets the standards and criteria set forth in § 20:06:44:02. After review, the director shall issue a written decision and provide a copy to the requesting organization.

History

Source: 26 SDR 109, effective March 5, 2000.
General Authority: SDCL 58-4A-13.
Law Implemented: SDCL 58-4A-13.

Chapter 20:06:45 Privacy of consumer financial and health information

ARSD 20:06:45:01 Purpose and scope

(1) Purpose. This chapter governs the treatment of nonpublic personal health information and nonpublic personal financial information about individuals by all licensees of the state insurance division. This chapter:

(A) Requires a licensee to provide notice to individuals about its privacy policies and practices;

(B) Describes the conditions under which a licensee may disclose nonpublic personal health information and nonpublic personal financial information about individuals to affiliates and nonaffiliated third parties;

(D) Establishes standards for developing and implementing administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of customer information.

(2) Scope. This chapter applies to nonpublic personal health information and nonpublic personal financial information about individuals who obtain, or are claimants or beneficiaries of, products or services primarily for personal, family, or household purposes from licensees. This chapter does not apply to information about companies or about individuals who obtain products or services for business, commercial, or agricultural purposes.

(3) Compliance. A licensee domiciled in this state that is in compliance with this chapter in a state that has not enacted laws or regulations that meet the requirements of Title V of the Gramm-Leach-Bliley Act (Pub. L. No. 102-106) may nonetheless be deemed to be in compliance with Title V of the Gramm-Leach-Bliley Act in such other state.

History

Source: 28 SDR 15, effective July 1, 2001; 29 SDR 48, effective October 10, 2002; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:02 Rule of construction

The examples in this chapter and the sample clauses in Appendix A of this chapter are not exclusive. Compliance with an example or use of a sample clause, to the extent applicable, constitutes compliance with this chapter.

History

Source: 28 SDR 15, effective July 1, 2001, 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:03 Definitions

Terms used in this chapter mean, unless the context requires otherwise:

(1) "Affiliate," any company that controls, is controlled by, or is under common control with another company.

(2) (A) "Clear and conspicuous," that a notice is reasonably understandable and designed to call attention to the nature and significance of the information in the notice.

(B) Examples.

(1) Reasonably understandable. A licensee makes its notice reasonably understandable if it:

(a) Presents the information in the notice in clear, concise sentences, paragraphs, and sections;

(b) Uses short explanatory sentences or bullet lists whenever possible;

(d) Avoids multiple negatives;

(e) Avoids legal and highly technical business terminology whenever possible; and

(f) Avoids explanations that are imprecise and readily subject to different interpretations.

(2) Designed to call attention. A licensee designs its notice to call attention to the nature and significance of the information in it if the licensee:

(a) Uses a plain-language heading to call attention to the notice;

(b) Uses a typeface and type size that are easy to read;

(d) Uses boldface or italics for key words; and

(e) In a form that combines the licensee's notice with other information, uses distinctive type size, style, and graphic devices, such as shading or sidebars.

(3) Notices on web sites. If a licensee provides a notice on a web page, the licensee designs its notice to call attention to the nature and significance of the information in it if the licensee uses text or visual cues to encourage scrolling down the page if necessary to view the entire notice and ensure that other elements on the web site (such as text, graphics, hyperlinks, or sound) do not distract attention from the notice, and the licensee either:

(a) Places the notice on a screen that consumers frequently access, such as a page on which transactions are conducted; or

(b) Places a link on a screen that consumers frequently access, such as a page on which transactions are conducted, that connects directly to the notice and is labeled appropriately to convey the importance, nature, and relevance of the notice.

(3) "Collect," to obtain information that the licensee organizes or can retrieve by the name of an individual or by identifying number, symbol, or other identifying particular assigned to the individual, irrespective of the source of the underlying information.

(4) "Company," a corporation, limited liability company, business trust, general or limited partnership, association, sole proprietorship, or similar organization.

(5) (A) "Consumer," an individual who seeks to obtain, obtains, or has obtained an insurance product or service from a licensee that is to be used primarily for personal, family, or household purposes, and about whom the licensee has nonpublic personal information, or that individual's legal representative.

(B) Examples.

(1) An individual who provides nonpublic personal information to a licensee in connection with obtaining or seeking to obtain financial, investment, or economic advisory services relating to an insurance product or service is a consumer regardless of whether the licensee establishes an ongoing advisory relationship.

(2) An applicant for insurance prior to the inception of insurance coverage is a licensee's consumer.

(3) An individual who is a consumer of another financial institution is not a licensee's consumer solely because the licensee is acting as agent for, or provides processing or other services to, that financial institution.

(4) An individual is a licensee's consumer if:

(a) (i) the individual is a beneficiary of a life insurance policy underwritten by the licensee;

(ii) the individual is a claimant under an insurance policy issued by the licensee;

(iii) the individual is an insured or an annuitant under an insurance policy or an annuity, respectively, issued by the licensee; or

(iv) the individual is a mortgagor of a mortgage covered under a mortgage insurance policy; and

(b) the licensee discloses nonpublic personal financial information about the individual to a nonaffiliated third party other than as permitted under §§ 20:06:45:13, 20:06:45:14, and 20:06:45:15.

(5) If the licensee provides the initial, annual, and revised notices under §§ 20:06:45:04, 20:06:45:05, and 20:06:45:08 to the plan sponsor, group or blanket insurance policyholder, group annuity contractholder, or workers' compensation policyholder, and if the licensee does not disclose to a nonaffiliated third party nonpublic personal financial information about such an individual other than as permitted under §§ 20:06:45:13, 20:06:45:14, and 20:06:45:15, an individual is not the consumer of the licensee solely because he or she is:

(a) A participant or a beneficiary of an employee benefit plan that the licensee administers or sponsors or for which the licensee acts as a trustee, insurer, or fiduciary;

(b) Covered under a group or blanket insurance policy or group annuity contract issued by the licensee; or

(6) (a) The individuals described in subdivision 20:06:45:03(5)(B)(5)(a) through subdivision 20:06:45:03(5)(B)(5)(c) are consumers of a licensee if the licensee does not meet all the conditions of subdivision 20:06:45:03(5)(B)(5).

(b) In no event shall the individuals, solely by virtue of the status described in subdivision 20:06:45:03(5)(B)(5)(a) through subdivision 20:06:45:03(5)(B)(5)(c), be deemed to be customers for purposes of this chapter.

(7) An individual is not a licensee's consumer solely because he or she is a beneficiary of a trust for which the licensee is a trustee.

(8) An individual is not a licensee's consumer solely because he or she has designated the licensee as trustee for a trust.

(6) "Consumer reporting agency," has the same meaning as in § 603(f) of the federal Fair Credit Reporting Act (15 U.S.C. 1681a(f)).

(7) "Control," means:

(A) Ownership, control, or power to vote twenty-five percent or more of the outstanding shares of any class of voting security of the company, directly or indirectly, or acting through one or more other persons;

(B) Control in any manner over the election of a majority of the directors, trustees, or general partners (or individuals exercising similar functions) of the company; or

(C) The power to exercise, directly or indirectly, a controlling influence over the management or policies of the company, as the director determines.

(8) "Customer," a consumer who has a customer relationship with a licensee. In no event, however, is a beneficiary or a claimant under a policy of insurance, solely by virtue of their status as a beneficiary or a claimant, deemed to be a customer for purposes of this chapter.

(9) (A) "Customer relationship," a continuing relationship between a consumer and a licensee under which the licensee provides one or more insurance products or services to the consumer that are to be used primarily for personal, family, or household purposes.

(B) Examples:

(1) A consumer has a continuing relationship with a licensee if:

(a) The consumer is a current policyholder of an insurance product issued by or through the licensee; or

(b) The consumer obtains financial, investment, or economic advisory services relating to an insurance product or service from the licensee for a fee.

(2) A consumer does not have a continuing relationship with a licensee if:

(a) The consumer applies for insurance but does not purchase the insurance;

(b) The licensee sells the consumer airline travel insurance in an isolated transaction;

(c) The individual is no longer a current policyholder of an insurance product or no longer obtains insurance services with or though the licensee;

(d) The consumer is a beneficiary or claimant under a policy and has submitted a claim under a policy choosing a settlement option involving an ongoing relationship with the licensee;

(e) The consumer is a beneficiary or a claimant under a policy and has submitted a claim under that policy choosing a lump sum settlement option;

(f) The customer's policy is lapsed, expired, or otherwise inactive or dormant under the licensee's business practices, and the licensee has not communicated with the customer about the relationship for a period of 12 consecutive months, other than annual privacy notices, material required by law or regulation, communication at the direction of a state or federal authority, or promotional materials;

(g) The individual is an insured or an annuitant under an insurance policy or annuity, respectively, but is not the policyholder or owner of the insurance policy or annuity; or

(h) For the purposes of this chapter, the individual's last known address according to the licensee's records is deemed invalid. An address of record is deemed invalid if mail sent to that address by the licensee has been returned by the postal authorities as undeliverable and if subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful.

(10) "Customer information," nonpublic personal information about a customer, whether in paper, electronic, or other form, that is maintained by or on behalf of the licensee.

(11) "Customer information systems," the electronic or physical methods used to access, collect, store, use, transmit, protect, or dispose of customer information.

(12) "Director," the director of the Division of Insurance.

(13) (A) "Financial institution," any institution the business of which is engaging in activities that are financial in nature or incidental to such financial activities as described in § 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).

(B) Financial institution does not include:

(1) Any person or entity with respect to any financial activity that is subject to the jurisdiction of the Commodity Futures Trading Commission under the Commodity Exchange Act (7 U.S.C. 1 et seq .);

(2) The Federal Agricultural Mortgage Corporation or any entity charged and operating under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq .); or

(3) Institutions chartered by Congress specifically to engage in securitizations, secondary market sales (including sales of servicing rights), or similar transactions related to a transaction of a consumer, as long as the institutions do not sell or transfer nonpublic personal information to a nonaffiliated third party.

(14) (A) "Financial product or service," any product or service that a financial holding company could offer by engaging in an activity that is financial in nature or incidental to such a financial activity under § 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).

(B) Financial service includes a financial institution's evaluation or brokerage of information that the financial institution collects in connection with a request or an application from a consumer for a financial product or service.

(15) "Health care," means:

(A) Preventive, diagnostic, therapeutic, rehabilitative, maintenance, or palliative care, services, procedures, tests, or counseling that:

(1) Relates to the physical, mental, or behavioral condition of an individual; or

(2) Affects the structure or function of the human body or any part of the human body, including the banking of blood, sperm, organs, or any other tissue; or

(B) Prescribing, dispensing, or furnishing to an individual drugs or biologicals, or medical devices or health care equipment and supplies.

(16) "Health care provider," a physician or other health care practitioner licensed, accredited, or certified to perform specified health services consistent with state law, or a health care facility.

(17) "Health information," any information or data except age or gender, whether oral or recorded in any form or medium, created by or derived from a health care provider or the consumer that relates to:

(A) The past, present, or future physical, mental, or behavioral health or condition of an individual;

(B) The provision of health care to an individual; or

(18) (A) "Insurance product or service," any product or service that is offered by a licensee pursuant to the insurance laws of this state.

(B) Insurance service includes a licensee's evaluation, brokerage, or distribution of information that the licensee collects in connection with a request or an application from a consumer for an insurance product or service.

(19) (A) "Licensee," all licensed insurers, producers, and other persons licensed or required to be licensed, or authorized or required to be authorized, or registered or required to be registered pursuant to the insurance laws of this state.

(B) A licensee is not subject to the notice and opt out requirements for nonpublic personal financial information set forth in §§ 20:06:45:01 through 20:06:45:15 if the licensee is an employee, agent, or other representative of another licensee ("the principal") and:

(1) The principal otherwise complies with, and provides the notices required by, the provisions of this chapter; and

(2) The licensee does not disclose any nonpublic personal information to any person other than the principal or its affiliates in a manner permitted by this chapter.

(C) (1) Subject to subdivision 20:06:45:03(17)(C)(2), "licensee" shall also include an unauthorized insurer that accepts business placed through a licensed surplus lines broker in this state, but only in regard to the surplus lines placements placed pursuant to SDCL chapter 58-32.

(2) A surplus lines broker or surplus lines insurer shall be deemed to be in compliance with the notice and opt out requirements for nonpublic personal financial information set forth in §§ 20:06:45:01 through 20:06:45:15 provided:

(a) The broker or insurer does not disclose nonpublic personal information of a consumer or a customer to nonaffiliated third parties for any purpose, including joint servicing or marketing under § 20:06:45:13, except as permitted by § 20:06:45:14 or 20:06:45:15; and

(b) The broker or insurer delivers a notice to the consumer at the time a customer relationship is established on which the following is printed in 16-point type:

PRIVACY NOTICE

"NEITHER THE U.S. BROKERS THAT HANDLED THIS INSURANCE NOR THE INSURERS THAT HAVE UNDERWRITTEN THIS INSURANCE WILL DISCLOSE NONPUBLIC PERSONAL INFORMATION CONCERNING THE BUYER TO NONAFFILIATES OF THE BROKERS OR INSURERS EXCEPT AS PERMITTED BY LAW."

(D) For the purposes of §§ 20:06:45:20 to 20:06:45:26, inclusive, the definition of "licensee" does not include a purchasing group or an unauthorized insurer in regard to the excess line business conducted pursuant to SDCL 58-23-33.

(20) (A) "Nonaffiliated third party," any person except:

(1) A licensee's affiliate; or

(2) A person employed jointly by a licensee and any company that is not the licensee's affiliate (but nonaffiliated third party includes the other company that jointly employees the person).

(B) Nonaffiliated third party includes any company that is an affiliate solely by virtue of the direct or indirect ownership or control of the company by the licensee or its affiliate in conducting merchant banking or investment banking activities of the type described in § 4(k)(4)(H) or insurance company investment activities of the type described in § 4(k)(4)(I) of the federal Bank Holding Company Act (12 U.S.C. 1843(k)(4)(H) and (I)).

(21) "Nonpublic personal information," nonpublic personal financial information and nonpublic personal health information.

(22) (A) "Nonpublic personal financial information," means:

(1) Personally identifiable financial information; and

(2) Any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available.

(B) Nonpublic personal financial information does not include:

(1) Health information;

(2) Publicly available information, except as included on a list described in subdivision 20:06:45:03(20)(A)(2); or

(3) Any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived without using any personally identifiable financial information that is not publicly available.

(1) Nonpublic personal financial information includes any list of individuals' names and street addresses that is derived in whole or in part using personally identifiable financial information that is not publicly available, such as account numbers.

(2) Nonpublic personal financial information does not include any list of individuals' names and addresses that contains only publicly available information, is not derived in whole or in part using personally identifiable financial information that is not publicly available, and is not disclosed in a manner that indicates that any of the individuals on the list is a consumer of a financial institution.

(23) "Nonpublic personal health information," health information:

(A) That identifies an individual who is the subject of the information; or

(B) With respect to which there is a reasonable basis to believe that the information could be used to identify an individual.

(24) (A) "Personally identifiable financial information," any information:

(1) A consumer provides to a licensee to obtain an insurance product or service from the licensee;

(2) About a consumer resulting from a transaction involving an insurance product or service between a licensee and a consumer; or

(3) The licensee otherwise obtains about a consumer in connection with providing an insurance product or service to that consumer.

(B) Examples:

(1) Information included. Personally identifiable financial information includes:

(a) Information a consumer provides to a licensee on an application to obtain an insurance product or service;

(b) Account balance information and payment history;

(c) The fact that an individual is or has been one of the licensee's customers or has obtained an insurance product or service from the licensee;

(d) Any information about the licensee's consumer if it is disclosed in a manner that indicates that the individual is or has been the licensee's consumer;

(e) Any information that a consumer provides to a licensee or that the licensee or its agent otherwise obtains in connection with collecting on a loan or servicing a loan;

(f) Any information the licensee collects through an Internet cookie (an information-collecting device from a web server); and

(g) Information from a consumer report.

(2) Information not included. Personally identifiable financial information does not include:

(a) Health information;

(b) A list of names and addresses of customers of an entity that is not a financial institution; and

(c) Information that does not identify a consumer, such as aggregate information or blind data that does not contain personal identifiers such as account numbers, names, or addresses.

(25) (A) "Publicly available information," any information that a licensee has a reasonable basis to believe is lawfully made available to the general public from:

(1) Federal, state, or local government records;

(2) Widely distributed media; or

(3) Disclosures to the general public that are required to be made by federal, state, or local law.

(B) Reasonable basis. A licensee has a reasonable basis to believe that information is lawfully made available to the general public if the licensee has taken steps to determine:

(1) That the information is of the type that is available to the general public; and

(2) Whether an individual can direct that the information not be made available to the general public and, if so, that the licensee's consumer has not done so.

(1) Government records. Publicly available information in government records includes information in government real estate records and security interest filings.

(2) Widely distributed media. Publicly available information from widely distributed media includes information from a telephone book, a television or radio program, a newspaper, or a web site that is available to the general public on an unrestricted basis. A web site is not restricted merely because an Internet service provider or a site operator requires a fee or a password, so long as access is available to the general public.

(3) Reasonable basis.

(a) A licensee has a reasonable basis to believe that mortgage information is lawfully made available to the general public if the licensee has determined that the information is of the type included on the public record in the jurisdiction where the mortgage would be recorded.

(b) A licensee has a reasonable basis to believe that an individual's telephone number is lawfully made available to the general public if the licensee has located the telephone number in the telephone book or the consumer has informed the licensee that the telephone number is not unlisted.

(26) "Service provider," a person that maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to the licensee.

History

Source: 28 SDR 15, effective July 1, 2001; 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:04 Initial privacy notice to consumers required

(1) Initial notice requirement. A licensee shall provide a clear and conspicuous notice that accurately reflects its privacy policies and practices to:

(A) Customer. An individual who becomes the licensee's customer, not later than when the licensee establishes a customer relationship, except as provided in subdivision 20:06:45:04(5); and

(B) Consumer. A consumer, before the licensee discloses any nonpublic personal financial information about the consumer to any nonaffiliated third party, if the licensee makes a disclosure other than as authorized by §§ 20:06:45:14 and 20:06:45:15.

(2) When initial notice to a consumer is not required. A licensee is not required to provide an initial notice to a consumer under subdivision 20:06:45:04(1)(B) if:

(A) The licensee does not disclose any nonpublic personal financial information about the consumer to any nonaffiliated third party, other than as authorized by §§ 20:06:45:14 and 20:06:45:15, and the licensee does not have a customer relationship with the consumer; or

(B) A notice has been provided by an affiliated licensee, as long as the notice clearly identifies all licensees to whom the notice applies and is accurate with respect to the licensee and the other institutions.

(3) When the licensee establishes a customer relationship:

(A) General rule. A licensee establishes a customer relationship at the time the licensee and the consumer enter into a continuing relationship.

(B) Examples of establishing customer relationship. A licensee establishes a customer relationship when the consumer:

(1) Becomes a policyholder of a licensee that is an insurer when the insurer delivers an insurance policy or contract to the consumer, or in the case of a licensee that is an insurance producer, obtains insurance through that licensee; or

(2) Agrees to obtain financial, economic, or investment advisory services relating to insurance products or services for a fee from the licensee.

(4) Existing customers. When an existing customer obtains a new insurance product or service from a licensee that is to be used primarily for personal, family, or household purposes, the licensee satisfies the initial notice requirements of subdivision 20:06:45:04(1) as follows:

(A) The licensee may provide a revised policy notice, under § 20:06:45:08, that covers the customer's new insurance product or service; or

(B) If the initial, revised, or annual notice that the licensee most recently provided to that customer was accurate with respect to the new insurance product or service, the licensee does not need to provide a new privacy notice under subdivision 20:06:45:04(1).

(5) Exceptions to allow subsequent delivery of notice.

(A) A licensee may provide the initial notice required by subdivision 20:06:45:04(1)(A) within a reasonable time after the licensee establishes a customer relationship if:

(1) Establishing the customer relationship is not at the customer's election; or

(2) Providing notice not later than when the licensee establishes a customer relationship would substantially delay the customer's transaction and the customer agrees to receive the notice at a later time.

(B) Examples of exceptions.

(1) Not at customer's election. Establishing a customer relationship is not at the customer's election if a licensee acquires or is assigned a customer's policy from another financial institution or residual market mechanism and the customer does not have a choice about the licensee's acquisition or assignment.

(2) Substantial delay of customer's transaction. Providing notice notlater than when a licensee establishes a customer relationship would substantially delay the customer's transaction when the licensee and the individual agree over the telephone to enter into a customer relationship involving prompt delivery of the insurance product or service.

(3) No substantial delay of customer's transaction. Providing notice notlater than when a licensee establishes a customer relationship would not substantially delay the customer's transaction when the relationship is initiated in person at the licensee's office or through other means by which the customer may view the notice, such as on a web site.

(6) Delivery. When a licensee is required to deliver an initial privacy notice by this section, the licensee shall deliver it according to § 20:06:45:09. If the licensee uses a short-form initial notice for non-customers according to subdivision 20:06:45:06(4), the licensee may deliver its privacy notice according to subdivision 20:06:45:06(4)(C).

History

Source: 28 SDR 15, effective July 1, 2001; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:05 Annual privacy notice to customers required

(1) (A) General rule. A licensee shall provide a clear and conspicuous notice to customers that accurately reflects its privacy policies and practices not less than annually during the continuation of the customer relationship. Annually means at least once in any period of 12 consecutive months during which that relationship exists. A licensee may define the 12-consecutive-month period, but the licensee shall apply it to the customer on a consistent basis.

(B) Example. A licensee provides a notice annually if it defines the 12-consecutive-month period as a calendar year and provides the annual notice to the customer once in each calendar year following the calendar year in which the licensee provided the initial notice. For example, if a customer opens an account on any day of year 1, the licensee shall provide an annual notice to that customer by December 31 of year 2.

(2) (A) Termination of customer relationship. A licensee is not required to provide an annual notice to a former customer. A former customer is an individual with whom a licensee no longer has a continuing relationship.

(B) Examples.

(1) A licensee no longer has a continuing relationship with an individual if the individual no longer is a current policyholder of an insurance product or no longer obtains insurance services with or through the licensee.

(2) A licensee no longer has a continuing relationship with an individual if the individual's policy is lapsed, expired, or otherwise inactive or dormant under the licensee's business practices, and the licensee has not communicated with the customer about the relationship for a period of 12 consecutive months, other than to provide annual privacy notices, material required by law or regulation, or promotional materials.

(3) For the purposes of this chapter, a licensee no longer has a continuing relationship with an individual if the individual's last known address according to the licensee's records is deemed invalid. An address of record is deemed invalid if mail sent to that address by the licensee has been returned by the postal authorities as undeliverable and if subsequent attempts by the licensee to obtain a current valid address for the individual have been unsuccessful.

(4) A licensee no longer has a continuing relationship with a customer in the case of providing real estate settlement services, at the time the customer completes execution of all documents related to the real estate closing, payment for those services has been received, or the licensee has completed all of its responsibilities with respect to the settlement, including filing documents on the public record, whichever is later.

(3) Delivery. When a licensee is required by this section to deliver an annual privacy notice, the licensee shall deliver it according to § 20:06:45:09.

History

Source: 28 SDR 15, effective July 1, 2001; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:06 Information to be included in privacy notices

(1) General rule. The initial, annual, and revised privacy notices that a licensee provides under §§ 20:06:45:04, 20:06:45:05, and 20:06:45:08 shall include each of the following items of information, in addition to any other information the licensee wishes to provide, that applies to the licensee and to the consumers to whom the licensee sends its privacy notice:

(A) The categories of nonpublic personal financial information that the licensee collects;

(B) The categories of nonpublic personal financial information that the licensee discloses;

(C) The categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal financial information, other than those parties to whom the licensee discloses information under §§ 20:06:45:14 and 20:06:45:15;

(D) The categories of nonpublic personal financial information about the licensee's former customers that the licensee discloses and the categories of affiliates and nonaffiliated third parties to whom the licensee discloses nonpublic personal financial information about the licensee's former customers, other than those parties to whom the licensee discloses information under §§ 20:06:45:14 and 20:06:45:15;

(E) If a licensee discloses nonpublic personal financial information to a nonaffiliated third party under § 20:06:45:13 (and no other exception in §§ 20:06:45:14 and 20:06:45:15 applies to that disclosure), a separate description of the categories of information the licensee discloses and the categories of third parties with whom the licensee has contracted;

(F) An explanation of the consumer's right under subdivision 20:06:45:10(1) to opt out of the disclosure of nonpublic personal financial information to nonaffiliated third parties, including the methods by which the consumer may exercise that right at that time;

(G) Any disclosures that the licensee makes under § 603(d)(2)(A)(iii) of the federal Fair Credit Reporting Act (15 U.S.C. 1681a(d)(2)(A)(iii)) (that is, notices regarding the ability to opt out of disclosures of information among affiliates);

(H) The licensee's policies and practices with respect to protecting the confidentiality and security of nonpublic personal information; and

(I) Any disclosure that the licensee makes under subdivision 20:06:45:06(2).

(2) Description of parties subject to exceptions. If a licensee discloses nonpublic personal financial information as authorized under §§ 20:06:45:14 and 20:06:45:15, the licensee is not required to list those exceptions in the initial or annual privacy notices required by §§ 20:06:45:04 and 20:06:45:05. When describing the categories of parties to whom disclosure is made, the licensee is required to state only that it makes disclosures to other affiliated or nonaffiliated third parties, as applicable, as permitted by law.

(3) Examples.

(A) Categories of nonpublic personal financial information that the licensee collects. A licensee satisfies the requirement to categorize the nonpublic personal financial information it collects if the licensee categorizes it according to the source of the information, as applicable:

(1) Information from the consumer;

(2) Information about the consumer's transactions with the licensee or its affiliates;

(3) Information about the consumer's transactions with nonaffiliated third parties; and

(4) Information from a consumer reporting agency.

(B) Categories of nonpublic personal financial information a licensee discloses.

(1) A licensee satisfies the requirement to categorize nonpublic personal financial information it discloses if the licensee categorizes the information according to source, as described in subdivision 20:06:45:06(3)(A), as applicable, and provides a few examples to illustrate the types of information in each category. These might include:

(a) Information from the consumer, including application information, such as assets and income, and identifying information, such as name, address, and social security number;

(b) Transaction information, such as information about balances, payment history, and parties to the transaction; and

(2) A licensee does not adequately categorize the information that it discloses if the licensee uses only general terms, such as transaction information about the consumer.

(3) If a licensee reserves the right to disclose all of the nonpublic personal financial information about consumers that it collects, the licensee may simply state that fact without describing the categories or examples of nonpublic personal information that the licensee discloses.

(1) A licensee satisfies the requirement to categorize the affiliates and nonaffiliated third parties to which the licensee discloses nonpublic personal financial information about consumers if the licensee identifies the types of businesses in which they engage.

(2) Types of businesses may be described by general terms only if the licensee uses a few illustrative examples of significant lines of business. For example, a licensee may use the term financial products or services if it includes appropriate examples of significant lines of businesses, such as life insurer, automobile insurer, consumer banking, or securities brokerage.

(3) A licensee also may categorize the affiliates and nonaffiliated third parties to which it discloses nonpublic personal financial information about consumers using more detailed categories.

(D) Disclosures under exception for service providers and joint marketers. If a licensee discloses nonpublic personal financial information under the exception in § 20:06:45:13 to a nonaffiliated third party to market products or services that it offers alone or jointly with another financial institution, the licensee satisfies the disclosure requirement of subdivision 20:06:45:06(1)(E) if it:

(1) Lists the categories of nonpublic personal financial information it discloses, using the same categories and examples the licensee used to meet the requirements of subdivision 20:06:45:06(1)(B), as applicable; and

(2) States whether the third party is:

(a) A service provider that performs marketing services on the licensee's behalf or on behalf of the licensee and another financial institution; or

(b) A financial institution with whom the licensee has a joint marketing agreement.

(E) Simplified notices. If a licensee does not disclose, and does not wish to reserve the right to disclose, nonpublic personal financial information about customers or former customers to affiliates of nonaffiliated third parties except as authorized under §§ 20:06:45:14 and 20:06:45:15, the licensee may simply state that fact, in addition to the information it shall provide under subdivisions 20:06:45:06(1)(A), 20:06:45:06(1)(H), 20:06:45:06(1)(I), and 20:06:45:06(2).

(F) Confidentiality and security. A licensee describes its policies and practices with respect to protecting the confidentiality and security of nonpublic personal financial information if it does both of the following:

(1) Describes in general terms who is authorized to have access to the information; and

(2) States whether the licensee has security practices and procedures in place to ensure the confidentiality of the information in accordance with the licensee's policy. The licensee is not required to describe technical information about the safeguards it uses.

(4) Short-form initial notice with opt out notice for non-customers.

(A) A licensee may satisfy the initial notice requirements in subdivisions 20:06:45:04(1)(B) and 20:06:45:07(3) for a consumer who is not a customer by providing a short-form initial notice at the same time as the licensee delivers an opt out notice as required in § 20:06:45:07.

(B) A short-form initial notice shall:

(1) Be clear and conspicuous;

(2) State that the licensee's privacy notice is available upon request; and

(3) Explain a reasonable means by which the consumer may obtain that notice.

(C) The licensee shall deliver its short-form initial notice according to § 20:06:45:09. The licensee is not required to deliver its privacy notice with its short-form initial notice. The licensee instead may simply provide the consumer a reasonable means to obtain its privacy notice. If a consumer who receives the licensee's short-form notice requests the licensee's privacy notice, the licensee shall deliver its privacy notice according to § 20:06:45:09.

(D) Examples of obtaining privacy notice. The licensee provides a reasonable means by which a consumer may obtain a copy of its privacy notice if the licensee:

(1) Provides a toll-free telephone number that the consumer may call to request the notice; or

(2) For a consumer who conducts business in person at the licensee's office, maintains copies of the notice on hand that the licensee provides to the consumer immediately upon request.

(5) Future disclosures. The licensee's notice may include:

(A) Categories of nonpublic personal financial information that the licensee reserves the right to disclose in the future, but does not currently disclose; and

(B) Categories of affiliates or nonaffiliated third parties to whom the licensee reserves the right in the future to disclose, but to whom the licensee does not currently disclose, nonpublic personal financial information.

(6) Sample clauses. Sample clauses illustrating some of the notice content required by this section are included in Appendix A of this chapter.

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:07 Form of opt out notice to consumers and opt out methods

(1) (A) Form of opt out notice. If a licensee is required to provide an opt out notice under subdivision 20:06:45:10(1), it shall provide a clear and conspicuous notice to each of its consumers that accurately explains the right to opt out under that section. The notice shall state:

(1) That the licensee discloses or reserves the right to disclose nonpublic personal financial information about its consumer to a nonaffiliated third party;

(2) That the consumer has the right to opt out of that disclosure; and

(3) A reasonable means by which the consumer may exercise the opt out right.

(B) Examples.

(1) Adequate opt out notice. A licensee provides adequate notice that the consumer can opt out of the disclosure of nonpublic personal financial information to a nonaffiliated third party if the licensee:

(a) Identifies all of the categories of nonpublic personal financial information that it discloses or reserves the right to disclose, and all of the categories of nonaffiliated third parties to which the licensee discloses the information, as described in subdivisions 20:06:45:06(1)(B) and (C), and states that the consumer can opt out of the disclosure of that information; and

(b) Identifies the insurance products or services that the consumer obtains from the licensee, either singly or jointly, to which the opt out direction would apply.

(2) Reasonable opt out means. A licensee provides a reasonable means to exercise an opt out right if it:

(a) Designates check-off boxes in a prominent position on the relevant forms with the opt out notice;

(b) Includes a reply form together with the opt out notice;

(c) Provides an electronic means to opt out, such as a form that can be sent via electronic mail or a process at the licensee's web site, if the consumer agrees to the electronic delivery of information; or

(d) Provides a toll-free telephone number that consumers may call to opt out.

(3) Unreasonable opt out means. A licensee does not provide a reasonable means of opting out if:

(a) The only means of opting out is for the consumer to write his or her own letter to exercise that opt out right; or

(b) The only means of opting out as described in any notice subsequent to the initial notice is to use a check-off box that the licensee provided with the initial notice but did not include with the subsequent notice.

(4) Specific opt out means. A licensee may require each consumer to opt out through a specific means, as long as that means is reasonable for that consumer.

(2) Same form as initial notice permitted. A licensee may provide the opt out notice together with or on the same written or electronic form as the initial notice the licensee provides in accordance with § 20:06:45:04.

(3) Initial notice required when opt out notice delivered subsequent to initial notice. If a licensee provides the opt out notice later than required for the initial notice in accordance with § 20:06:45:04, the licensee shall also include a copy of the initial notice with the opt out notice in writing or, if the consumer agrees, electronically.

(4) Joint relationships.

(A) If two or more consumers jointly obtain an insurance product or service from a licensee, the licensee may provide a single opt out notice. The licensee's opt out notice shall explain how the licensee will treat an opt out direction by a joint consumer (as explained in subdivision 20:06:45:07(4)(E)).

(B) Any of the joint consumers may exercise the right to opt out. The licensee may either:

(1) Treat an opt out direction by a joint consumer as applying to all of the associated joint consumers; or

(2) Permit each joint consumer to opt out separately.

(C) If a licensee permits each joint consumer to opt out separately, the licensee shall permit one of the joint consumers to opt out on behalf of all of the joint consumers.

(D) A licensee may not require all joint consumers to opt out before it implements any opt out direction.

(E) Example. If John and Mary are both named policyholders on a homeowner's insurance policy issued by a licensee and the licensee sends policy statements to John's address, the licensee may do any of the following, but it shall explain in its opt out notice which opt out policy the licensee will follow:

(1) Send a single opt out notice to John's address, but the licensee shall accept an opt out direction from either John or Mary.

(2) Treat an opt out direction by either John or Mary as applying to the entire policy. If the licensee does so and John opts out, the licensee may not require Mary to opt out as well before implementing John's opt out direction.

(3) Permit John and Mary to make different opt out directions. If the licensee does so:

(a) It shall permit John and Mary to opt out for each other;

(b) If both opt out, the licensee shall permit both of them to notify it in a single response (such as on a form or through a telephone call); and

(c) If John opts out and Mary does not, the licensee may only disclose nonpublic personal financial information about Mary, but not about John and not about John and Mary jointly.

(5) Time to comply with opt out. A licensee shall comply with a consumer's opt out direction as soon as reasonably practicable after the licensee receives it.

(6) Continuing right to opt out. A consumer may exercise the right to opt out at any time.

(7) Duration of consumer's opt out direction.

(A) A consumer's direction to opt out under this section is effective until the consumer revokes it in writing or, if the consumer agrees, electronically.

(B) When a customer relationship terminates, the customer's opt out direction continues to apply to the nonpublic personal financial information that the licensee collected during or related to that relationship. If the individual subsequently establishes a new customer relationship with the licensee, the opt out direction that applied to the former relationship does not apply to the new relationship.

(8) Delivery. When a licensee is required to deliver an opt out notice by this section, the licensee shall deliver it according to § 20:06:45:09.

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:08 Revised privacy notices

(1) General rule. Except as otherwise authorized in this chapter, a licensee may not, directly or through an affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party other than as described in the initial notice that the licensee provided to that consumer under § 20:06:45:04, unless:

(A) The licensee has provided to the consumer a clear and conspicuous revised notice that accurately describes its policies and practices;

(B) The licensee has provided to the consumer a new opt out notice;

(C) The licensee has given the consumer a reasonable opportunity, before the licensee discloses the information to the nonaffiliated third party, to opt out of the disclosure; and

(D) The consumer does not opt out.

(2) Examples.

(A) Except as otherwise permitted by §§ 20:06:45:13, 20:06:45:14, and 20:06:45:15, a licensee shall provide a revised notice before it:

(1) Discloses a new category of nonpublic personal financial information to any nonaffiliated third party;

(2) Discloses nonpublic personal financial information to a new category of nonaffiliated third party; or

(3) Discloses nonpublic personal financial information about a former customer to a nonaffiliated third party, if that former customer has not had the opportunity to exercise an opt out right regarding that disclosure.

(B) A revised notice is not required if the licensee discloses nonpublic personal financial information to a new nonaffiliated third party that the licensee adequately described in its prior notice.

(3) Delivery. When a licensee is required to deliver a revised privacy notice by this section, the licensee shall deliver it according to § 20:06:45:09.

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:09 Delivery

(1) How to provide notices. A licensee shall provide any notices that this chapter requires so that each customer can reasonably be expected to receive actual notice in writing or, if the consumer agrees, electronically.

(2) (A) Examples of reasonable expectation of actual notice. A licensee may reasonably expect that a consumer will receive actual notice if the licensee:

(1) Hand-delivers a printed copy of the notice to the consumer;

(2) Mails a printed copy of the notice to the last known address of the consumer separately, or in a policy, billing, or other written communication;

(3) For a consumer who conducts transactions electronically, posts the notice on the electronic site and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining a particular insurance product or service; or

(4) For an isolated transaction with a consumer, such as the licensee providing an insurance quote or selling the consumer travel insurance, posts the notice and requires the consumer to acknowledge receipt of the notice as a necessary step to obtaining the particular insurance product or service.

(B) Examples of unreasonable expectation of actual notice. A licensee may not, however, reasonably expect that a consumer will receive actual notice of its privacy policies and practices if it:

(1) Only posts a sign in its office or generally publishes advertisements of its privacy policies and practices; or

(2) Sends the notice via electronic mail to a consumer who does not obtain an insurance product or service from the licensee electronically.

(3) Annual notices only. A licensee may reasonably expect that a customer will receive actual notice of the licensee's annual privacy notice if:

(A) The customer uses the licensee's web site to access insurance products and services electronically and agrees to receive notices at the web site and the licensee posts its current privacy notice continuously in a clear and conspicuous manner on the web site; or

(B) The customer has requested that the licensee refrain from sending any information regarding the customer relationship, and the licensee's current privacy notice remains available to the customer upon request.

(4) Oral description of notice insufficient. A licensee may not provide any notice required by this chapter solely by orally explaining the notice, either in person or over the telephone.

(5) Retention or accessibility of notices for customers.

(A) For customers only, a licensee shall provide the initial notice required by subdivision 20:06:45:04(1)(A), the annual notice required by subdivision 20:06:45:05(1), and the revised notice required by § 20:06:45:08 so that the customer can retain them or obtain them later in writing or, if the customer agrees, electronically.

(B) Examples of retention of accessibility. A licensee provides a privacy notice to the customer so that the customer can retain it or obtain it later if the licensee:

(1) Hand-delivers a printed copy of the notice to the customer;

(2) Mails a printed copy of the notice to the last known address of the customer; or

(3) Makes its current privacy notice available on a web site (or a link to another web site) for the customer who obtains an insurance product or service electronically and agrees to receive the notice at the web site.

(6) Joint notice with other financial institutions. A licensee may provide a joint notice from the licensee and one or more of its affiliates or other financial institutions, as identified in the notice, as long as the notice is accurate with respect to the licensee and the other institutions. A licensee also may provide a notice on behalf of another financial institution.

(7) Joint relationships. If two or more consumers jointly obtain an insurance product or service from a licensee, the licensee may satisfy the initial, annual, and revised notice requirements of subdivisions 20:06:45:04(1), 20:06:45:05(1), and 20:06:45:08(1), respectively, by providing one notice to those consumers jointly.

History

Source: 28 SDR 15, effective July 1, 2001; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:10 Limits on disclosure of nonpublic personal financial information to nonaffiliated third parties

20:06:45 :10. Limits on disclosure of nonpublic personal financial information to nonaffiliated third parties.

(1) (A) Conditions for disclosure. Except as otherwise authorized in this chapter, a licensee may not, directly or through any affiliate, disclose any nonpublic personal financial information about a consumer to a nonaffiliated third party unless:

(1) The licensee has provided to the consumer an initial notice as required under § 20:06:45:04;

(2) The licensee has provided to the consumer an opt out notice as required in § 20:06:45:07;

(3) The licensee has given the consumer a reasonable opportunity, before it discloses the information to the nonaffiliated third party, to opt out of the disclosure; and

(4) The consumer does not opt out.

(B) Opt out definition. Opt out means a direction by the consumer that the licensee not disclose nonpublic personal financial information about that consumer to a nonaffiliated third party, other than as permitted by §§ 20:06:45:13, 20:06:45:14, and 20:06:45:15.

(C) Examples of reasonable opportunity to opt out. A licensee provides a consumer with a reasonable opportunity to opt out if:

(1) By mail. The licensee mails the notices required in subdivision 20:06:45:10(1)(A) to the consumer and allows the consumer to opt out by mailing a form, calling a toll-free telephone number, or any other reasonable means within 30 days from the date the licensee mailed the notices.

(2) By electronic means. A customer opens an on-line account with a licensee and agrees to receive the notices required in subdivision 20:06:45:10(1)(A) electronically, and the licensee allows the customer to opt out by any reasonable means within 30 days after the date that the customer acknowledges receipt of the notices in conjunction with opening the account.

(3) Isolated transaction with consumer. For an isolated transaction such as providing the consumer with an insurance quote, a licensee provides the consumer with a reasonable opportunity to opt out if the licensee provides the notices required in subdivision 20:06:45:10(1)(A) at the time of the transaction and requests that the consumer decide, as a necessary part of the transaction, whether to opt out before completing the transaction.

(2) Application of opt out to all consumers and all nonpublic personal financial information.

(A) A licensee shall comply with this section, regardless of whether the licensee and the consumer have established a customer relationship.

(B) Unless a licensee complies with this section, the licensee may not, directly or through any affiliate, disclose any nonpublic personal financial information about a consumer that the licensee has collected, regardless of whether the licensee collected it before or after receiving the direction to opt out from the consumer.

(3) Partial opt out. A licensee may allow a consumer to select certain nonpublic personal financial information or certain nonaffiliated third parties with respect to which the consumer wishes to opt out.

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:11 Limits on redisclosure and reuse of nonpublic personal financial information

(1) (A) Information the licensee receives under an exception. If a licensee receives nonpublic personal financial information from a nonaffiliated financial institution under an exception in § 20:06:45:14 or 20:06:45:15, the licensee's disclosure and use of that information is limited as follows:

(1) The licensee may disclose the information to the affiliates of the financial institution from which the licensee received the information;

(2) The licensee may disclose the information to its affiliates, but the licensee's affiliates may, in turn, disclose and use the information only to the extent that the licensee may disclose and use the information; and

(3) The licensee may disclose and use the information pursuant to an exception in § 20:06:45:14 or 20:06:45:15, in the ordinary course of business to carry out the activity covered by the exception under which the licensee received the information.

(B) Example. If a licensee receives information from a nonaffiliated financial institution for claims settlement purposes, the licensee may disclose the information for fraud prevention, or in response to a properly authorized subpoena. The licensee may not disclose that information to a third party for marketing purposes or use that information for its own marketing purposes.

(2) (A) Information a licensee receives outside of an exception. If a licensee receives nonpublic personal financial information from a nonaffiliated financial institution other than under an exception in § 20:06:45:14 or 20:06:45:15, the licensee may disclose the information only:

(1) To the affiliates of the financial institution from which the licensee received the information;

(2) To its affiliates, but its affiliates may, in turn, disclose the information only to the extent that the licensee may disclose the information; and

(3) To any other person, if the disclosure would be lawful if made directly to that person by the financial institution from which the licensee received the information.

(B) Example. If a licensee obtains a customer list from a nonaffiliated financial institution outside of the exceptions in § 20:06:45:14 or 20:06:45:15:

(1) The licensee may use that list for its own purposes; and

(2) The licensee may disclose that list to another nonaffiliated third party only if the financial institution from which the licensee purchased the list could have lawfully disclosed the list to that third party. That is, the licensee may disclose the list in accordance with the privacy policy of the financial institution from which the licensee received the list, as limited by the opt out direction of each consumer whose nonpublic personal financial information the licensee intends to disclose, and the licensee may disclose the list in accordance with an exception in § 20:06:45:14 or 20:06:45:15, such as to the licensee's attorneys or accountants.

(3) Information a licensee discloses under an exception. If a licensee discloses nonpublic personal financial information to a nonaffiliated third party under an exception in § 20:06:45:14 or 20:06:45:15, the third party may disclose and use that information only as follows:

(A) The third party may disclose the information to the licensee's affiliates;

(B) The third party may disclose the information to its affiliates, but its affiliates may, in turn, disclose and use the information only to the extent that the third party may disclose and use the information; and

(C) The third party may disclose and use the information pursuant to an exception in § 20:06:45:14 or 20:06:45:15 in the ordinary course of business to carry out the activity covered by the exception under which it received the information.

(4) Information a licensee discloses outside of an exception. If a licensee discloses nonpublic personal financial information to a nonaffiliated third party other than under an exception in § 20:06:45:14 or 20:06:45:15, the third party may disclose the information only:

(A) To the licensee's affiliates;

(B) To the third party's affiliates, but the third party's affiliates, in turn, may disclose the information only to the extent the third party can disclose the information; and

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:12 Limits on sharing account number information for marketing purposes

(1) General prohibition on disclosure of account numbers. A licensee may not, directly or through an affiliate, disclose, other than to a consumer reporting agency, a policy number or similar form of access number or access code for a consumer's policy or transaction account to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other marketing through electronic mail to the consumer.

(2) Exceptions. Subdivision 20:06:45:12(1) does not apply if a licensee discloses a policy number or similar form of access number or access code:

(A) To the licensee's service provider solely in order to perform marketing for the licensee's own products or services, as long as the service provider is not authorized to directly initiate charges to the account;

(B) To a licensee who is a producer solely in order to perform marketing for the licensee's own products or services; or

(C) To a participant in an affinity or similar program where the participants in the program are identified to the customer when the customer enters into the program.

(3) Examples.

(A) Policy number. A policy number, or similar form of access number or access code, does not include a number or code in an encrypted form, as long as the licensee does not provide the recipient with a means to decode the number or code.

(B) Policy or transaction account. For the purposes of this section, a policy or transaction account is an account other than a deposit account or a credit card account. A policy or transaction account does not include an account to which third parties cannot initiate charges.

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:13 Exception to opt out requirements for disclosure of nonpublic personal financial information for service providers and joint marketing

(1) General rule.

(A) The opt out requirements in §§ 20:06:45:07 and 20:06:45:10 do not apply when a licensee provides nonpublic personal financial information to a nonaffiliated third party to perform services for the licensee or functions on the licensee's behalf, if the licensee:

(1) Provides the initial notice in accordance with § 20:06:45:04; and

(2) Enters into a contractual agreement with the third party that prohibits the third party from disclosing or using the information other than to carry out the purposes for which the licensee disclosed the information, including use under an exception in § 20:06:45:14 or 20:06:45:15 in the ordinary course of business to carry out those purposes.

(B) Example. If a licensee discloses nonpublic personal financial information under this section to a financial institution with which the licensee performs joint marketing, the licensee's contractual agreement with that institution meets the requirements of subdivision 20:06:45:13(1)(A)(2) if it prohibits the institution from disclosing or using the nonpublic personal financial information except as necessary to carry out the joint marketing or under an exception in § 20:06:45:14 or 20:06:45:15 in the ordinary course of business to carry out that joint marketing.

(2) Service may include joint marketing. The services a nonaffiliated third party performs for a licensee under subdivision 20:06:45:13(1) may include marketing of the licensee's own products or services or marketing of financial products or services offered pursuant to joint agreements between the licensee and one or more financial institutions.

(3) Definition of joint agreement. For purposes of this section, joint agreement means a written contract pursuant to which a licensee and one or more financial institutions jointly offer, endorse, or sponsor a financial product or service.

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:14 Exceptions to notice and opt out requirements for disclosure of nonpublic personal financial information for processing and servicing transactions

(1) Exceptions for processing transactions at consumer's request. The requirements for initial notice in subdivision 20:06:45:04(1)(B), the opt out in §§ 20:06:45:07 and 20:06:45:10, and service providers and joint marketing in § 20:06:45:13 do not apply if the licensee discloses nonpublic personal financial information as necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes, or in connection with:

(A) Servicing or processing an insurance product or service that a consumer requests or authorizes, or adjusting a claim submitted by a consumer;

(B) Maintaining or servicing the consumer's account with a licensee, or with another entity as part of a private label credit card program or other extension of credit on behalf of such entity;

(C) A proposed or actual securitization, secondary market sale (including sales of servicing rights), or similar transaction related to a transaction of the consumer;

(D) Reinsurance or stop loss or excess loss insurance; or

(E) Informing a policyholder or the policyholder's producer or broker when necessary with respect to a claim asserted or paid under the policy and servicing or processing such claim.

(2) "Necessary to effect, administer, or enforce a transaction" means that the disclosure is:

(A) Required, or is one of the lawful or appropriate methods, to enforce the licensee's rights or the rights of other persons engaged in carrying out the financial transaction or providing the product or service; or

(B) Required, or is a usual, appropriate, or acceptable method:

(1) To carry out the transaction or the product or service business of which the transaction is a part, and record, service, or maintain the consumer's account in the ordinary course of providing the insurance product or service;

(2) To administer or service benefits or claims relating to the transaction or the product or service business of which it is a part;

(3) To provide a confirmation, explanation, statement, or other record of the transaction, or information on the status or value of the insurance product or service to the consumer or the consumer's producer;

(4) To accrue or recognize incentives or bonuses associated with the transaction that are provided by a licensee or any other party;

(5) To underwrite insurance at the consumer's request or for any of the following purposes as they relate to a consumer's insurance, or, when the consumer is a workers' compensation beneficiary or third-party claimant, to the policyholder's insurance: account administration, reporting, investigating or preventing fraud or material misrepresentation, processing premium payments, processing, adjusting, paying, and settling insurance claims, administering insurance benefits (including utilization review activities), participating in research projects, or as otherwise required or specifically permitted by federal or state law; or

(6) In connection with:

(a) The authorization, settlement, billing, processing, clearing, transferring, reconciling, or collection of amounts charged, debited, or otherwise paid using a debit, credit, or other payment card, check, or account number, or by other payment means;

(b) The transfer or collection of debts, receivables, accounts, or interests therein; or

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:15 Other exceptions to notice and opt out requirements for disclosure of nonpublic personal financial information

(1) Exceptions to opt out requirements. The requirements for initial notice to consumers in subdivision 20:06:45:04(1)(B), the opt out in §§ 20:06:45:07 and 20:06:45:10, and service providers and joint marketing in § 20:06:45:13 do not apply when a licensee discloses nonpublic personal financial information:

(A) With the consent or at the direction of the consumer, provided that the consumer has not revoked the consent or direction;

(B) (1) To protect the confidentiality or security of a licensee's records pertaining to the consumer, service, product, or transaction;

(2) To protect against or prevent actual or potential fraud or unauthorized transactions;

(3) For required institutional risk control or for resolving consumer disputes or inquiries;

(4) To persons holding a legal or beneficial interest relating to the consumer; or

(5) To persons acting in a fiduciary or representative capacity on behalf of the consumer;

(C) To provide information to insurance rate advisory organizations, guaranty funds or agencies, agencies that are rating a licensee, persons that are assessing the licensee's compliance with industry standards, and the licensee's attorneys, accountants, and auditors;

(D) To the extent specifically permitted or required under other provisions of law and in accordance with the federal Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq .), to law enforcement agencies (including the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration, the Securities and Exchange Commission, the Secretary of the Treasury, with respect to 31 U.S.C. Chapter 53, Subchapter II (Records and Reports on Monetary Instruments and Transactions) and 12 U.S.C. Chapter 21 (Financial Recordkeeping), a state insurance authority, and the Federal Trade Commission), self-regulatory organizations, or for an investigation on a matter related to public safety;

(E) (1) To a consumer reporting agency in accordance with the federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq .); or

(2) From a consumer report reported by a consumer reporting agency;

(F) In connection with a proposed or actual sale, merger, transfer, or exchange of all or a portion of a business or operating unit if the disclosure of nonpublic personal financial information concerns solely consumers of the business or unit;

(G) (1) To comply with federal, state, or local laws, rules, and other applicable legal requirements;

(2) To comply with a properly authorized civil, criminal, or regulatory investigation, or subpoena or summons by federal, state, or local authorities; or

(3) To respond to judicial process or government regulatory authorities having jurisdiction over a licensee for examination, compliance, or other purposes as authorized by law; or

(H) For purposes related to the replacement of a group benefit plan, a group health plan, a group welfare plan, or a workers' compensation policy.

(2) Example of revocation of consent. A consumer may revoke consent by subsequently exercising the right to opt out of future disclosures of nonpublic personal information as permitted under subdivision 20:06:45:07(6).

History

Source: 28 SDR 15, effective July 1, 2001.
General Authority: SDCL 58-2-41.
Law Implemented: SDCL 58-2-41.

ARSD 20:06:45:16 Protection of Fair Credit Reporting Act

Nothing in this chapter may be construed to modify, limit, or supersede the operation of the federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq .), and no inference shall be drawn on the basis of the provisions of this chapter regarding whether information is transaction or experience information under § 603 of that Act.

General Authority : SDCL 58-2-40, 58-2-41.

History

Source: 28 SDR 15, effective July 1, 2001; 31 SDR 67, effective November 14, 2004.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:17 Nondiscrimination

A licensee may not discriminate against any consumer or customer because that consumer or customer has opted out from the disclosure of his or her nonpublic personal financial information pursuant to the provisions of this chapter. A licensee may not discriminate against a consumer or customer because that consumer or customer has not granted authorization for the disclosure of his or her nonpublic personal health information pursuant to the provisions of this chapter.

History

Source: 28 SDR 15, effective July 1, 2001; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:18 Effective date

(1) Effective date. This chapter is effective July 1, 2001.

(2) (A) Notice requirement for consumers who are the licensee's customers on the compliance date. By July 1, 2001, a licensee shall provide an initial notice, as required by § 20:06:45:04, to consumers who are the licensee's customers on July 1, 2001.

(B) Example. A licensee provides an initial notice to consumers who are its customers on July 1, 2001, if, by that date, the licensee has established a system for providing an initial notice to all new customers and has mailed the initial notice to all the licensee's existing customers.

(3) Grandfathering of service agreements.Until July 1, 2002, a contract that a licensee has entered into with a nonaffiliated third party to perform services for the licensee or functions on the licensee's behalf satisfies the provisions of subdivision 20:06:45:13(1)(A)(2), even if the contract does not include a requirement that the third party maintain the confidentiality of nonpublic personal information, as long as the licensee entered into the agreement on or before July 1, 2000.

(4) For personal health information, this chapter is effective July 1, 2005.

History

Source: 28 SDR 15, effective July 1, 2001; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:19 Obligation to provide information to director

Nothing in this chapter shall in any way affect the obligations of any licensee to provide information to the director under the laws and rules of this state.

History

Source: 28 SDR 15, effective July 1, 2001; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:20 Information security program

Each licensee shall implement a comprehensive written information security program that includes administrative, technical, and physical safeguards for the protection of customer information. The administrative, technical, and physical safeguards included in the information security program shall be appropriate to the size and complexity of the licensee and the nature and scope of its activities.

Licensed producers must determine the level of safeguards appropriate for their business. For those licensed producers that require only a minimum level of safeguards based upon their size and complexity, the appropriate level of safeguards may consist of the following:

(1) Physical safeguards ensuring that nonpublic personal information is under lock when agency personnel are not present to ensure its privacy; and

(2) Technical safeguards ensuring that any electronic information that can be potentially accessed by another person or entity be guarded by an appropriate software program; and

(3) Administrative safeguards that outline agency procedures indicating that nonpublic personal information is not to be provided to persons other than the insured, insurer or its representatives, or others as necessary to carry out the transaction or claim of the insured or customer or requests of the insured or customer and that spell out the specific physical and technical safeguards that are required by the agency.

History

Source: 29 SDR 48, adopted September 20, 2002, effective March 1, 2003; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:21 Objectives of information security program

A licensee's information security program shall be designed to:

(A) Ensure the security and confidentiality of customer information;

(B) Protect against any anticipated threats or hazards to the security or integrity of the information; and

(C) Protect against unauthorized access to or use of the information that could result in substantial harm or inconvenience to any customer.

History

Source: 29 SDR 48, adopted September 20, 2002, effective March 1, 2003; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:22 Examples of methods of development and implementation

The actions and procedures described in §§ 20:06:45:23 to 20:06:45:26, inclusive, are examples of methods of implementing the requirements of §§ 20:06:45:20 and 20:06:45:21. These examples are non-exclusive illustrations of actions and procedures that licensees may follow to implement §§ 20:06:45:20 and 20:06:45:21.

History

Source: 29 SDR 48, adopted September 20, 2002, effective March 1, 2003; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:23 Assess risk

The licensee:

(A) Identifies reasonably foreseeable internal or external threats that could result in unauthorized disclosure, misuse, alteration, or destruction of customer information or customer information systems;

(B) Assesses the likelihood and potential damage of these threats, taking into consideration the sensitivity of customer information; and

(C) Assesses the sufficiency of policies, procedures, customer information systems and other safeguards in place to control risks.

History

Source: 29 SDR 48, adopted September 20, 2002, effective March 1, 2003; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:24 Manage and control risk

The licensee:

(A) Designs its information security program to control the identified risks, commensurate with the sensitivity of the information, as well as the complexity and scope of the licensee's activities;

(B) Trains staff, as appropriate, to implement the licensee's information security program; and

(C) Regularly tests or otherwise regularly monitors the key controls, systems, and procedures of the information security program. The frequency and nature of these tests or other monitoring practices are determined by the licensee's risk assessment.

History

Source: 29 SDR 48, adopted September 20, 2002, effective March 1, 2003; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:25 Oversee service provider arrangements

The licensee:

(A) Exercises appropriate due diligence in selecting its service providers; and

(B) Requires its service providers to implement appropriate measures designed to meet the objectives of §§ 20:06:45:20 to 20:06:45:26, inclusive, and, where indicated by the licensee's risk assessment, takes appropriate steps to confirm that its service providers have satisfied these obligations.

History

Source: 29 SDR 48, adopted September 20, 2002, effective March 1, 2003; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:26 Adjust the program

The licensee monitors, evaluates, and adjusts, as appropriate, the information security program in light of any relevant changes in technology, the sensitivity of its customer information, internal or external threats to information, and the licensee's own changing business arrangements, such as mergers and acquisitions, alliances and joint ventures, outsourcing arrangements, and changes to customer information systems.

History

Source: 29 SDR 48, adopted September 20, 2002, effective March 1, 2003; 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40, 58-2-41.
Law Implemented: SDCL 58-2-40, 58-2-41.

ARSD 20:06:45:27 Disclosure of nonpublic personal health information

A licensee may not disclose nonpublic personal health information about a consumer or customer unless an authorization is obtained from the consumer or customer whose nonpublic personal health information is sought to be disclosed.

This rule does not prohibit, restrict, or require an authorization for the disclosure on nonpublic personal health information by a licensee for the performance of the following insurance functions by or on behalf of the licensee: claims administration; claims adjustment and management; detection; investigation or reporting of actual or potential fraud, misrepresentation, or criminal activity; underwriting; policy placement or issuance; loss control; ratemaking and guaranty fund functions; reinsurance and excess loss insurance; risk management; case management; disease management; quality assurance; quality improvement; performance evaluation; provider credentialing verification; utilization review; peer review activities; actuarial, scientific, medical, or public policy research; grievance procedures; internal administration of compliance, managerial, and information systems; policyholder service functions; auditing; reporting; database security; administration of consumer disputes and inquiries; external accreditation standards; the replacement of a group benefit plan or workers compensation policy or program; activities in connection with a sale, merger, transfer, or exchange of all or part of a business or operating unit; any activity that permits disclosure without authorization pursuant to the federal Health Insurance Portability and Accountability Act privacy rules promulgated by the U.S. Department of Health and Human Services; disclosure that is required, or is one of the lawful or appropriate methods, to enforce the licensee's rights or the rights of other persons engaged in carrying out a transaction or providing a product or service that a consumer requests or authorizes; and any activity otherwise permitted by law, required pursuant to governmental reporting authority, or to comply with legal process. Additional insurance functions may be added with the approval of the director to the extent they are necessary for appropriate performance of insurance functions and are fair and reasonable to the interest of consumers.

History

Source: 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40.
Law Implemented: SDCL 58-2-40.

ARSD 20:06:45:28 Authorization to disclose nonpublic personal health information

An authorization to disclose nonpublic personal health information pursuant to § 20:06:45:27 shall be in written or electronic form and contain all of the following:

(1) The identity of the consumer or customer who is the subject of the nonpublic personal health information;

(2) A general description of the types of nonpublic personal health information to be disclosed;

(3) General descriptions of the parties to whom the licensee discloses nonpublic personal health information, the purpose of the disclosure, and how the information will be used;

(4) The signature of the consumer or customer who is the subject of the nonpublic personal health information or the individual who is legally empowered to grant authority and the date signed; and

(5) Notice of the length of time for which the authorization is valid and that the consumer or customer may revoke the authorization at any time and the procedure for making a revocation.

The authorization shall specify a length of time for which the authorization shall remain valid, which in no event may be for more than 24 months.

A consumer or customer who is the subject of nonpublic personal health information may revoke an authorization provided pursuant to § 20:06:45:27 at any time, subject to the rights of an individual who acted in reliance on the authorization prior to notice of the revocation.

A licensee shall retain the authorization or a copy thereof in the record of the individual who is the subject of nonpublic personal health information.

History

Source: 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40.
Law Implemented: SDCL 58-2-40.

ARSD 20:06:45:29 Authorization delivery

A request for authorization and an authorization form may be delivered to a customer as part of an opt-out notice pursuant to § 20:06:45:09 if the request and the authorization form are clear and conspicuous. An authorization form is not required to be delivered to the consumer or customer or included in any other notices unless the licensee intends to disclose protected health information pursuant to § 20:06:45:27.

History

Source: 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40.
Law Implemented: SDCL 58-2-40.

ARSD 20:06:45:30 Relationship to federal rules

Irrespective of whether a licensee is subject to the federal Health Insurance Portability and Accountability Act privacy rule as promulgated by the U.S. Department of Health and Human Services, if a licensee complies with all requirements of the federal rule except for its effective date provision, the licensee is not subject to the provisions of this chapter.

History

Source: 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40.
Law Implemented: SDCL 58-2-40.

ARSD 20:06:45:31 Relationship to state laws

Nothing in this chapter preempts or supercedes existing state law related to medical records, or health or insurance information privacy.

History

Source: 31 SDR 67, effective November 14, 2004.
General Authority: SDCL 58-2-40.
Law Implemented: SDCL 58-2-40.

Chapter 20:06:46 HIPAA rules -- Nondiscrimination in the group market

ARSD 20:06:46:01 Definitions

Terms used in this chapter mean:

(1) "Affiliation period," a period of time that must expire before health insurance coverage provided by a carrier becomes effective, and during which the carrier is not required to provide benefits;

(2) "Beneficiary," a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder;

(3) "Enrollment date," the first day of coverage or, if there is a waiting period, the first day of the waiting period, whichever is earlier;

(4) "Medical condition," any condition, whether physical or mental, including any condition resulting from illness, injury, accident, pregnancy, or congenital malformation. For purposes of this definition, genetic information is not a condition;

(5) "Participant," any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit;

(6) "Waiting period," with respect to a health benefit plan and an individual, who is a potential enrollee in the plan, the period that must pass with respect to the individual before the individual is eligible to be covered for benefits under the terms of the plan. For purposes of calculating periods of creditable coverage, a waiting period is not to be considered a gap in coverage.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:02 Criteria that cannot be used to determine benefit eligibility

A carrier may not use health status; medical condition, including both physical and mental illnesses; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including acts arising out of domestic violence or participation in activities, such as motorcycling, snowmobiling, all-terrain vehicle riding, horseback riding, skiing, and other similar activities; or disability in determining the eligibility of an individual for coverage under a plan. Nothing in this section requires a health plan to offer or provide particular benefits other than those provided under the terms of the plan or prevents a plan or issuer from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits for similarly situated individuals enrolled in the plan or coverage. For purposes of this section, health factor does not include the decision whether to elect health insurance coverage, including the time chosen to enroll, such as under special enrollment or late enrollment.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:03 Rules for eligibility may not discriminate based on any health factor

A carrier subject to this chapter may not establish a rule for eligibility, including continued eligibility, regarding enrollment for benefits under the plan, that discriminates based on any health factor that relates to the individual or dependent of the individual. Rules of eligibility include those relating to:

(1) Enrollment;

(2) The effective date of coverage;

(3) Waiting or affiliation periods;

(4) Late and special enrollment;

(5) Eligibility for benefit packages, including rules for individuals to change their selection among benefit packages;

(6) Benefits, including rules relating to covered benefits, benefit restrictions, and cost-sharing mechanisms, such as coinsurance, copayments, and deductibles, as described in §§ 20:06:46:06 to 20:06:46:08, inclusive;

(7) Continued eligibility; and

(8) Terminating coverage, including disenrollment, of an individual under the plan.

Nothing in this section prohibits a carrier subject to this chapter from establishing more favorable rules of eligibility for individuals with an adverse health factor, such as disability, than for individuals without the adverse health factor.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:04 Condition of enrollment or continued enrollment may not require additional premium for similarly situated individuals

Condition of enrollment or continued enrollment may not require additional premium for similarly situated individuals** . A carrier subject to this chapter may not require an individual, as a condition of enrollment or continued enrollment under the plan, to pay a premium or contribution rate that is greater than the premium or contribution rate for a similarly situated individual enrolled in the plan based on any health factor that relates to the individual or a dependent of the individual. In determining an individual's premium or contribution rate, discounts, rebates, payments-in-kind, and any other premium differential mechanisms shall be taken into account.

Nothing in this section restricts the aggregate amount that a carrier subject to this chapter may charge an employer for coverage under a plan, except that a carrier subject to this chapter may not quote or charge an employer a different premium than that quoted or charged an individual in a group of similarly situated individuals based on a health factor unless permitted under SDCL chapter 58-18B.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:05 Premium or contribution differential based on completion of a bona fide wellness program

Notwithstanding § 20:06:46:04, a carrier subject to this chapter may establish a premium or contribution differential based on whether an individual has complied with the requirements of a bona fide wellness program.

A carrier subject to this chapter with a cost-sharing mechanism, such as a deductible, payment, or coinsurance, that requires a higher payment from an individual, based on a health factor of that individual or dependent of that individual, than for a similarly situated individual under the plan, does not violate §§ 20:06:46:06 and 20:06:46:07, if the payment differential is based on whether the individual has complied with the requirements of a bona fide wellness program.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:06 Benefit restrictions must be uniformly applied to all similarly situated individuals

Except as required by this section, § 20:06:46:03 does not require a carrier subject to this chapter to provide coverage for any particular benefit to any group of similarly situated individuals.

(1) A carrier subject to this chapter shall make the benefits provided under a plan available uniformly to all similarly situated individuals, as those groups are determined under §§ 20:06:46:09 to 20:06:46:12, inclusive.

(2) For any restriction on a benefit or benefits provided under a plan, a carrier subject to this chapter shall apply the restriction uniformly to all similarly situated individuals and may not direct the restriction, as determined based on all of the relevant facts and circumstances, at individual participants or beneficiaries based on any health factor of the participants or beneficiaries.

(3) A carrier subject to this chapter may impose annual, lifetime, or other limits on benefits and may require a deductible, copayment, coinsurance, or other cost-sharing requirement in order to obtain a benefit under the plan if the limit or cost-sharing requirement applies uniformly to all similarly situated individuals and is not directed at individual participants or beneficiaries based on any health factor of the participants or beneficiaries.

(4) For purpose of this section, a plan amendment applicable to all individuals in one or more groups of similarly situated individuals under the plan and made effective no earlier than the first day of the first plan year after the amendment is adopted is not considered per se to be directed at any individual participants or beneficiaries.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:07 Treatment resulting from domestic violence or a medical condition

If a carrier subject to this chapter generally provides benefits for a type of injury, the plan or carrier may not deny an individual participant or beneficiary benefits otherwise provided under the plan for treatment of the injury if the injury results from an act of domestic violence or a medical condition.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:08 Preexisting condition exclusion requirements

Section 20:06:46:03 does not prohibit a carrier subject to this chapter from imposing a preexisting condition exclusion period if the preexisting exclusion period:

(1) Complies with the requirements for imposing a preexisting condition exclusion period pursuant to §§ 20:06:40:01, 20:06:40:04, 20:06:40:08, 20:06:40:09, 20:06:40:10, 20:06:40:15, and SDCL 58-18-45;

(2) Is applied uniformly to all similarly situated individuals, as those groups are determined under §§ 20:06:46:09 to 20:06:46:12, inclusive; and

(3) Is not directed at individual participants or beneficiaries based on any health factor of the participants or beneficiaries.

For purposes of §§ 20:06:46:06 to 20:06:46:12, inclusive, a plan amendment relating to a preexisting condition exclusion that is applicable to all individuals in one or more groups of similarly situated individuals under the plan and made effective no earlier than the first day of the first plan year after the amendment is adopted is not considered per se to be directed at any individual participants or beneficiaries.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:09 Treatment of similarly situated individuals

Sections 20:06:46:06 to 20:06:46:12, inclusive, apply only within a group of individuals who are treated as similarly situated individuals.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:10 Employment based factors in determining two or more distinct groups of participants

Subject to § 20:06:46:12, § 20:06:46:03 does not prohibit a carrier subject to this chapter from treating participants as two or more distinct groups of similarly situated individuals if the distinction made between or among groups of participants is based on a bona fide employment-based classification that is consistent with the employer's usual business practice. Whether an employment-based classification is bona fide shall be determined based on all of the relevant facts and circumstances. Relevant facts and circumstances include whether the employer uses the classification for purposes independent of qualification for health coverages. Such classifications may include:

(1) Full-time versus part-time status;

(2) Membership in a collective bargaining unit;

(3) Date of hire;

(4) Length of service; and

(5) Current employee versus former employee status.

A classification based on a health factor may not be determined to be a bona fide employment-based classification for purposes of §§ 20:06:46:09 to 20:06:46:12, inclusive, unless the requirements of § 20:06:46:03 are satisfied.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:11 Beneficiaries treated as two or more distinct groups

Subject to § 20:06:46:12, § 20:06:46:03 does not prohibit a carrier subject to this chapter from treating beneficiaries as two or more distinct groups of similarly situated individuals if the distinction made between or among the groups of beneficiaries is based on any of the following factors:

(1) A bona fide employment-based classification of the participant through whom the beneficiary is receiving coverage;

(2) Relationship to the participant (e.g., as spouse or as a dependent child);

(3) Marital status;

(4) With respect to a child of the participant, age or student status; or

(5) Any other factor, if the factor is not a health factor.

This section may not be construed to prevent a carrier subject to this chapter from providing more favorable treatment of individuals under the plan with adverse health factors in accordance with § 20:06:46:03.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:12 Creation or modification of an employment or coverage classification not permitted

Notwithstanding §§ 20:06:46:10 and 20:06:46:11, unless permitted under § 20:06:46:03, if the creation or modification of an employment or coverage classification is directed at individual participants or beneficiaries based on a health factor of the participants or beneficiaries, the classification is not permitted under §§ 20:06:46:09 to 20:06:46:12, inclusive.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:13 Rule of eligibility or individual's premium or contribution rate

Except to the extent permitted under § 20:06:46:14 or 20:06:46:15, in accordance with §§ 20:06:46:03 to 20:06:46:05, inclusive, a carrier subject to this chapter may not establish a rule of eligibility or set an individual's premium or contribution rate based on:

(1) Whether the individual is confined in a hospital or other health care institution; or

(2) The individual's ability to engage in normal life activities.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:14 Actively-at-work not a condition of eligibility or premium or contribution rate

In accordance with §§ 20:06:46:03 to 20:06:46:05, inclusive, a carrier subject to this chapter may not establish a rule for eligibility or set an individual's premium or contribution rate based on whether the individual is actively-at-work, including whether an individual is continuously employed, unless absence from work due to any health factor is treated, for purposes of the plan, as being actively-at-work. However, a carrier subject to this chapter may establish a rule for eligibility that requires an individual to begin work for the employer sponsoring the plan before coverage under the plan becomes effective if the rule for eligibility applies regardless of the reasons for the absence.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:46:15 Rule of eligibility or individual premium or contribution permitted

Notwithstanding §§ 20:06:46:13 and 20:06:46:14, a carrier subject to this chapter may establish a rule of eligibility or set an individual's premium or contribution rate with respect to similarly situated individuals, if the rule is in compliance with SDCL 58-18-48, 58-18B-3, and 58-18B-15, as those groups are determined under §§ 20:06:46:09 to 20:06:46:12, inclusive.

History

Source: 29 SDR 48, effective October 10, 2002.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

Chapter 20:06:47 Group disability benefits

ARSD 20:06:47:01 Scope

This chapter applies to group disability income insurance policies as defined in SDCL 58-17-108.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-49.

ARSD 20:06:47:02 Establishment of claims procedures

Any plan providing disability benefits shall establish and maintain reasonable claim procedures. The procedures shall include the following:

(1) A description of all claim procedures including, but not limited to, any procedures for obtaining prior authorization as a prerequisite for obtaining a benefit and adverse determination review procedures;

(2) Applicable time frames;

(3) Administrative processes and safeguards to ensure consistent benefit determinations for similar situations;

(4) In regard to voluntary appeal:

(a) The plan waives any right to assert that a covered person has failed to exhaust administrative remedies because the claimant did not elect to submit a benefit dispute to any such voluntary level of appeal provided by the plan;

(b) The plan agrees that any statute of limitations or other defense based on timeliness is tolled during the time that any such voluntary appeal is pending;

(c) The plan provides that a covered person may elect to submit a benefit dispute to such voluntary level of appeal only after the exhaustion of the appeals; and

(d) The plan provides to any covered person, upon request, sufficient information relating to the voluntary level of appeal to enable the covered person to make an informed judgment about whether to submit a benefit dispute to the voluntary level of appeal, including a statement that the decision of a covered person as to whether or not to submit a benefit dispute to the voluntary level of appeal will have no effect on the covered person's right to representation, the process for selecting the decision maker, and the circumstances, if any, that may affect the impartiality of the decision maker, such as any financial or personal interests in the result or any past or present relationship with any party to the review process.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-49.

ARSD 20:06:47:03 Unacceptable claims procedures

The claims procedures may not contain any provisions or be administered in a method that unduly inhibits or hampers the initiation or processing of claims for benefits such as:

(1) Denying a claim for lack of prior authorization in circumstances where obtaining authorization could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function;

(2) Precluding an authorized representative from acting on behalf of a covered person;

(3) Requiring the filing of more than two appeals of an adverse benefit determination prior to taking civil action;

(4) Requiring arbitration; and

(5) Imposing fees or costs for voluntary appeals.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-49.

ARSD 20:06:47:04 Initial benefit determination

Any plan providing disability benefits shall notify a covered person, or if applicable, the covered person's authorized representative, of a benefit determination within a reasonable time period, but not later than 45 days after receipt of the claim. This time period for making a determination and notifying the covered person or their authorized representative may be extended for up to 30 days when necessary due to matters beyond the control of the plan. If the plan is unable to render a determination within 45 days, the plan must notify the covered person in writing, prior to the end of the initial 45-day period of that fact, and include the following:

(1) The standards used to determine benefit entitlement;

(2) The issues preventing benefit determination;

(3) Any additional information or materials needed to complete the determination;

(4) The time period, which may not be less than 45 days, that the covered person or the person's authorized representative has to submit additional information; and

(5) The date by which the plan expects to render determination.

If the plan is unable to render a determination, due to matters beyond its control, the time period may be extended for a second 30-day period, providing the plan notifies the covered person in writing, prior to the end of the initial 30-day extension and includes the notification requirements listed above. The toll of the time periods begins at the time the claim is filed in accordance with plan procedures without regard to whether all the information necessary accompanies the filing. In regard to time period extensions, the time is tolled from the date on which notice of the extension is sent to the covered person until the date on which the covered person responds to the request for additional information.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-49.

ARSD 20:06:47:05 Adverse benefit notification

The plan shall provide a covered person or, if applicable, the person's authorized representative, with written or electronic notification of any adverse benefit determination in a manner calculated to be understood by the covered person. The notification shall include the following:

(1) The specific reason or reasons for the determination;

(2) Reference to the specific plan provision on which the determination was based;

(3) A description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary;

(4) A description of review procedures and applicable time frames;

(5) A statement of the person's right to bring a civil action under applicable law;

(6) The specific rule, guideline, protocol, or other similar criterion used in making the adverse determination, or a statement that such items were relied upon and are available free of charge to the covered person upon request;

(7) An explanation of the scientific or clinical judgment used in the determination based on medical necessity or experimental treatment or similar exclusion or limitation, or a statement that such explanation will be provided free of charge upon request; and

(8) The statement "You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and the South Dakota Division of Insurance."

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-49.

ARSD 20:06:47:06 Appeal of adverse benefit determination

Any plan providing disability benefits, upon receipt of an appeal of an adverse benefit determination, shall notify a covered person or, if applicable, the covered person's authorized representative, of the benefit determination within a reasonable time period, but not later than 45 days after receipt of the request, without regard to whether all the information necessary to make a benefit determination accompanies the filing. This time period for making a determination and notifying the covered person of the covered person's authorized representative may be extended for up to 45 days when necessary due to matters beyond the control of the plan. If the plan is unable to render a determination within the 45 days, the plan must notify the covered person in writing, prior to the end of the initial 45-day period of that fact, and include the following:

(1) The special circumstances requiring an extension of time; and

(2) The date by which the plan expects to render a determination.

The time period for extensions due to the covered person's failure to submit information necessary to decide a claim shall be tolled from the date on which the notification of the extension is sent until the date on which the covered person responds to the request for additional information.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-49.

ARSD 20:06:47:07 Full and fair review

The plan shall provide full and fair review of an adverse benefit determination. Evidence of a full and fair review consists of the following:

(1) A reasonable opportunity to submit written comments, documents, records, and other information relating to the claim for benefits;

(2) Reasonable access to copies of any documents, records, and other information relevant to the claim for benefits upon request and free of charge;

(3) Consideration of all comments, documents, records, and other information submitted by the covered person relating to the claim for benefits without regard to whether such information was considered or available in the initial determination;

(4) A minimum of 180 days following notification of an adverse determination in which to appeal;

(5) No deference to the initial determination and a review that is conducted by neither the individual who made the adverse determination or a subordinate of that individual;

(6) Consultation by the individual reviewing the appeal with a health care professional of appropriate training and experience in the field of medicine involved when the determination is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary or appropriate. However, the professional may not be the individual consulted in the initial determination or a subordinate of that individual; and

(7) The identification of medical or vocational experts whose advice was obtained in regard to the determination, regardless if the advice was relied upon in making the determination.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-49.

ARSD 20:06:47:08 Relevant claim information

A document, record, or other information shall be considered relevant to a claim if such document, record, or other information:

(1) Was relied upon in making the benefit determination;

(2) Was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination;

(3) Demonstrates compliance with the administrative processes and safeguards required in making the benefit determination; and

(4) Constitutes statement of policy or guidance with respect to the plan concerning the denied treatment option or benefit for the covered person's diagnosis, without regard to whether such advice or statement was relied upon in making the benefit determination.

History

Source: 30 SDR 39, effective September 28, 2003; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17H-49.
Law Implemented: SDCL 58-17H-49.

Chapter 20:06:48 Health insurance risk pool

ARSD 20:06:48:01 Repealed

Eligible person -- Defined.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 32, effective July 1, 2015.

ARSD 20:06:48:02 Repealed

Enrollment forms.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:03 Repealed

Tolling of 63-day timeframe.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; 31 SDR 214, effective July 6, 2005; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:04 Repealed

Risk pool application timeframe.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:05 Repealed

Effective date of risk pool coverage.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:06 Repealed

Prior application for major medical coverage.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:07 Repealed

Payment of insurance producer commission.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; 35 SDR 183, effective February 2, 2009; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:08 Repealed

Denial of claim.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:09 Repealed

Appeals (repealed, effective January 1, 2017).**

History

Source: 30 SDR 51, effective October 28, 2003; 36 SDR 209, effective July 1, 2010; 39 SDR 100, effective December 6, 2012; SL 2015, ch 249, §§ 34 and 35, effective July 1, 2015; 42 SDR 52, effective October 13, 2015; repealed, effective January 1, 2017.

ARSD 20:06:48:10 Repealed

Payment of risk pool premiums.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:11 Repealed

Coverage cancellation for nonpayment of premium.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:12 Repealed

Lifetime benefit limit.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; 35 SDR 306, effective July 1, 2009; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:13 Repealed

Changing plans.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; 36 SDR 209, effective July 1, 2010; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:14 Repealed

One-person group ineligible.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:15 Repealed

Cooperation required.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; 32 SDR 203, effective June 5, 2006; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:16 Repealed

Preexisting condition waiting period prohibited.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:17 Repealed

Eligibility -- Exclusionary rider.** Repealed.

History

Source: 30 SDR 51, effective October 28, 2003; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:18 Repealed

Public health plans.** Repealed.

History

Source: 31 SDR 214, effective July 6, 2005; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:19 Repealed

Eligibility based upon residence.** Repealed.

History

Source: 32 SDR 203, effective June 5, 2006; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:20 Repealed

Termination of coverage due to fraud.** Repealed.

History

Source: 33 SDR 226, effective June 25, 2007; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

ARSD 20:06:48:21 Repealed

Claims paid in error -- Debt subject to recovery (repealed, effective January 1, 2017).**

History

Source: 33 SDR 226, effective June 25, 2007; SL 2015, ch 249, § 35, July 1, 2015; repealed, effective January 1, 2017.

ARSD 20:06:48:22 Repealed

Creditable coverage -- Children's Health Insurance Program.** Repealed.

History

Source: 36 SDR 127, effective March 1, 2010; repealed, SL 2015, ch 249, § 33, effective July 1, 2015.

Chapter 20:06:49 Discount plans

ARSD 20:06:49:01 Nominal processing fee

A discount plan subject to the registration provisions of SDCL 58-17E-9 may withhold a nominal processing fee not to exceed $25.

History

Source: 31 SDR 214, effective July 6, 2005; 33 SDR 230, effective July 2, 2007.
General Authority: SDCL 58-17E-45.
Law Implemented: SDCL 58-17E-41, 58-17E-45.

Chapter 20:06:50 Coordination of benefits

ARSD 20:06:50:01 Permissible policy language and disclosure forms

Appendices A and B are samples of permissible policy language and disclosure forms in reference to coordination of benefits.

History

Source: 32 SDR 232, effective July 10, 2006.
General Authority: SDCL 58-18A-61.
Law Implemented: SDCL 58-18A-61.

Chapter 20:06:51 Mortality tables for use in determining minimum reserve liabilities

ARSD 20:06:51:01 Definitions

Terms used in §§ 20:06:51:01 to 20:06:51:06, inclusive, mean:

(1) "2001 CSO Mortality Table," that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2^nd Quarter 2002 ) and supplemented by the 2001 CSO Preferred Class Structure Mortality Table. Unless the context indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables in the 2001 CSO Mortality Table include the following:

(a) 2001 CSO Mortality Table (F), means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table;

(b) 2001 CSO Mortality Table (M) means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table;

(c) Composite mortality tables means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers;

(d) Smoker and nonsmoker mortality tables means mortality tables with separate rates of mortality for smokers and nonsmokers;

(2) "2001 CSO Preferred Class Structure Mortality Table," mortality tables with separate rates of mortality for Super Preferred Nonsmokers, Preferred Nonsmokers, Residual Standard Nonsmokers, Preferred Smokers, and Residual Standard Smokers splits of the 2001 CSO Nonsmoker and Smoker tables as adopted by the NAIC at the September, 2006, national meeting and published in the NAIC Proceedings (3^rd Quarter 2006) . Unless the context indicates otherwise, the 2001 CSO Preferred Class Structure Mortality Table includes both the ultimate form of that table and the select and ultimate form of that table. It includes both the smoker and nonsmoker mortality tables. It includes both the male and female mortality tables and the gender composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality table;

(3) "Preneed insurance policy," any life insurance policy or certificate that is issued in combination with, in support of, with an assignment to, or as a guarantee for a prearrangement agreement for goods and services to be provided at the time of and immediately following the death of the insured. Goods and services may include embalming, cremation, body preparation, viewing or visitation, coffin or urn, memorial stone, and transportation of the deceased. The status of the policy or contract as preneed insurance is determined at the time of issue in accordance with the policy form filing;

(4) "Statistical agent," an entity with proven systems for protecting the confidentiality of individual insured and insurer information; demonstrated resources for and history of ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and a history of and means for aggregation of data and accurate promulgation of the experience modifications in a timely manner;

(5) "Ultimate 1980 CSO," the Commissioners' 1980 Standard Ordinary Life Valuation Mortality Tables (1980 CSO) without ten-year selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law approved in December 1983.

Reference: 2002-2 NAIC Proceedings. 1153.

History

Source: 33 SDR 107, adopted December 6, 2006, effective January 1, 2007; 35 SDR 88, effective October 27, 2008.
General Authority: SDCL 58-26-83.
Law Implemented: SDCL 58-26-45, 58-2-6-83.

ARSD 20:06:51:02 Election of Mortality Table

At the election of the insurer for each calendar year of issue, for any one or more specified plans of insurance and subject to satisfying the conditions stated in this chapter, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum valuation standard for policies issued after December 31, 2006. No such election may be made until the company demonstrates at least 20 percent of the business to be valued on this table is in one or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to this chapter shall be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to the requirements of the NAIC model regulation, "Recognition of the 2001 CSO Mortality Table For Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model Regulation."

History

Source: 33 SDR 107, adopted December 6, 2006, effective January 1, 2007.
General Authority: SDCL 58-26-83.
Law Implemented: SDCL 58-26-83.

ARSD 20:06:51:03 Separate rates for preferred and standard nonsmoker lives

For each plan of insurance with separate rates for preferred and standard nonsmoker lives, an insurer may use the Super Preferred Nonsmoker, Preferred Nonsmoker, and Residual Standard Nonsmoker tables to substitute for the Nonsmoker Mortality Table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, except for business valued under the Residual Standard Nonsmoker Table, the appointed actuary shall certify that:

(1) The present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class;

(2) The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class.

History

Source: 33 SDR 107, adopted December 6, 2006, effective January 1, 2007.
General Authority: SDCL 58-26-83.
Law Implemented: SDCL 58-26-83.

ARSD 20:06:51:04 Separate rates for preferred and standard smoker lives

For each plan of insurance with separate rates for preferred and standard smoker lives, an insurer may use the Preferred Smoker and Residual Standard Smoker tables to substitute for the Smoker Mortality Table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, for business valued under the Preferred Smoker Table, the appointed actuary shall certify that:

(1) The present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the preferred smoker valuation basis table corresponding to the valuation table being used for that class;

History

Source: 33 SDR 107, approved December 6, 2006, effective January 1, 2007.
General Authority: SDCL 58-26-83.
Law Implemented: SDCL 58-26-83.

ARSD 20:06:51:05 Filing of reports

Unless exempted by the director, every authorized insurer using the 2001 CSO Preferred Class Structure Table shall annually file statistical reports showing mortality and such other information as the director may deem necessary or expedient for the administration of the provisions of §§ 20:06:51:01 to 20:06:51:05, inclusive. The form of the reports shall be established by the director who shall consider the use of any form established by the NAIC or a statistical agent and designated by the NAIC.

History

Source: 33 SDR 107, adopted December 6, 2006, effective January 1, 2007.
General Authority: SDCL 58-26-83.
Law Implemented: SDCL 58-26-83.

ARSD 20:06:51:06 Minimum valuation mortality standards for preneed insurance policies

For preneed insurance and similar policies, the minimum mortality standard for determining reserve liabilities and nonforfeiture values for both male and female insureds is the Ultimate 1980 CSO. However, for preneed insurance policies issued after December 31, 2008, and before January 1, 2012, the 2001 CSO may be used as the minimum standard for reserves and minimum standard for nonforfeiture benefits for both male and female insureds.

If an insurer elects to use the 2001 CSO as a minimum standard for any policy issued on or after December 31, 2008, and before January 1, 2012, the insurer shall provide, as a part of the actuarial opinion memorandum submitted in support of the company's asset adequacy testing, an annual written notification to the domiciliary commissioner. The notification shall include:

(1) A complete list of all preneed policy forms that use the 2001 CSO as a minimum standard;

(2) A certification signed by the appointed actuary stating that the reserve methodology employed by the company in determining reserves for the preneed policies issued after December 31, 2008, and using the 2001 CSO as a minimum standard, develops adequate reserves. For the purposes of this certification, the preneed insurance policies using the 2001 CSO as a minimum standard cannot be aggregated with any other policies; and

(3) Supporting information regarding the adequacy of reserves for preneed insurance policies issued after December 31, 2008, and using the 2001 CSO as a minimum standard for reserves.

Preneed insurance policies issued after December 31, 2011, must use the Ultimate 1980 CSO in the calculation of minimum nonforfeiture values and minimum reserves.

This rule applies to preneed insurance policies issued after December 31, 2008.

History

Source: 35 SDR 88, effective October 27, 2008.
General Authority: SDCL 58-15-43.12, 58-26-49, 58-26-83.
Law Implemented: SDCL 58-15-43.8, 58-26-45, 58-26-46, 58-26-49, 58-26-83.

Chapter 20:06:52 Discretionary clauses

ARSD 20:06:52:01 Definitions

Terms used in this chapter mean:

(1) "Appeal," any review or appeal before an administrative agency, arbitrator, court or mediator;

(2) "Discretionary clause," a provision in a policy that purports to bind the claimant to, or grant deference in, proceedings subsequent to the insurer's decision, denial, or interpretation on terms, coverage, or eligibility for benefits, including a policy provision that provides any of the following:

(a) A policyholder or other claimant may not appeal a denial of a claim;

(b) The insurer's decision to deny policy coverage is binding upon a policyholder or other claimant or is otherwise entitled to deference upon appeal or review;

(c) On appeal or review the insurer's decision-making power as to policy coverage is binding or otherwise entitled to deference;

(d) The insurer's interpretation of the terms of a policy is binding upon a policyholder or other claimant or is otherwise entitled to deference;

(e) On appeal the insurer's interpretation of the terms of a policy is binding or is otherwise entitled to deference;

(f) A standard of review on appeal that gives deference in the original claim decision, or gives rise to such standard of review;

(g) A standard of review on appeal other than a de novo review, or gives rise to a standard of review other than de novo;

(h) The insurer has discretion to determine whether a claim is compensable or to interpret the provisions of the policy or certificate;

(3) "Policy," any plan, certificate, contract, policy, and agreement that provides for health insurance as defined by SDCL 58-9-3 or otherwise provides health or disability benefits.

History

Source: 35 SDR 48, effective September 8, 2008.
General Authority: SDCL 58-2-39, 58-17-87, 58-18-79, 58-18-79(14), 58-29D-34.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-29D-23, 58-29D-31(2)(6), 58-33-67.

ARSD 20:06:52:02 Discretionary clauses prohibited

A discretionary clause is not permitted in any individual or group health policy. No policy offered or issued in this state by a health carrier or plan to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services may contain a discretionary clause or similar provision purporting to reserve discretion to the health carrier or plan to interpret the terms of the policy or to provide standards of interpretation or review that are inconsistent with the laws of this state. The provisions of this rule apply to any health insurance policy issued or renewed after June 30, 2008.

Nothing in this section limits the director's authority under SDCL 58-11-19 to 58-11-21, inclusive, to disapprove or withdraw approval of any policy that contains a discretionary clause or to otherwise disapprove any practice involving a discretionary clause.

History

Source: 35 SDR 48, effective September 8, 2008.
General Authority: SDCL 58-2-39, 58-17-87, 58-18-79, 58-18-79(14), 58-29D-34.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-29D-23, 58-29D-31(2)(6), 58-33-67.

ARSD 20:06:52:03 Application to claims administration services

The provisions of this chapter apply to any health insurer or third party administrator engaged in the business of insurance including any contractual arrangement entered into for the administration of claims under an employer health benefit plan. No health insurer or third party administrator exercising any claims administrative authority may decide or adjudicate any claim by or through the exercise of any discretionary clause.

History

Source: 35 SDR 48, effective September 8, 2008.
General Authority: SDCL 58-2-39, 58-17-87, 58-18-79, 58-18-79(14), 58-29D-34.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-29D-23, 58-29D-31(2)(6), 58-33-67.

Chapter 20:06:53 External and internal review

ARSD 20:06:53:01 Definitions

Terms used in this chapter mean:

(1) "Adverse determination," a determination by a health carrier or its designee utilization review organization that an admission, availability of care, continued stay, or other health care service that is a covered benefit has been reviewed and, based upon the information provided, does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness, and the requested service or payment for the service is therefore denied, reduced, or terminated. A rescission of coverage is an adverse determination;

(2) "Ambulatory review," utilization review of health care services performed or provided in an outpatient setting;

(3) "Authorized representative," any person to whom a covered person has given express written consent to represent the covered person in an external review; any person authorized by law to provided substituted consent for a covered person; or any family member of the covered person or the covered person's treating health care professional, but only if the covered person is unable to provide consent;

(4) "Best evidence," evidence based on:

(a) Randomized clinical trials;

(b) If randomized clinical trials are not available, cohort studies or case-control studies;

(d) If subsections (a), (b), and (c) are not available, expert opinion;

(5) "Case-control study," a retrospective evaluation of two groups of patients with different outcomes to determine which specific interventions the patients received;

(6) "Case management," a coordinated set of activities conducted for individual patient management of serious, complicated, protracted, or other health conditions;

(7) "Case-series," an evaluation of a series of patients with a particular outcome, without the use of a control group;

(8) "Certification," a determination by a health carrier or its designee utilization review organization that an admission, availability of care, continued stay, or other health care service has been reviewed and, based on the information provided, satisfies the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, and effectiveness;

(9) "Clinical review criteria," the written screening procedures, decision abstracts, clinical protocols, and practice guidelines used by a health carrier to determine the necessity and appropriateness of health care services;

(10) "Cohort study," a prospective evaluation of two groups of patients with only one group of patients receiving a specific intervention;

(11) "Concurrent review," utilization review conducted during a patient's hospital stay or course of treatment;

(12) "Covered benefits" or "benefits," those health care services to which a covered person is entitled under the terms of a health benefit plan;

(13) "Covered person," a policyholder, subscriber, enrollee, or other individual participating in a health benefit plan;

(14) "Discharge planning," the formal process for determining, prior to discharge from a facility, the coordination and management of the care that a patient receives following discharge from a facility;

(15) "Disclose," to release, transfer, or otherwise divulge protected health information to any person other than the individual who is the subject of the protected health information;

(16) "Emergency medical condition," the sudden and, at the time, unexpected onset of a health condition or illness that requires immediate medical attention, where failure to provide medical attention would result in a serious impairment to bodily functions, serious dysfunction of a bodily organ or part, or would place the person's health in serious jeopardy;

(17) "Emergency services," health care items and services furnished or required to evaluate and treat an emergency medical condition;

(18) "Evidence-based standard," the conscientious, explicit, and judicious use of the current best evidence based on the overall systematic review of the research in making decisions about the care of individual patients;

(19) "Expert opinion," a belief or an interpretation by specialists with experience in a specific area about the scientific evidence pertaining to a particular service, intervention, or therapy;

(20) "Facility," an institution providing health care services or a health care setting, including, hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory, and imaging centers, and rehabilitation and other therapeutic health settings;

(21) "Final adverse determination," an adverse determination involving a covered benefit that has been upheld by a health carrier, or its designee utilization review organization, at the completion of the health carrier's internal grievance process procedures as set forth in SDCL 58-17I-1 to 58-17I-16, inclusive;

(22) "Health benefit plan," a policy, contract, certificate, or agreement offered or issued by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services;

(23) 'Health care professional," a physician or other health care practitioner licensed, accredited, or certified to perform specified health care services consistent with state law;

(24) "Health care provider" or "provider," a health care professional or a facility;

(25) "Health care services," services for the diagnosis, prevention, treatment, cure or relief of a health condition, illness, injury, or disease;

(26) "Health information," information or data, whether oral or recorded in any form or medium, and personal facts or information about events or relationships that relates to:

(a) The past, present, or future physical, mental, or behavioral health or condition of an individual or a member of the individual's family;

(b) The provision of health care services to an individual; or

(27) "Independent review organization," an entity that conducts independent external reviews of adverse determinations and final adverse determinations;

(28) "Medical or scientific evidence," evidence found in the following sources:

(a) Peer-reviewed scientific studies published in, or accepted for publication by, medical journals that meet nationally recognized requirements for scientific manuscripts and that submit most of their published articles for review by experts who are not part of the editorial staff;

(b) Peer-reviewed medical literature, including literature relating to therapies reviewed and approved by a qualified institutional review board, biomedical compendia, and other medical literature that meet the criteria of the National Institutes of Health's Library of Medicine for indexing in Index Medicus (Medline) and Elsevier Science Ltd. for indexing in Excerpta Medicus (EMBASE);

(c) Medical journals recognized by the Secretary of Health and Human Services under Section 1861(t)(2) of the federal Social Security Act;

(d) The following standard reference compendia:

(i) The American Hospital Formulary Service-Drug Information;

(ii) Drug Facts and Comparisons;

(iii) The American Dental Association Accepted Dental Therapeutics; and

(iv) The United States Pharmacopoeia-Drug Information;

(e) Findings, studies, or research conducted by or under the auspices of federal government agencies and nationally recognized federal research institutes, including:

(i) The federal Agency for Healthcare Research and Quality;

(ii) The National Institutes of Health;

(iii) The National Cancer Institute;

(iv) The National Academy of Sciences;

(v) The Centers for Medicare & Medicaid Services;

(vi) The federal Food and Drug Administration; and

(vii) Any national board recognized by the National Institutes of Health for the purpose of evaluating the medical value of health care services; or

(f) Any other medical or scientific evidence that the director determines is comparable to the sources listed in subsections (a) to (e), inclusive;

(29) "NAIC," the National Association of Insurance Commissioners;

(30) "Prospective review," utilization review conducted prior to an admission or a course of treatment;

(31) "Protected health information," health information:

(a) That identifies an individual who is the subject of the information; or

(b) With respect to which there is a reasonable basis to believe that the information could be used to identify an individual;

(32) "Randomized clinical trial," a controlled, prospective study of patients that have been randomized into an experimental group and a control group at the beginning of the study with only the experimental group of patients receiving a specific intervention, which includes study of the groups for variables and anticipated outcomes over time;

(33) "Retrospective review," a review of medical necessity conducted after services have been provided to a patient, but does not include the review of a claim that is limited to an evaluation of reimbursement levels, veracity of documentation, accuracy of coding, or adjudication for payment;

(34) "Second opinion," an opportunity or requirement to obtain a clinical evaluation by a provider other than the one originally making a recommendation for a proposed health care service to assess the clinical necessity and appropriateness of the initial proposed health care service;

(35) "Utilization review," a set of formal techniques designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of, health care services, procedures, or settings. Techniques may include ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning, or retrospective review;

(36) "Utilization review organization," an entity that conducts utilization review, other than a health carrier performing a review of its own health benefit plan.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:02 Applicability

Except as otherwise provided in this section, this chapter applies to any plan of individual health coverage, including any health benefit plans subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive, that is not an excepted benefit pursuant to SDCL 58-17-69(13) and any employer based health plan, including health benefit plans subject to the provisions of SDCL 58-18-42. This chapter does not apply to self funded plans preempted from state regulation pursuant to the Employee Retirement Income Security Act of 1974. Nothing in §§ 20:06:53:01 to 20:06:53:67 applies to grandfathered plans pursuant to 75 Fed. Reg. 116 (2010) to be codified as 26 C.F.R. § 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-18-87.
Law Implemented: SDCL 58-18-42, 58-18-51.1.

ARSD 20:06:53:03 Notice of right to external review

A health carrier shall notify the covered person in writing of the covered person's right to request an external review to be conducted pursuant to §§ 20:06:53:12 to 20:06:53:53, inclusive, and include the appropriate statements and information set forth in this section at the same time the health carrier sends written notice of:

(1) An adverse determination upon completion of the health carrier's utilization review process set forth in SDCL 58-17H-1 to 58-17H-49, inclusive; and

(2) A final adverse determination.

As part of the written notice required by this section, a health carrier includes the following, or substantially equivalent, language: "We have denied your request for the provision of, or payment for, a health care service or course of treatment. You may have the right to have our decision reviewed by health care professionals who have no association with us if our decision involved making a judgment as to the medical necessity, appropriateness, health care setting, level of care, or effectiveness of the health care service or treatment you requested by submitting a request for external review to the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, South Dakota 57501." The notice as contained in Appendix A, or a substantially similar form as may be approved by the director, must be used.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011; 42 SDR 52, effective October 13, 2015.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:04 Content of notices

The health carrier shall include in the notice required under § 20:06:53:03:

(1) For a notice related to an adverse determination, a statement informing the covered person that:

(a) If the covered person has a medical condition where the timeframe for completion of an expedited review of a grievance involving an adverse determination set forth in SDCL 58-17I-12 to 58-17I-15, inclusive, would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the covered person or the covered person's authorized representative may file a request for an expedited external review to be conducted pursuant to §§ 20:06:53:23 to 20:06:53:32, inclusive, or §§ 20:06:53:33 to 20:06:53:54, inclusive;

(b) If:

(i) The adverse determination involves a denial of coverage based on a determination that the recommended or requested health care service or treatment is experimental or investigational and the covered person's treating physician certifies in writing that the recommended or requested health care service or treatment that is the subject of the adverse determination would be significantly less effective if not promptly initiated; and

(ii) At the same time the covered person or the covered person's authorized representative files a request for an expedited review of a grievance involving an adverse determination as set forth in SDCL 58-17I-12 to 58-17I-15, inclusive, then the independent review organization assigned to conduct the expedited external review will determine whether the covered person is required to complete the expedited review of the grievance prior to conducting the expedited external review; and

(c) The covered person or the covered person's authorized representative may file a grievance under the health carrier's internal grievance process as set forth in SDCL 58-17I-1 to 58-17I-16, inclusive, but if the health carrier has not issued a written decision to the covered person or the covered person's authorized representative within 30 days following the date the covered person or the covered person's authorized representative files the grievance with the health carrier and the covered person or the covered person's authorized representative has not requested or agreed to a delay, the covered person or the covered person's authorized representative may file a request for external review pursuant to § 20:06:53:06 and shall be considered to have exhausted the health carrier's internal grievance process for purposes of §§ 20:06:53:07 to 20:06:53:11, inclusive; and

(2) For a notice related to a final adverse determination, a statement informing the covered person that:

(a) If the covered person has a medical condition where the timeframe for completion of a standard external review pursuant to §§ 20:06:53:12 to 20:06:53:22, inclusive, would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function, the covered person or the covered person's authorized representative may file a request for an expedited external review pursuant to §§ 20:06:53:23 to 20:06:53:32, inclusive; or

(b) If the final adverse determination concerns:

(i) An admission, availability of care, continued stay, or health care service for which the covered person received emergency services, but has not been discharged from a facility, the covered person or the covered person's authorized representative may request an expedited external review pursuant to §§ 20:06:53:23 to 20:06:53:32, inclusive; or

(ii) A denial of coverage based on a determination that the recommended or requested health care service or treatment is experimental or investigational, the covered person or the covered person's authorized representative may file a request for a standard external review to be conducted pursuant to §§ 20:06:53:33 to 20:06:53:53, inclusive, or if the covered person's treating physician certifies in writing that the recommended or requested health care service or treatment that is the subject of the request would be significantly less effective if not promptly initiated, the covered person or the covered person's authorized representative may request an expedited external review to be conducted under §§ 20:06:53:33 to 20:06:53:53, inclusive.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:05 Review procedures and authorization to accompany notice

In addition to the information required by § 20:06:53:04, the health carrier shall include a copy of the description of both the standard and expedited external review procedures the health carrier is required to provide pursuant to § 20:06:53:67, highlighting the provisions in the external review procedures that give the covered person or the covered person's authorized representative the opportunity to submit additional information and including any forms used to process an external review.

As part of any forms provided under this section, the health carrier shall include an authorization form, or other document approved by the director that complies with the requirements of 45 C.F.R § 164.508, by which the covered person, for purposes of conducting an external review under this chapter, authorizes the health carrier and the covered person's treating health care provider to disclose protected health information, including medical records, concerning the covered person that are pertinent to the external review, as provided in § 20:06:45:27.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:06 Request for external review

Except for a request for an expedited external review as set forth in §§ 20:06:53:23 to 20:06:53:32, all requests for external review shall be made in writing to the director.

The form to be used for external review requests is in Appendix B. A covered person or the covered person's authorized representative may make a request for an external review of an adverse determination or final adverse determination.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:07 Exhaustion of internal grievance process required

Except as provided in §§ 20:06:53:09 to 20:06:53:11, inclusive, a request for an external review pursuant to §§ 20:06:53:12 to 20:06:53:53, inclusive, may not be made until the covered person has exhausted the health carrier's internal grievance process as set forth in SDCL 58-17I-1 to 58-17I-16, inclusive.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16- 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:08 When exhaustion of internal grievance occurs

A covered person shall be considered to have exhausted the health carrier's internal grievance process for purposes of this section, if the covered person or the covered person's authorized representative:

(1) Has filed a grievance involving an adverse determination pursuant to SDCL 58-17I-7 to 58-17I-11, inclusive; and

(2) Except to the extent the covered person or the covered person's authorized representative requested or agreed to a delay, has not received a written decision on the grievance from the health carrier within 30 days following the date the covered person or the covered person's authorized representative filed the grievance with the health carrier. However, a covered person or the covered person's authorized representative may not make a request for an external review of an adverse determination involving a retrospective review determination made pursuant to SDCL 58-17I-7 to 58-17I-11, inclusive, until the covered person has exhausted the health carrier's internal grievance process.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:09 Request for expedited review

At the same time a covered person or the covered person's authorized representative files a request for an expedited review of a grievance involving an adverse determination as set forth in SDCL 58-17I-12 to 58-17I-15, inclusive, the covered person or the covered person's authorized representative may file a request for an expedited external review of the adverse determination based upon:

(1) Under §§ 20:06:53:23 to 20:06:53:32, inclusive, if the covered person has a medical condition where the timeframe for completion of an expedited review of the grievance involving an adverse determination set forth in SDCL 58-17I-12 to 58-17I-15, inclusive, would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function; or

(2) Under §§ 20:06:53:33 to 20:06:53:53, inclusive, if the adverse determination involves a denial of coverage based on a determination that the recommended or requested health care service or treatment is experimental or investigational and the covered person's treating physician certifies in writing that the recommended or requested health care service or treatment that is the subject of the adverse determination would be significantly less effective if not promptly initiated.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:10 Determination of expedited review

Upon receipt of a request for an expedited external review pursuant to § 20:06:53:09, the independent review organization conducting the external review in accordance with the provisions of §§ 20:06:53:23 to 20:06:53:32, inclusive, or §§ 20:06:53:33 to 20:06:53:54, inclusive, shall determine whether the covered person is required to complete the expedited review process set forth in SDCL 58-17I-12 to 58-17I-15, inclusive, before it conducts the expedited external review.

Upon a determination made pursuant to this section, the independent review organization immediately shall notify the covered person and, if applicable, the covered person's authorized representative of this determination and that it will not proceed with the expedited external review set forth in §§ 20:06:53:23 to 20:06:53:32, inclusive, until completion of the expedited grievance review process and the covered person's grievance at the completion of the expedited grievance review process remains unresolved.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:11 Waiver of exhaustion requirement

A request for an external review of an adverse determination may be made before the covered person has exhausted the health carrier's internal grievance procedures as set forth in SDCL 58-17I-7 to 58-17I-11, inclusive, whenever the health carrier agrees to waive the exhaustion requirement. If the requirement to exhaust the health carrier's internal grievance procedures is waived under this section, the covered person or the covered person's authorized representative may file a request in writing for a standard external review as set forth in §§ 20:06:53:12 to 20:06:53:22, inclusive, or §§ 20:06:53:33 to 20:06:53:54, inclusive.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:12 Standard external review

At any time during the four months after the date of receipt of a notice of an adverse determination or final adverse determination pursuant to §§ 20:06:53:03 to 20:06:53:05, inclusive, a covered person or the covered person's authorized representative may file a request for an external review with the director. Within one business day after the date of receipt of a request for external review pursuant to this section, the director shall send a copy of the request to the health carrier.

Within five business days following the date of receipt of the copy of the external review request from the director under this section, the health carrier shall complete a preliminary review of the request to determine whether:

(1) The individual is or was a covered person in the health benefit plan at the time the health care service was requested or, in the case of a retrospective review, was a covered person in the health benefit plan at the time the health care service was provided;

(2) The health care service that is the subject of the adverse determination or the final adverse determination is a covered service under the covered person's health benefit plan, but for a determination by the health carrier that the health care service is not covered because it does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness;

(3) The covered person has exhausted the health carrier's internal grievance process as set forth in SDCL 58-17I-1 to 58-17I-16, inclusive, unless the covered person is not required to exhaust the health carrier's internal grievance process pursuant to §§ 20:06:53:07 to 20:06:53:11, inclusive; and

(4) The covered person has provided all the information and forms required to process an external review, including the release form provided under §§ 20:06:53:04 and 20:06:53:05.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:13 Notification following preliminary review

Within one business day after completion of the preliminary review, the health carrier shall notify the director and covered person and, if applicable, the covered person's authorized representative in writing whether:

(1) The request is complete; and

(2) The request is eligible for external review.

If the request is not complete, the health carrier shall inform the covered person and, if applicable, the covered person's authorized representative and the director in writing and include in the notice what information or materials are needed to make the request complete. If the request is not eligible for external review, the health carrier shall inform the covered person, if applicable, the covered person's authorized representative and the director in writing and include in the notice the reasons for its ineligibility.

The notice of initial determination shall include a statement informing the covered person and, if applicable, the covered person's authorized representative that a health carrier's initial determination that the external review request is ineligible for review may be appealed to the director.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:14 Determination by the director and assignment of independent review organization

The director may determine that a request is eligible for external review under § 20:06:53:12 notwithstanding a health carrier's initial determination that the request is ineligible and require that it be referred for external review. In making a determination under this section, the director's decision shall be made in accordance with the terms of the covered person's health benefit plan and is subject to all applicable provisions of this chapter.

Whenever the director receives a notice that a request is eligible for external review following the preliminary review conducted pursuant to § 20:06:53:13, within one business day after the date of receipt of the notice, the director shall:

(1) Assign an independent review organization from the list of approved independent review organizations compiled and maintained by the director pursuant to §§ 20:06:53:55 and 20:06:53:56, to conduct the external review and notify the health carrier of the name of the assigned independent review organization; and

(2) Notify in writing the covered person and, if applicable, the covered person's authorized representative of the request's eligibility and acceptance for external review. The director shall include in the notice provided to the covered person and, if applicable, the covered person's authorized representative a statement that the covered person or the covered person's authorized representative may submit in writing to the assigned independent review organization at any time during the five business days following the date of receipt of the notice provided pursuant to § 20:06:53:14 additional information that the independent review organization shall consider when conducting the external review. The independent review organization is not required to, but may, accept and consider additional information submitted after five business days.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:15 Independence of review decision

In reaching a decision, the assigned independent review organization is not bound by any decisions or conclusions reached during the health carrier's utilization review process as set forth in SDCL 58-17H-1 to 58-17H-49, inclusive, or the health carrier's internal grievance process as set forth in SDCL 58-17I-1 to 58-17I-16, inclusive.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:16 Health carrier required to provide information

Within five business days after the date of receipt of the notice provided pursuant to § 20:06:53:14, the health carrier or its designee utilization review organization shall provide to the assigned independent review organization any documents and any information considered in making the adverse determination or final adverse determination.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:17 Effect of failure to act on external review process

The failure by the health carrier or its utilization review organization to provide the documents and information within the time specified in § 20:06:53:16 may not delay the conduct of the external review except as follows:

(1) If the health carrier or its utilization review organization fails to provide the documents and information within the time specified in § 20:06:53:16, the assigned independent review organization may terminate the external review and make a decision to reverse the adverse determination or final adverse determination; or

(2) Within one business day after making the decision under subdivision (1), the independent review organization shall notify the covered person, if applicable, the covered person's authorized representative, the health carrier, and the director.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:18 Independent review organization review of information

The assigned independent review organization shall review all of the information and documents received pursuant to § 20:06:53:16 and any other information submitted in writing to the independent review organization by the covered person or the covered person's authorized representative pursuant to § 20:06:53:14. Upon receipt of any information submitted by the covered person or the covered person's authorized representative pursuant to § 20:06:53:14, the assigned independent review organization shall within one business day forward the information to the health carrier.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:19 Carrier reconsideration

Upon receipt of the information, if any, required to be forwarded pursuant to § 20:06:53:18, the health carrier may reconsider its adverse determination or final adverse determination that is the subject of the external review. Reconsideration by the health carrier of its adverse determination or final adverse determination pursuant to this section may not delay or terminate the external review.

The external review may only be terminated if the health carrier decides, upon completion of its reconsideration, to reverse its adverse determination or final adverse determination and provide coverage or payment for the health care service that is the subject of the adverse determination or final adverse determination. Within one business day after making a decision to reverse its adverse determination or final adverse determination, as provided in this section, the health carrier shall notify the covered person, if applicable, the covered person's authorized representative, the assigned independent review organization, and the director in writing of its decision.

The assigned independent review organization shall terminate the external review upon receipt of the notice of a reversal from the health carrier sent pursuant to this section.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:20 Information to be considered by independent review organization

In addition to the documents and information provided pursuant to §§ 20:06:53:16 and 20:06:53:17, the assigned independent review organization, to the extent the information or documents are available and the independent review organization considers them appropriate, shall consider the following in reaching a decision:

(1) The covered person's medical records;

(2) The attending health care professional's recommendation;

(3) Consulting reports from appropriate health care professionals and other documents submitted by the health carrier, covered person, the covered person's authorized representative, or the covered person's treating provider;

(4) The terms of coverage under the covered person's health benefit plan with the health carrier to ensure that the independent review organization's decision is not contrary to the terms of coverage under the covered person's health benefit plan with the health carrier;

(5) The most appropriate practice guidelines, which shall include applicable evidence-based standards and may include any other practice guidelines developed by the federal government, national or professional medical societies, boards, and associations;

(6) Any applicable clinical review criteria developed and used by the health carrier or its designee utilization review organization; and

(7) The opinion of the independent review organization's clinical reviewer or reviewers after considering subdivisions (1) to (6), inclusive, to the extent the information or documents are available and the clinical reviewer or reviewers consider appropriate.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:21 Independent review organization decisions

Within 45 days after the date of receipt of the request for an external review, the assigned independent review organization shall provide written notice of its decision to uphold or reverse the adverse determination or the final adverse determination to the covered person, the covered person's authorized representative, the health carrier, and the director.

The independent review organization shall include in the notice sent pursuant to this section the following:

(1) A general description of the reason for the request for external review;

(2) The date the independent review organization received the assignment from the director to conduct the external review;

(3) The date the external review was conducted;

(4) The date of its decision;

(5) The principal reason or reasons for its decision, including what applicable, if any, evidence-based standards were a basis for its decision;

(6) The rationale for its decision; and

(7) References to the evidence or documentation, including the evidence-based standards, considered in reaching its decision.

Upon receipt of a notice of a decision pursuant to this section reversing the adverse determination or final adverse determination, the health carrier immediately shall approve the coverage that was the subject of the adverse determination or final adverse determination.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:22 Director assignment of independent review organization

The assignment by the director of an approved independent review organization to conduct an external review in accordance with this section shall be done on a random basis among those approved independent review organizations qualified to conduct the particular external review based on the nature of the health care service that is the subject of the adverse determination or final adverse determination and other circumstances, including conflict of interest concerns pursuant to § 20:06:53:60.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:23 Expedited external review

Except for retrospective adverse or final adverse determinations, a covered person or the covered person's authorized representative may make a request for an expedited external review with the director at the time the covered person receives:

(1) An adverse determination if:

(a) The adverse determination involves a medical condition of the covered person for which the timeframe for completion of an expedited internal review of a grievance involving an adverse determination set forth in SDCL 58-17I-12 to 58-17I-15, inclusive, would seriously jeopardize the life or health of the covered person or would jeopardize the covered person's ability to regain maximum function; and

(b) The covered person or the covered person's authorized representative has filed a request for an expedited review of a grievance involving an adverse determination as set forth in SDCL 58-17H-1 to 58-17H-16, inclusive; or

(2) A final adverse determination:

(b) If the final adverse determination concerns an admission, availability of care, continued stay, or health care service for which the covered person received emergency services, but has not been discharged from a facility.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:24 Notifications upon request for expedited external review

Upon receipt of a request for an expedited external review, the director immediately shall send a copy of the request to the health carrier. Immediately upon receipt of the request from the director, the health carrier shall determine whether the request meets the reviewability requirements set forth in § 20:06:53:12. The health carrier shall immediately notify the director and the covered person and, if applicable, the covered person's authorized representative of its eligibility determination.

The notice of initial determination shall include a statement informing the covered person and, if applicable, the covered person's authorized representative that a health carrier's initial determination that an external review request is ineligible for review may be appealed to the director.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:25 Director's determination of eligibility for expedited reviews

The director may determine that a request is eligible for external review and under § 20:06:53:12 notwithstanding a health carrier's initial determination that the request is ineligible and require that it be referred for external review. In making a determination under this section, the director's decision is made in accordance with the terms of the covered person's health benefit plan and is subject to all applicable provisions of this chapter.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:26 Director assignment of independent review organization for expedited reviews

Upon receipt of a notice that the request meets the reviewability requirements, the director immediately shall assign an independent review organization to conduct the expedited external review from the list of approved independent review organizations compiled and maintained by the director pursuant to §§ 20:06:53:55 and 20:06:53:56. The director shall immediately notify the health carrier of the name of the assigned independent review organization.

Upon receipt of the notice from the director of the name of the independent review organization assigned to conduct the expedited external review pursuant to this section, the health carrier or its designee utilization review organization shall provide or transmit all necessary documents and information considered in making the adverse determination or final adverse determination to the assigned independent review organization electronically or by telephone or facsimile or any other available expeditious method.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:27 Independent review organization decision for expedited reviews

In reaching a decision in accordance with §§ 20:06:53:29 and 20:06:53:30, the assigned independent review organization is not bound by any decisions or conclusions reached during the health carrier's utilization review process as set forth in SDCL 58-17H-1 to 58-17H-49, inclusive, or the health carrier's internal grievance process as set forth in SDCL 58-17I-1 to 58-17I-16, inclusive.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:28 Information to be considered by independent review organization for expedited review

In addition to the documents and information provided or transmitted pursuant to § 20:06:53:26, the assigned independent review organization, to the extent the information or documents are available and the independent review organization considers them appropriate, shall consider the following in reaching a decision:

(1) The covered person's pertinent medical records;

(2) The attending health care professional's recommendation;

(5) The most appropriate practice guidelines, which shall include evidence-based standards, and may include any other practice guidelines developed by the federal government, or national or professional medical societies, boards, and associations;

(6) Any applicable clinical review criteria developed and used by the health carrier or its designee utilization review organization in making adverse determinations; and

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:29 Expedited review decision

As expeditiously as the covered person's medical condition or circumstances requires, but in no event more than 72 hours after the date of receipt of the request for an expedited external review that meets the reviewability requirements set forth in § 20:06:53:12, the assigned independent review organization shall:

(1) Make a decision to uphold or reverse the adverse determination or final adverse determination; and

(2) Notify the covered person, if applicable, the covered person's authorized representative, the health carrier, and the director of the decision. If the notice provided was not in writing, within 48 hours after the date of providing that notice, the assigned independent review organization shall:

(a) Provide written confirmation of the decision to the covered person, if applicable, the covered person's authorized representative, the health carrier, and the director; and

(b) Include the information set forth in § 20:06:53:21.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:30 Health carrier required to approve upon reversal by expedited review

Upon receipt of the notice a decision pursuant to § 20:06:53:29 reversing the adverse determination or final adverse determination, the health carrier immediately shall approve the coverage that was the subject of the adverse determination or final adverse determination.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:31 Assignment of independent review organization for expedited review

Assignment of independent review organization for expedited reviews.** The assignment by the director of an approved independent review organization to conduct an external review in accordance with this section shall be done on a random basis among those approved independent review organizations qualified to conduct the particular external review based on the nature of the health care service that is the subject of the adverse determination or final adverse determination and other circumstance, including conflict of interest concerns pursuant to § 20:06:53:60.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:32 Applicability of expedited reviews

An expedited external review may not be provided for retrospective adverse or final adverse determinations. Sections 20:06:53:23 to 20:06:53:31, inclusive, only apply to expedited reviews.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:33 External review of experiment or investigational treatment adverse determinations

External review of experimental or investigational treatment adverse determinations.** Within four months after the date of receipt of a notice of an adverse determination or final adverse determination pursuant to §§ 20:06:53:03 to 20:06:53:05, inclusive, that involves a denial of coverage based on a determination that the health care service or treatment recommended or requested is experimental or investigational, a covered person or the covered person's authorized representative may file a request for external review with the director.

A covered person or the covered person's authorized representative may make an oral request for an expedited external review of the adverse determination or final adverse determination pursuant to this section if the covered person's treating physician certifies, in writing, that the recommended or requested health care service or treatment that is the subject of the request would be significantly less effective if not promptly initiated.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:34 Notifications upon request for external review of experimental or investigational treatment adverse determinations

Upon receipt of a request for an expedited external review, the director immediately shall notify the health carrier. Upon notice of the request for expedited external review, the health carrier immediately shall determine whether the request meets the reviewability requirements of § 20:06:53:36. The health carrier shall immediately notify the director and the covered person and, if applicable, the covered person's authorized representative of its eligibility determination.

The notice of initial determination by the health carrier under this section shall include a statement informing the covered person and, if applicable, the covered person's authorized representative that a health carrier's initial determination that the external review request is ineligible for review may be appealed to the director.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:35 Director's determination of eligibility and assignment for external review of experimental or investigational treatment

The director may determine that a request is eligible for external review under § 20:06:53:36 notwithstanding a health carrier's initial determination the request is ineligible and require that it be referred for external review. In making a determination under this section, the director's decision shall be made in accordance with the terms of the covered person's health benefit plan and is subject to all applicable provisions of this chapter.

Upon receipt of the notice that the expedited external review request meets the reviewability requirements of § 20:06:53:36, the director immediately shall assign an independent review organization to review the expedited request from the list of approved independent review organizations compiled and maintained by the director pursuant to §§ 20:06:53:55 and 20:06:53:56 and notify the health carrier of the name of the assigned independent review organization.

At the time the health carrier receives the notice of the assigned independent review organization pursuant to this section, the health carrier or its designee utilization review organization shall provide or transmit all necessary documents and information considered in making the adverse determination or final adverse determination to the assigned independent review organization electronically or by telephone or facsimile or any other available expeditious method.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:36 Health carrier preliminary review of request for experimental or investigational treatment reviews

Except for a request for an expedited external review made pursuant to §§ 20:06:53:33 to 20:06:53:35, inclusive, within one business day after the date of receipt of the request, the director receives a request for an external review, the director shall notify the health carrier. Within five business days following the date of receipt of the notice sent pursuant to this section, the health carrier shall conduct and complete a preliminary review of the request to determine whether:

(1) The individual is or was a covered person in the health benefit plan at the time the health care service or treatment was recommended or requested or, in the case of a retrospective review, was a covered person in the health benefit plan at the time the health care service or treatment was provided;

(2) The recommended or requested health care service or treatment that is the subject of the adverse determination or final adverse determination:

(a) Is a covered benefit under the covered person's health benefit plan except for the health carrier's determination that the service or treatment is experimental or investigational for a particular medical condition; and

(b) Is not explicitly listed as an excluded benefit under the covered person's health benefit plan with the health carrier;

(3) The covered person's treating physician has certified that one of the following situations is applicable:

(a) Standard health care services or treatments have not been effective in improving the condition of the covered person;

(b) Standard health care services or treatments are not medically appropriate for the covered person; or

(c) There is no available standard health care service or treatment covered by the health carrier that is more beneficial than the recommended or requested health care service or treatment described in subdivision (4) of this section;

(4) The covered person's treating physician:

(a) Has recommended a health care service or treatment that the physician certifies, in writing, is likely to be more beneficial to the covered person, in the physician's opinion, than any available standard health care services or treatments; or

(b) Who is a licensed, board certified or board eligible physician qualified to practice in the area of medicine appropriate to treat the covered person's condition, has certified in writing that scientifically valid studies using accepted protocols demonstrate that the health care service or treatment requested by the covered person that is the subject of the adverse determination or final adverse determination is likely to be more beneficial to the covered person than any available standard health care services or treatments;

(5) The covered person has exhausted the health carrier's internal grievance process as set forth in SDCL 58-17I-1 to 58-17I-16, inclusive, unless the covered person is not required to exhaust the health carrier's internal grievance process pursuant to §§ 20:06:53:07 to 20:06:53:21, inclusive; and

(6) The covered person has provided all the information and forms required by the director that are necessary to process an external review, including the release form provided under §§ 20:06:53:04 and 20:06:53:05.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:37 Health carrier notification after preliminary review of request for experimental or investigational treatment reviews

Within one business day after completion of the preliminary review, the health carrier shall notify the director and the covered person and, if applicable, the covered person's authorized representative in writing whether the request is complete and whether the request is eligible for external review.

If the request is not complete, the health carrier shall inform, in writing, the director and the covered person and, if applicable, the covered person's authorized representative and include in the notice what information or materials are needed to make the request complete.

If the request is not eligible for external review, the health carrier shall inform the covered person, the covered person's authorized representative, if applicable, and the director in writing and include in the notice the reasons for its ineligibility.

The notice of initial determination provided under this section must include a statement informing the covered person and, if applicable, the covered person's authorized representative that a health carrier's initial determination that the external review request is ineligible for review may be appealed to the director.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:38 Director's determination of request for experimental or investigational treatment reviews

The director may determine that a request is eligible for external review pursuant to § 20:06:53:36, notwithstanding a health carrier's initial determination that the request is ineligible and require that it be referred for external review. In making a determination under this section, the director's decision shall be made in accordance with the terms of the covered person's health benefit plan and is subject to all applicable provisions of this chapter.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:39 Health carrier notification of eligibility for experimental or investigational treatment reviews

Whenever a request for external review is determined eligible for external review, the health carrier shall notify the director and the covered person and, if applicable, the covered person's authorized representative. Within one business day after the receipt of the notice from the health carrier that the external review request is eligible for external review pursuant to § 20:06:53:35 or this section, the director shall:

(1) Assign an independent review organization to conduct the external review from the list of approved independent review organizations compiled and maintained by the director pursuant to §§ 20:06:53:55 and 20:06:53:56 and notify the health carrier of the name of the assigned independent review organization; and

(2) Notify in writing the covered person and, if applicable, the covered person's authorized representative of the request's eligibility and acceptance for external review.

The director shall include in the notice provided to the covered person and, if applicable, the covered person's authorized representative a statement that the covered person or the covered person's authorized representative may submit in writing to the assigned independent review organization within five business days following the date of receipt of the notice provided pursuant to this section additional information that the independent review organization shall consider when conducting the external review. The independent review organization is not required to, but may, accept and consider additional information submitted after five business days.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:40 Independent review organization experimental or investigational treatment reviews

Within one business day after the receipt of the notice of assignment to conduct the external review pursuant to § 20:06:53:39, the assigned independent review organization shall:

(1) Select one or more clinical reviewers, as it determines is appropriate, pursuant to this section to conduct the external review; and

(2) Based on the opinion of the clinical reviewer, or opinions if more than one clinical reviewer has been selected to conduct the external review, make a decision to uphold or reverse the adverse determination or final adverse determination.

In selecting clinical reviewers pursuant to this section, the assigned independent review organization shall select physicians or other health care professionals who meet the minimum qualifications described in §§ 20:06:53:57 to 20:06:53:62, inclusive, and, through clinical experience in the past three years, are experts in the treatment of the covered person's condition and knowledgeable about the recommended or requested health care service or treatment. Neither the covered person, the covered person's authorized representative, if applicable, nor the health carrier may choose or control the choice of the physicians or other health care professionals to be selected to conduct the external review.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:41 Independent review organization clinical reviewer written opinion for experimental or investigational treatment reviews

Independent review organization clinical reviewer written opinion for experimental or investigational treatment review.** In accordance with §§ 20:06:53:45 and 20:06:53:46, each clinical reviewer shall provide a written opinion to the assigned independent review organization on whether the recommended or requested health care service or treatment should be covered. In reaching an opinion, clinical reviewers are not bound by any decisions or conclusions reached during the health carrier's utilization review process as set forth in SDCL 58-17H-1 to 58-17H-49, inclusive.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:42 Records provided to independent review organization for experimental or investigational treatment reviews

Within five business days after the date of receipt of the notice provided pursuant to § 20:06:53:39, the health carrier or its designee utilization review organization shall provide to the assigned independent review organization, the documents and any information considered in making the adverse determination or the final adverse determination. Except as provided in this section, failure by the health carrier or its designee utilization review organization to provide the documents and information within the five day timeframe may not delay the conduct of the external review.

If the health carrier or its designee utilization review organization has failed to provide the documents and information within the time specified in this section, the assigned independent review organization may terminate the external review and make a decision to reverse the adverse determination or final adverse determination. Immediately upon making the decision under this section, the independent review organization shall notify the covered person, the covered person's authorized representative, if applicable, the health carrier, and the director.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:43 Review of information by independent review organization for experimental or investigational treatment reviews

Each clinical reviewer selected pursuant to §§ 20:06:53:39 to 20:06:53:41, inclusive, shall review all of the information and documents received pursuant to § 20:06:53:42 and any other information submitted in writing by the covered person or the covered person's authorized representative pursuant to § 20:06:53:39. Upon receipt of any information submitted by the covered person or the covered person's authorized representative pursuant to § 20:06:53:39, within one business day after the receipt of the information, the assigned independent review organization shall forward the information to the health carrier.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:44 Reconsideration by health carrier for experimental or investigational treatment reviews

Upon receipt of the information required to be forwarded pursuant to § 20:06:53:43, the health carrier may reconsider its adverse determination or final adverse determination that is the subject of the external review. Reconsideration by the health carrier of its adverse determination or final adverse determination pursuant to this section may not delay or terminate the external review. The external review may be terminated only if the health carrier decides, upon completion of its reconsideration, to reverse its adverse determination or final adverse determination and provide coverage or payment for the recommended or requested health care service or treatment that is the subject of the adverse determination or final adverse determination.

Immediately upon making the decision to reverse its adverse determination or final adverse determination, as provided in this section, the health carrier shall notify the covered person, the covered person's authorized representative, if applicable, the assigned independent review organization, and the director, in writing, of its decision.

The assigned independent review organization shall terminate the external review upon receipt of the notice from the health carrier's decision to reverse its adverse determination or final adverse determination.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:45 Clinical review opinion for experimental or investigational treatment reviews

Except as provided in § 20:06:53:44, within 20 days after being selected in accordance with §§ 20:06:53:39 to 20:06:53:41, inclusive, to conduct the external review, each clinical reviewer shall provide an opinion to the assigned independent review organization pursuant to § 20:06:53:47 on whether the recommended or requested health care service or treatment should be covered. Except for an opinion provided pursuant to § 20:06:53:46, each clinical reviewer's opinion shall be in writing and include the following information:

(1) A description of the covered person's medical condition;

(2) A description of the indicators relevant to determining whether there is sufficient evidence to demonstrate that the recommended or requested health care service or treatment is more likely than not to be beneficial to the covered person than any available standard health care services or treatments and the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of available standard health care services or treatments;

(3) A description and analysis of any medical or scientific evidence, as that term is defined in subdivision 20:06:53:01(28), considered in reaching the opinion;

(4) A description and analysis of any evidence-based standard, as that term is defined in subdivision 20:06:53:01(18); and

(5) Information on whether the reviewer's rationale for the opinion is based on subsection 20:06:53:47(5)(a) or (b).

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:46 Expedited review opinions for experimental or investigational treatment reviews

For an expedited external review, each clinical reviewer shall provide an opinion orally or in writing to the assigned independent review organization as expeditiously as the covered person's medical condition or circumstances requires, but in no event more than five calendar days after being selected in accordance with §§ 20:06:53:39 to 20:06:53:41, inclusive. If the opinion provided pursuant to this section was not in writing, within 48 hours following the date the opinion was provided, the clinical reviewer shall provide written confirmation of the opinion to the assigned independent review organization and include the information as required under § 20:06:53:45.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:47 Clinical review criteria for experimental or investigational treatment reviews

In addition to the documents and information provided pursuant to §§ 20:06:53:33 to 20:06:53:35, inclusive, or § 20:06:53:42, each clinical reviewer selected pursuant to §§ 20:06:53:39 to 20:06:53:41, inclusive, to the extent the information or documents are available and the reviewer considers appropriate, shall consider in reaching an opinion pursuant to §§ 20:06:53:45 and 20:06:53:46, the following:

(1) The covered person's pertinent medical records;

(2) The attending physician or health care professional's recommendation;

(4) The terms of coverage under the covered person's health benefit plan with the health carrier to ensure that, but for the health carrier's determination that the recommended or requested health care service or treatment that is the subject of the opinion is experimental or investigational, the reviewer's opinion is not contrary to the terms of coverage under the covered person's health benefit plan with the health carrier; and

(5) Whether:

(a) The recommended or requested health care service or treatment has been approved by the federal Food and Drug Administration, if applicable, for the condition; or

(b) Medical or scientific evidence or evidence-based standards demonstrate that the expected benefits of the recommended or requested health care service or treatment is more likely than not to be beneficial to the covered person than any available standard health care service or treatment and the adverse risks of the recommended or requested health care service or treatment would not be substantially increased over those of available standard health care services or treatments.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:48 Independent review organization decision and notice for experimental or investigational treatment reviews

Except as provided in § 20:06:53:49, within 20 days after the date it receives the opinion of each clinical reviewer pursuant to § 20:06:53:47, the assigned independent review organization, in accordance with § 20:06:53:50, shall make a decision and provide written notice of the decision to the covered person, the covered person's authorized representative, the health carrier, and the director.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:49 Expedited reviews upon receipt of clinical review opinion for experimental or investigational treatment reviews

For an expedited external review, within 48 hours after the date it receives the opinion of each clinical reviewer pursuant to § 20:06:53:47, the assigned independent review organization, in accordance with § 20:06:53:50, shall make a decision and provide notice of the decision orally or in writing to the persons listed in § 20:06:53:48.

If the notice provided under this section was not in writing, within 48 hours after the date of providing that notice, the assigned independent review organization shall provide written confirmation of the decision to the persons listed in § 20:06:53:48 and include the information set forth in § 20:06:53:51.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:50 Decision by independent review organization for experimental or investigational reviews

Decision by independent review organization for experimental or investigational treatment reviews.** If a majority of the clinical reviewers recommend that the recommended or requested health care service or treatment should be covered, the independent review organization shall make a decision to reverse the health carrier's adverse determination or final adverse determination. If a majority of the clinical reviewers recommend that the recommended or requested health care service or treatment should not be covered, the independent review organization shall make a decision to uphold the health carrier's adverse determination or final adverse determination.

If the clinical reviewers are evenly split as to whether the recommended or requested health care service or treatment should be covered, the independent review organization shall obtain the opinion of an additional clinical reviewer in order for the independent review organization to make a decision based on the opinions of a majority of the clinical reviewers.

The additional clinical reviewer selected under this section shall use the same information to reach an opinion as the clinical reviewers who have already submitted their opinions pursuant to § 20:06:53:47. The selection of the additional clinical reviewer under this section does not extend the time within which the assigned independent review organization is required to make a decision based on the opinions of the clinical reviewers selected under §§ 20:06:53:39 to 20:06:53:41, inclusive.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:51 Notice of written decision by independent review organization for experimental or investigational treatment reviews

The independent review organization shall include in the notice provided pursuant to §§ 20:06:53:48 and 20:06:53:49:

(1) A general description of the reason for the request for external review;

(2) The written opinion of each clinical reviewer, including the recommendation of each clinical reviewer as to whether the recommended or requested health care service or treatment should be covered and the rationale for the reviewer's recommendation:

(3) The date the independent review organization was assigned by the director to conduct the external review;

(4) The date the external review was conducted;

(5) The date of its decision;

(6) The principal reason or reasons for its decision; and

(7) The rationale for its decision.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:52 Health carrier requirement upon notice of decision reversing adverse determination for experimental or investigational reviews

Health carrier requirement upon notice of decision reversing adverse determination for experimental or investigational treatment reviews.** Upon receipt of a notice of a decision pursuant to §§ 20:06:53:48 and 20:06:53:49 reversing the adverse determination or final adverse determination, the health carrier immediately shall approve coverage of the recommended or requested health care service or treatment that was the subject of the adverse determination or final adverse determination.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:53 Criteria for assignment of independent review organization for experimental or investigational treatment reviews

The assignment by the director of an approved independent review organization to conduct an external review in accordance with §§ 20:06:53:33 to 20:06:53:54, inclusive, shall be done on a random basis among those approved independent review organizations qualified to conduct the particular external review based on the nature of the health care service that is the subject of the adverse determination or final adverse determination and other circumstances, including conflict of interest concerns pursuant to § 20:06:53:60.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:54 Binding nature of external review decision

An external review decision is binding on the health carrier except to the extent the health carrier has other remedies available under applicable state law. An external review decision is binding on the covered person except to the extent the covered person has other remedies available under applicable federal or state law.

A covered person or the covered person's authorized representative may not file a subsequent request for external review involving the same adverse determination or final adverse determination for which the covered person has already received an external review decision pursuant to this chapter.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:55 Approval of independent review organizations

The director shall approve independent review organizations eligible to be assigned to conduct external reviews pursuant to this chapter. In order to be eligible for approval by the director under this section to conduct external reviews pursuant to this chapter an independent review organization, except as otherwise provided in §§ 20:06:53:55 and 20:06:53:56, shall be accredited by a nationally recognized private accrediting entity that the director has determined has independent review organization accreditation standards that are equivalent to or exceed the minimum qualifications for independent review organizations established pursuant to §§ 20:06:53:57 to 20:06:53:62, inclusive; and

Any independent review organization wishing to be approved to conduct external reviews pursuant to this chapter shall submit an application form as prescribed by the director and include with the form all documentation and information necessary for the director to determine if the independent review organization satisfies the minimum qualifications established pursuant to §§ 20:06:53:57 to 20:06:53:62, inclusive.

The director may approve independent review organizations that are not accredited by a nationally recognized private accrediting entity if there are no acceptable nationally recognized private accrediting entities providing independent review organization accreditation.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:56 Continuation of approval for independent review organizations

An approval is effective for two years, unless the director determines before its expiration that the independent review organization is not satisfying the minimum qualifications established pursuant to §§ 20:06:53:57 to 20:06:53:62, inclusive.

Whenever the director determines that an independent review organization has lost its accreditation or no longer satisfies the minimum requirements established pursuant to §§ 20:06:53:57 to 20:06:53:62, inclusive, the director shall terminate the approval of the independent review organization and remove the independent review organization from the list of independent review organizations approved to conduct external reviews pursuant to this chapter that is maintained by the director pursuant to § 20:06:53:62.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:57 Minimum qualifications for independent review organizations

To be approved under §§ 20:06:53:55 and 20:06:53:56 to conduct external reviews, an independent review organization shall have and maintain written policies and procedures that govern all aspects of both the standard external review process and the expedited external review process set forth in this chapter. The policies and procedures shall include, at a minimum:

(1) A quality assurance mechanism in place that:

(a) Ensures that external reviews are conducted within the specified timeframes and required notices are provided in a timely manner;

(b) Ensures the selection of qualified and impartial clinical reviewers to conduct external reviews on behalf of the independent review organization and suitable matching of reviewers to specific cases and that the independent review organization employs or contracts with an adequate number of clinical reviewers to meet this objective;

(d) Ensures that any person employed by or under contract with the independent review organization adheres to the requirements of this chapter;

(2) A toll-free telephone service to receive information on a 24-hour-day, 7-day-a-week basis related to external reviews that is capable of accepting, recording, or providing appropriate instruction to incoming telephone callers during other than normal business hours; and

(3) An agreement to maintain and provide to the director the information set out in §§ 20:06:53:64 and 20:06:53:65.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:58 Requirements for clinical reviewers

All clinical reviewers assigned by an independent review organization to conduct external reviews shall be physicians or other appropriate health care providers who meet the following minimum qualifications:

(1) Be an expert in the treatment of the covered person's medical condition that is the subject of the external review;

(2) Be knowledgeable about the recommended health care service or treatment through recent or current actual clinical experience treating patients with the same or similar medical condition of the covered person;

(3) Hold a non-restricted license in a state of the United States and, for physicians, a current certification by a recognized American medical specialty board in the area or areas appropriate to the subject of the external review; and

(4) Have no history of disciplinary actions or sanctions, including loss of staff privileges or participation restrictions, that have been taken or are pending by any hospital, governmental agency or unit, or regulatory body that raise a substantial question as to the clinical reviewer's physical, mental, or professional competence or moral character.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:59 Subsidiaries of or ownership in independent review organizations

In addition to the requirements set forth in § 20:06:53:57, an independent review organization may not own or control, be a subsidiary of, or in any way be owned or controlled by, or exercise control with, a health benefit plan, a national, state, or local trade association of health benefit plans, or a national, state, or local trade association of health care providers.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:60 Independence of clinical reviewers

In addition to the requirements set forth in §§ 20:06:53:57, 20:06:53:58, and 20:06:53:59, to be approved pursuant to §§ 20:06:52:55 and 20:06:53:56 to conduct an external review of a specified case, neither the independent review organization selected to conduct the external review nor any clinical reviewer assigned by the independent organization to conduct the external review may have a material professional, familial, or financial conflict of interest with any of the following;

(1) The health carrier that is the subject of the external review;

(2) The covered person whose treatment is the subject of the external review or the covered person's authorized representative;

(3) Any officer, director, or management employee of the health carrier that is the subject of the external review;

(4) The health care provider or the health care provider's medical group or independent practice association recommending the health care service or treatment that is the subject of the external review;

(5) The facility at which the recommended health care service or treatment would be provided; or

(6) The developer or manufacturer of the principal drug, device, procedure, or other therapy being recommended for the covered person whose treatment is the subject of the external review.

In determining whether an independent review organization or a clinical reviewer of the independent review organization has a material professional, familial, or financial conflict of interest for purposes of this section, the director shall take into consideration situations where the independent review organization to be assigned to conduct an external review of a specified case or a clinical reviewer to be assigned by the independent review organization to conduct an external review of a specified case may have an apparent professional, familial, or financial relationship or connection with a person described in this section, but that the characteristics of that relationship or connection are such that they are not a material professional, familial, or financial conflict of interest that results in the disapproval of the independent review organization or the clinical reviewer from conducting the external review.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:61 Nationally accredited independent review organizations

An independent review organization that is accredited by a nationally recognized private accrediting entity that has independent review accreditation standards that the director has determined are equivalent to or exceed the minimum qualifications of this section shall be presumed in compliance with this section to be eligible for approval under §§ 20:06:53:55 and 20:06:53:56.

The director shall initially review and periodically review the independent review organization accreditation standards of a nationally recognized private accrediting entity to determine whether the entity's standards are, and continue to be, equivalent to or exceed the minimum qualifications established under this section. The director may accept a review conducted by the NAIC for the purpose of the determination under this section.

Upon request, a nationally recognized private accrediting entity shall make its current independent review organization accreditation standards available to the director or the NAIC in order for the director to determine if the entity's standards are equivalent to or exceed the minimum qualifications established under this section. The director may exclude any private accrediting entity that is not reviewed by the NAIC.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:62 Unbiased independent review organizations

Unbiased independent review organization.** An independent review organization must be unbiased. An independent review organization shall establish and maintain written procedures to ensure that it is unbiased in addition to any other procedures required pursuant to §§ 20:06:53:57 to 20:06:53:62, inclusive.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:63 Hold harmless for independent review organizations

No independent review organization or clinical reviewer working on behalf of an independent review organization or an employee, agent, or contractor of an independent review organization is liable in damages to any person for any opinions rendered or acts or omissions performed within the scope of the organization's or person's duties under the law during or upon completion of an external review conducted pursuant to this chapter, unless the opinion was rendered or act or omission performed in bad faith or involved gross negligence.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:64 External review reporting requirements

An independent review organization assigned pursuant to §§ 20:06:53:12 to 20:06:53:32, inclusive, to conduct an external review shall maintain written records in the aggregate by state and by health carrier on all requests for external review for which it conducted an external review during a calendar year and, upon request, submit a report to the director, as required under this section. The report must be in the format of Appendix C.

Each independent review organization required to maintain written records on all requests for external review pursuant to this section for which it was assigned to conduct an external review shall submit to the director, upon request, a report in the format specified by the director. The report shall include in the aggregate by state, and for each health carrier, the following:

(1) The total number of requests for external review;

(2) The number of requests for external review resolved and, of those resolved, the number resolved upholding the adverse determination or final adverse determination and the number resolved reversing the adverse determination or final adverse determination;

(3) The average length of time for resolution;

(4) A summary of the types of coverages or cases for which an external review was sought, as provided in the format required by the director; and

(5) The number of external reviews pursuant to § 20:06:53:19 that were terminated as the result of a reconsideration by the health carrier of its adverse determination or final adverse determination after the receipt of additional information from the covered person or the covered person's authorized representative.

The director may request additional information to be included within the report or to be provided at an alternate date that relates to the independent review organization's compliance with this chapter.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:65 Independent review organization and health carrier recordkeeping

The independent review organization shall retain the written records required pursuant to § 20:06:53:64 for at least three years.

Each health carrier shall maintain written records in the aggregate, by state and for each type of health benefit plan offered by the health carrier, on all requests for external review that the health carrier receives notice of from the director pursuant to this chapter. Each health carrier required to maintain written records on all requests for external review pursuant to this section shall submit to the director, upon request, a report in the format of Appendix D. The report shall include in the aggregate, by state, and by type of health benefit plan the following information:

(1) The total number of requests for external review; and

(2) From the total number of requests for external review reported under subdivision (1) of this section, the number of requests determined eligible for a full external review.

The director may request additional information to be included within the report or to be provided at an alternate date that relates to the health carrier's compliance with this chapter.

The health carrier shall retain the written records required pursuant to this section for at least three years.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:66 Funding of external review. The health carrier against which a request for any review subject to this chapter is filed shall pay the cost of the independent review organization for conducting the external review. Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 102, effective December 7, 2011; 50 SDR 63, effective November 28, 2023. General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79. Law Implemented: SDCL 58-17-87, 58-18-79

Funding of external review. The health carrier against which a request for any review subject to this chapter is filed shall pay the cost of the independent review organization for conducting the external review.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 102, effective December 7, 2011; 50 SDR 63, effective November 28, 2023.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:67 Disclosure requirements

Each health carrier shall include a description of the external review procedures in or attached to the policy, certificate, membership booklet, outline of coverage, or other evidence of coverage it provides to covered persons. The description shall be in a format prescribed by the director. The description shall include a statement that informs the covered person of the right of the covered person to file a request for an external review of an adverse determination or final adverse determination with the director. The statement may explain that external review is available when the adverse determination or final adverse determination involves an issue of medical necessity, appropriateness, health care setting, level of care, or effectiveness. The statement shall include the telephone number and address of the director. The statement shall inform the covered person that, when filing a request for an external review, the covered person is required to authorize the release of any medical records of the covered person that may be required to be reviewed for the purpose of reaching a decision on the external review.

Commission Note: The provisions of this chapter are effective for plan years beginning after September 22, 2010.

History

Source: 37 SDR 48, effective September 22, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-17H-49, 58-17I-16, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:68 Adverse benefit determination -- Defined

For purposes of §§ 20:06:53:68 to 20:06:53:77, inclusive, an adverse benefit determination is defined in SDCL 58-17H-1(1).

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010; 37 SDR 241, effective July 1, 2011.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-17H-1, 58-18-79.

ARSD 20:06:53:69 Urgent care requests -- Timely notification of determination -- Initial benefit determination

For an urgent care request in the context of an initial benefit determination, unless the covered person or the covered person's authorized representative has failed to provide sufficient information for the health carrier to determine whether, or to what extent, the benefits requested are covered benefits or payable under the health carrier's health benefit plan, the health carrier shall notify the covered person or, if applicable, the covered person's authorized representative of the health carrier's determination with respect to the request, whether or not the benefit determination is an adverse determination, as soon as possible, taking into account the medical condition of the covered person, but in no event later than twenty-four hours after the date of the receipt of the request by the health carrier.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-17C-72, 58-18-79.

ARSD 20:06:53:70 Additional evidence

The plan or issuer must provide the claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the plan or issuer or at the direction of the plan or issuer in connection with the claim. Such evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date. Additionally, before the plan or issuer can issue an adverse benefit determination on review based on a new or additional rationale, the claimant must be provided, free of charge, with the rationale. The rationale must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond prior to that date.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:71 Avoiding conflicts of interest

The plan or issuer must ensure that all claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. Therefore, any decision regarding hiring, compensation, termination, promotion, or any other similar matter with respect to any individual may not be made based upon the likelihood that the individual will support a denial of benefits. A plan or issuer may not provide bonuses based on the number of denials made by a claims adjudicator. Similarly, a plan or issuer may not contract with a medical expert based on the expert's reputation for outcomes in contested cases, rather than based on the expert's professional qualifications.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:72 Notice to enrollee

A plan or issuer shall provide notice to enrollees, in a culturally and linguistically appropriate manner, if ten percent or more of the population residing in the claimants county are literate only in the same non-English language, as determined based on American Community Survey data published by United States Census Bureau.

Plans and issuers must provide notice in accordance with SDCL 58-17H-32 and 58-17H-48. Insurers may comply with the notice requirements required in SDCL 58-17H-32 and 58-17H-48 by providing notification of the right to request and receive diagnoses and treatment codes and their meanings in all notices of adverse benefit determinations and final adverse benefit determinations.

Reference: American Community Survey data published by United States Census Bureau. www.census.gov.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010; 37 SDR 241, effective July 1, 2011; 38 SDR 59, effective October 19, 2011.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-17H-48, 58-18-79.

ARSD 20:06:53:73 Failure to comply with internal claims and appeal process

If a plan or issuer fails to strictly adhere to all the requirements of the internal claims and appeals process with respect to a claim, the claimant is deemed to have exhausted the internal claims and appeals process, regardless of whether the plan or issuer asserts that it substantially complied with these requirements. Upon the failure to strictly adhere to the requirements of the internal claims and appeals process, the claimant may initiate an external review and pursue any available remedies under applicable law, such as judicial review.

The claimant is entitled upon written request to an explanation of the plan's or issuer's basis for asserting that it meets this standard. If the external review or the court rejects the claimant's request for immediate review on the basis that the plan met this standard, the claimant has the right to resubmit and pursue the internal appeal under SDCL 58-17I-7.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010; 38 SDR 59, effective October 19, 2011.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:74 Continued coverage and ongoing treatment

A plan and issuer must provide continued coverage pending the outcome of an internal appeal of a concurrent review. A plan or issuer may not reduce or terminate an ongoing course of treatment without providing advance notice and an opportunity for advance review.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:75 One level of internal appeals

A health insurance issuer offering individual health insurance coverage may only have one level of internal appeals. A claimant may seek either external review or judicial review immediately after an adverse benefit determination is upheld in the first level of the internal appeals process.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:76 Record keeping

Each health insurance issuer offering individual health insurance coverage shall maintain records of all claims and notices associated with its internal claims and appeals processes. The records must be maintained for at least six years. An issuer must make such records available to the director for examination upon request. Any request for a first level review of a grievance involving an adverse benefit determination and any request for a voluntary review of a grievance involving an adverse benefit determination must be included in the health carrier's grievance register, which must be maintained in a reasonably clear and accessible manner and must contain, at a minimum, the following:

(1) A general description of the reason for the grievance;

(2) The date received;

(3) The date of each review or, if applicable, review meeting;

(4) Resolution at each level of the grievance, if applicable;

(5) Date of resolution at each level, if applicable; and

(6) Name of the covered person for whom the grievance was filed.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:53:77 Applicability

Nothing in §§ 20:06:53:68 to 20:06:53:76, inclusive, applies to grandfathered plans pursuant to 26 C.F.R. 54.9815-2719T, 29 C.F.R. 2590.715-27109, or 45 C.F.R. 147.36. Sections 20:06:53:68 to 20:06:53:76, inclusive, apply to any plan of individual health coverage, including any health benefit plans subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive, that is not an excepted benefit pursuant to SDCL subdivision 58-17-69(13). Sections 20:06:53:68 to 20:06:53:74, inclusive, apply to any employer based health plan, including health benefit plans subject to the provisions of SDCL 58-18-42. This chapter does not apply to self-funded plans preempted from state regulation pursuant to the Employee Retirement Income Security Act of 1974.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-51.1, 58-18-79.

ARSD 20:06:53:78 Strictly adhere -- Defined

For purposes of §§ 20:06:53:68 to 20:06:53:77 minor non-prejudicial errors attributable to good cause or matters beyond the plan or issuer's control in the context of ongoing good faith exchange of information and not evidence of pattern or practice of non-compliance with the internal claims and appeal process meet the strict adherence requirements of the internal claims and appeal process.

History

Source: 38 SDR 59, effective October 19, 2011.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:79 Written explanation of violation

A covered person may request a written explanation of the violation from the health carrier. The health carrier shall provide the written explanation within ten days of receiving the request. The written explanation shall include a specific description of its bases, if any, for asserting that the violation does not deem the provisions of SDCL 58-17I-1 to 58-17I-16 have been exhausted.

History

Source: 38 SDR 59, effective October 19, 2011.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:53:80 Procedure when immediate review request denied

If an independent reviewer or a court of competent jurisdiction rejects the grievance involving an adverse determination for immediate review on the basis that the health carrier met the requirements of the exception provided in § 20:06:53:78 the covered person has the right to resubmit and pursue a review of the grievance under SDCL 58-17I-1 to 58-17I-16. Within a reasonable time, after the independent reviewer or the court rejects the grievance involving an adverse determination for immediate review, but not exceeding ten days, the health carrier shall provide to the covered person or, if applicable, the covered person's authorized representative notice of the opportunity to resubmit and, as appropriate, pursue a review of the grievance under SDCL 58-17I-1 to 58-17I-16.

For purposes of calculating the time period for re-filing the benefit request or claim under this subparagraph, the time period shall begin to run upon the covered person's or, if applicable, the covered person's authorized representative receipt of the notice of opportunity to resubmit.

History

Source: 38 SDR 59, effective October 19, 2011.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

Chapter 20:06:54 Preventive services

ARSD 20:06:54:01 Coverage for preventive items and services

A group health plan, or a health insurance issuer offering group or individual health insurance coverage, shall provide coverage for all of the following items and services, and may not impose any cost-sharing requirements such as a copayment, coinsurance, or deductible with respect to the following items or services:

(1) Evidence-based items or services that have in effect a rating of A or B in the recommendations of the United States Preventive Services Task Force as of July 1, 2018, and as appearing in Appendix A with respect to the individual involved;

(2) Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved. For this purpose, a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention is considered in effect after it has been adopted by the Director of the Centers for Disease Control and Prevention, and a recommendation is considered to be for routine use if it is listed on the Immunization Schedules of the Centers for Disease Control and Prevention;

(3) With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration; and

(4) With respect to women, to the extent not described in subdivision 20:06:54:01(1), evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration.

A health carrier shall at least annually at the beginning of each new plan year or policy year, whichever is applicable, revise the preventive services covered under its health insurance policies pursuant to this section consistent with the recommendations of the United States Preventive Services Task Force, the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention and the guidelines with respect to infants, children, adolescents, and women, evidenced-based preventive care and screenings by the Health Resources and Services Administration in effect at the time.

Reference: The Guide to Clinical Preventive Services, 20 14. Recommendation of the U.S. Preventive Services Task Force. Copies can be obtained by contacting the Agency for Healthcare Research and Quality Publications Clearinghouse, on a single copy basis. Mail AHRQ Publications Clearinghouse, P.O. Box 8547, Silver Spring, MD 20907-8547. Online: http://www.ahrq.gov/. Telephone: 800-358-9295, E-mail: ahrqpubs@ahrq.hhs.gov. You may also view online at http://www.uspreventiveservicestaskforce.org/Page/Name/recommendations.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-1.1, 58-17-1.2, 58-17-62, 58-17-87, 58-17-98, 58-18-36, 58-18-41, 58-18-79, 58-18-80, 58-18-83.

ARSD 20:06:54:02 Coverage for office visits in conjunction with preventive items and services

If an item or service described in § 20:06:54:01 is billed separately or is tracked as individual encounter data separately from an office visit, then a plan or issuer may impose cost-sharing requirements with respect to the office visit.

If an item or service described in § 20:06:54:01 is not billed separately or is not tracked as individual encounter data separately from an office visit and the primary purpose of the office visit is the delivery of such an item or service, then a plan or issuer may not impose cost-sharing requirements with respect to the office visit. If an item or service described in § 20:06:54:01 is not billed separately or is not tracked as individual encounter data separately from an office visit and the primary purpose of the office visit is not the delivery of such an item or service, then a plan or issuer may impose cost-sharing requirements with respect to the office visit.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-1.1, 58-17-1.2, 58-17-62, 58-17-87, 58-17-98, 58-18-36, 58-18-41, 58-18-79, 58-18-80, 58-18-83.

ARSD 20:06:54:03 Preventive items and services with out-of-network providers

Nothing in this section requires a plan or issuer that has a network of providers to provide benefits for items or services described in § 20:06:54:01 that are delivered by an out-of-network provider. Moreover, nothing in this section precludes a plan or issuer that has a network of providers from imposing cost-sharing requirements for items or services described in § 20:06:54:01 that are delivered by an out-of-network provider.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-1.1, 58-17-1.2, 58-17-62, 58-17-87, 58-17-98, 58-18-36, 58-18-41, 58-18-79, 58-18-80, 58-18-83.

ARSD 20:06:54:04 Reasonable medical management allowed

Nothing prevents a plan or issuer from using reasonable medical management techniques to determine the frequency, method, treatment, or setting for an item or service described in § 20:06:54:01 to the extent not specified in the recommendation or guideline.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-1.1, 58-17-1.2, 58-17-62, 58-17-87, 58-17-98, 58-18-36, 58-18-41, 58-18-79, 58-18-80, 58-18-83.

ARSD 20:06:54:05 Additional services not prohibited

Nothing in this section prohibits a plan or issuer from providing coverage for items and services in addition to those recommended by the United States Preventive Services Task Force or the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention or provided for by guidelines supported by the Health Resources and Services Administration, or from denying coverage for items and services that are not recommended by that task force or that advisory committee or supported by the HRSA guidelines. A plan or issuer may impose cost-sharing requirements for a treatment not described in § 20:06:54:01, even if the treatment results from an item or service described in § 20:06:54:01.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-1.1, 58-17-1.2, 58-17-62, 58-17-87, 58-17-98, 58-18-36, 58-18-41, 58-18-79, 58-18-80, 58-18-83.

ARSD 20:06:54:06 Applicability

A plan or issuer must provide coverage pursuant to §§ 20:06:54:01 to 20:06:54:05, inclusive, for the group market for plan years and in the individual market policy years, beginning after September 22, 2010. Nothing in §§ 20:06:54:01 to 20:06:54:05, inclusive, applies to grandfathered plans pursuant to 75 Fed. Reg. 116 (2010) to be codified at 26 C.F.R. § 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147. This chapter applies to any plan of individual health coverage, including any health benefit plans subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive, that is not an excepted benefit pursuant to SDCL subdivision 58-17-69(13) and any employer based health plan, including health benefit plans subject to the provisions of SDCL 58-18-42. This chapter does not apply to self-funded plans preempted from state regulation pursuant to the Employee Retirement Income Security Act of 1974.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-1.1, 58-17-1.2, 58-17-62, 58-17-87, 58-17-98, 58-18-36, 58-18-41, 58-18-51.1, 58-18-79, 58-18-80, 58-18-83.

Chapter 20:06:55 Market regulations

ARSD 20:06:55:01 Eligibility of children up to age 26

A group health plan, or a health insurance issuer offering group or individual health insurance coverage, that makes available dependent coverage of children must make such coverage available for children until attainment of 26 years of age. The provisions of §§ 20:06:55:01 to 20:06:55:10, inclusive, apply for plan years, in the individual market policy years, beginning after September 22, 2010. Nothing in this section alters the requirements of SDCL 58-17-2.3 or 58-18-31.1 as it relates to any dependent who is over the age of 25 but has not reached the age of 30.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:02 Restrictions on plan definition of dependent

With respect to a child who has not attained age 26, a plan or issuer may not define dependent for purposes of eligibility for dependent coverage of children other than in terms of a relationship between a child and the participant, and in the individual market, the primary subscriber. A plan or issuer may not deny or restrict coverage for a child who has not attained age 26 based on the presence or absence of the child's financial dependency upon the participant, primary subscriber, or with any other person; residency with the participant and in the individual market the primary subscriber, or any other person; student status; marital status; employment; or any combination of those factors. In addition, a plan or issuer may not deny or restrict coverage of a child based on eligibility for other coverage, except as provided in § 20:06:55:10.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:03 Coverage of grandchildren not required

Nothing in §§ 20:06:55:01 to 20:06:55:10, inclusive, requires a plan or issuer to make coverage available for the child of a child receiving dependent coverage, unless the grandparent becomes the legal guardian or adoptive parent of that grandchild.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:04 Uniformity irrespective of age

The terms of the plan or health insurance coverage providing dependent coverage of children may not vary based on age except for children who are age 26 or older. Nothing in this section applies to premium rates.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:05 Individuals whose coverage ended by reason of reaching a dependent eligibility threshold -- Applicability

Sections 20:06:55:05 to 20:06:55:09, inclusive, apply to any child whose coverage ended, or who was denied coverage or was not eligible for coverage under a group health plan or group or individual health insurance coverage because, under the terms of the plan or coverage, the availability of dependent coverage of children ended before the attainment of age 26 and who becomes eligible or is required to become eligible for coverage under a group health plan or group or individual health insurance coverage on the first day of the first plan year and in the individual market the first day of the first policy year, beginning after September 22, 2010.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:06 Individuals whose coverage ended by reason of reaching a dependent eligibility threshold -- Opportunity to enroll required

If a group health plan, or group or individual health insurance coverage, in which a child described in § 20:06:55:05 is eligible to enroll or is required to become eligible to enroll in the plan, or coverage in which the child's coverage ended or did not begin for the reasons described in § 20:06:55:05, and if the plan, or the issuer of such coverage, is subject to the requirements of §§ 20:06:55:05 to 20:06:55:09, inclusive, the plan and the issuer are required to give the child an opportunity to enroll that continues for at least 30 days including written notice of the opportunity to enroll as described in § 20:06:55:10. The opportunity to enroll must be provided beginning not later than the first day of the first plan year and in the individual market the first day of the first policy year, beginning after September 22, 2010.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:07 Individuals whose coverage ended by reason of reaching a dependent eligibility threshold -- Written notice

For purposes of §§ 20:06:55:05 to 20:06:55:09, inclusive, the written notice must include a statement that children whose coverage ended, who were denied coverage or were not eligible for coverage, because the availability of dependent coverage of children ended before attainment of age 26 are eligible to enroll in the plan or coverage. The notice may be provided to an employee on behalf of the employee's child and in the individual market, to the primary subscriber on behalf of the primary subscriber's child. In addition, for a group health plan or group health insurance coverage, the notice may be included with other enrollment materials that a plan distributes to employees, provided the statement is prominent. For a group health plan or group health insurance coverage, if a notice satisfying the requirements of this section is provided to an employee whose child is entitled to an enrollment opportunity pursuant to § 20:06:55:05, the obligation to provide the notice of enrollment opportunity pursuant to § 20:06:55:05 with respect to that child is satisfied for both the plan and the issuer. The written notice must be provided beginning not later than the first day of the first plan year and in the individual market the first day of the first policy year, beginning after September 22, 2010.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:08 Individuals whose coverage ended by reason of reaching a dependent eligibility threshold -- Effective date

In the case of an individual who enrolls pursuant to § 20:06:55:05, coverage must take effect in the group market not later than the first day of the first plan year and in the individual market, the first day of the first policy year, beginning after September 22, 2010.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:09 Individuals whose coverage ended by reason of reaching a dependent eligibility threshold -- Group health plan special enrollee

Any child enrolling in a group health plan pursuant to § 20:06:55:05 must be treated as if the child were a special enrollee, as provided under the rules of 45 C.F.R. § 146.117(d). Accordingly, the child and, if the child would not be a participant once enrolled in the plan, the participant through whom the child is otherwise eligible for coverage under the plan, must be offered all the benefit packages available to similarly situated individuals who did not lose coverage by reason of cessation of dependent status. For this purpose, any difference in benefits or cost-sharing requirements constitutes a different benefit package. The child also cannot be required to pay more for coverage than similarly situated individuals who did not lose coverage by reason of cessation of dependent status.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:10 Special rule for grandfathered group health plans

For plan years beginning before January 1, 2014, a group health plan that qualifies as a grandfathered health plan pursuant to 75 Fed. Reg. 116 (2010) to be codified at 26 C.F.R. § 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147, and that makes available dependent coverage of children may exclude an adult child who has not attained age 26 from coverage only if the adult child is eligible to enroll in an eligible employer-sponsored health plan, as defined in section 5000A(f)(2) of the Internal Revenue Code, other than a group health plan of a parent.

For plan years beginning after December 31, 2013, a group health plan that qualifies as a grandfathered health plan pursuant to 75 Fed. Reg. 116 (2010) to be codified at 26 C.F.R. § 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147 must comply with the requirements of §§ 20:06:55:01 to 20:06:55:04, inclusive.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79.

ARSD 20:06:55:11 Applicability

Except for those coverages that are excepted benefits pursuant to SDCL subdivision 58-17-69(13), §§ 20:06:55:01 to 20:06:55:08, inclusive, apply to any plan of individual health insurance coverage and to any health benefit plan subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive.

Sections 20:06:55:01 to 20:06:55:10, inclusive, apply to any employer based health plan, including any health benefit plan subject to the provisions of SDCL 58-18-42. This chapter does not apply to self funded plans preempted from state regulation pursuant to the Employee Retirement Income Security Act of 1974.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-51.1, 58-18-79.

ARSD 20:06:55:12 Choice of primary care providers

If a health carrier offering group or individual health insurance coverage requires or provides for the designation by a covered person of a participating primary care health care professional, the health carrier shall permit each covered person to:

(1) Designate any participating primary care health care professional who is available to accept the covered person; and

(2) For a child, designate any participating physician who specializes in pediatrics as the child's primary care health care professional and is available to accept the child.

This section does not waive any exclusions of coverage under the terms and conditions of the policy with respect to pediatric care. If the health carrier provides coverage for obstetrical or gynecological care and requires the designation of an in-network primary care provider, the health carrier may not require the authorization or referral by the plan for a female insured who seeks obstetrical or gynecological care from a participating in-network provider specializing in obstetrics or gynecology. The health carrier shall treat the provision of obstetrical and gynecological care, and the ordering of related obstetrical and gynecological items and services by a participating health care professional who specializes in obstetrics or gynecology as the authorization of the primary care health care professional. The health carrier may require the health care professional to agree to otherwise adhere to the health carrier's policies and procedures, including procedures for obtaining prior authorization and provider services in accordance with a treatment plan, if any, approved by the health carrier. This section does not waive any exclusions of coverage under the terms and conditions of the policy with respect to coverage of obstetrical or gynecological care or preclude the health carrier involved from requiring the participating health care professional providing obstetrical or gynecological care to notify the primary health care professional or the health carrier of treatment decisions.

A health carrier shall provide notice to covered persons of the terms and conditions of the plan related to the designation of a participating health care professional provided in this section and of a covered person's rights. A group health insurance carrier shall include the notice with the summary plan description or other similar description of benefits under the group health insurance coverage. An individual health insurance carrier shall include the notice whenever the individual carrier provides a primary subscriber with a policy, certificate, or contract of health insurance. A carrier may use Appendix A to satisfy the notice requirements of this section.

Nothing in this section applies to grandfathered plans pursuant to 75 Fed. Reg. 116 (2010) to be codified at 26 C.F.R. § 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147. Except for those coverages that are excepted benefits pursuant to SDCL subdivision 58-17-69(13), this section applies to any plan of individual health insurance coverage and to any health benefit plan subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive, and also applies to any employer based health plan, including health benefit plans subject to the provisions of SDCL 58-18-42.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-51.1, 58-18-79.

ARSD 20:06:55:13 Emergency services

No prior authorization of emergency services may be required by a health carrier either for in-network or out-of-network emergency services. A plan must provide for the payment of emergency services by an out-of-network provider in an amount not less than the greatest of the following:

(1) The amount negotiated with in-network providers for emergency services excluding any in-network co-payment on coinsurance imposed with respect to the covered person;

(2) The amount for the emergency service calculated and excluding any in-network co-payment or coinsurance, using the same method the plan uses to determine payments for out-of-network services but using the in-network cost-sharing provisions instead of the out-of-network cost-sharing provisions; or

(3) The amount that would be paid under Medicare part A or part B for the emergency service and excluding any in-network co-payment or coinsurance.

For capitated and other plans that do not have a negotiated per-service amount for in-network providers, subdivision (1) does not apply. If a plan has more than one negotiated amount for in-network providers for a particular emergency service, the amount of subdivision (1) is the median of these negotiated amounts. Nothing in this section applies to grandfathered plans pursuant to 75 Fed. Reg. 116 (2010) to be codified at 26 C.F.R. § 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147. Except for those coverages that are excepted benefits pursuant to SDCL subdivision 58-17-69(13), this section applies to any plan of individual health insurance coverage and to any health benefit plan subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive, and applies to any employer based health plan, including health benefit plans subject to the provisions of SDCL 58-18-42.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-51.1, 58-18-79.

ARSD 20:06:55:14 Rescissions

A policy, certificate, or contract of insurance may not be rescinded unless the individual performs an act, practice, or omission that constitutes fraud or unless the individual makes an intentional misrepresentation of a material fact. A rescission is any cancellation or discontinuance of coverage under any individual or group health insurance policy or certificate, other than a plan of excepted benefits, that has a retroactive effect. Rescission does not include a cancellation or discontinuance of coverage under a health policy or certificate if:

(1) The cancellation or discontinuance of coverage has only a prospective effect;

(2) The cancellation or discontinuance of coverage is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage; or

(3) The health benefit plan covers only active employees and, if applicable, dependents and those covered under continuation coverage provisions, the employee pays no premiums for coverage after termination of employment and the cancellation or discontinuance of coverage is effective retroactively back to the date of termination of employment due to a delay in administrative record-keeping.

A health carrier shall provide at least thirty days advance notice to each plan enrollee or covered person who would be affected by the proposed rescission of coverage before coverage under the plan may be rescinded. If the proposed rescission is with respect to a group plan, the notice is required regardless of whether the rescission applies only to an individual within the group or to the entire group.

Except for those coverages that are excepted benefits pursuant to SDCL subdivision 58-17-69(13), this section applies to any plan of individual or group health insurance coverage and to any health benefit plan subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive, and also applies to any employer based health plan, including health benefit plans subject to the provisions of SDCL 58-18-42.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-51.1, 58-18-79.

ARSD 20:06:55:15 Group plans -- Lifetime limits

A group health plan may not establish any lifetime limit or any annual limit on the dollar amount of essential benefits for any individual except as permitted in § 20:06:55:16. However, a flexible spending arrangement may have an annual limit on the dollar amount of benefits. Nothing in this section prohibits a group health plan from placing annual or lifetime limits on specific covered benefits that are not essential benefits. Essential benefits include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services including behavioral health treatment, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services including oral and vision care. Nothing in this section prohibits a group health plan from excluding all benefits for a given condition.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:55:16 Group plans -- Annual limits

With respect to plan years beginning prior to January 1, 2014, a group health plan may establish, for any individual, an annual limit on the dollar amount of benefits that are essential health benefits if the limit is no less than the following:

(1) For a plan year beginning after September 22, 2010, but before September 23, 2011, $750,000;

(2) For a plan year beginning after September 22, 2011, but before September 23, 2012, $1,250,000;

(3) For plan years beginning after September 22, 2012, but before January 1, 2014, $2,000,000.

In determining whether an individual has received benefits that meet or exceed the allowable annual limits as required by this section the plan or issuer may only take into account essential health benefits.

For plan years beginning after December 31, 2013, no annual dollar limit is permitted for essential health benefits.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:55:17 Group plans -- Eligibility

An individual who meets the requirements of this section is eligible for benefits under a group health plan as described in § 20:06:55:18. This section applies to any individual:

(1) Whose coverage or benefits under a group health plan ended by reason of reaching a lifetime limit on the dollar value of all benefits for any individual; and

(2) Who becomes eligible, or is required to become eligible, for benefits not subject to a lifetime limit on the dollar value of all benefits under the group health plan on the first day of the first plan year beginning after September 22, 2010, by reason of the application of this section.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:55:18 Group plans -- Notices and enrollment

If an individual described in § 20:06:55:17 is eligible for benefits or is required to become eligible for benefits under the group health plan, the group health plan is required to give the individual written notice that the lifetime limit on the dollar value of all benefits no longer applies and that the individual, if covered, is once again eligible for benefits under the plan. If the individual is not enrolled in the plan or if an enrolled individual is eligible for but not enrolled in any benefit package under the plan, then the plan must also give such individual an opportunity to enroll that continues for at least thirty days. The notices and enrollment opportunity required under this section must be provided beginning no later than the first day of the first plan year beginning after September 22, 2010. In the case of an individual who enrolls pursuant to this section, coverage must take effect no later than the first day of the first plan year beginning after September 22, 2010.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:55:19 Group plans -- Special enrollment

An individual enrolling in a group health plan pursuant to § 20:06:55:18 must be treated as if the individual were a special enrollee pursuant to §§ 20:06:40:05 and 20:06:40:05.01. The individual eligible for special enrollment must be offered all the benefit packages available to similarly situated individuals who did not lose coverage by reason of reaching a lifetime limit on the dollar value of all benefits. Any difference in benefits or cost-sharing constitutes a different benefit package. The individual may not be required to pay more for coverage than similarly situated individuals who did not lose coverage by reason of reaching a lifetime limit on the dollar value of all benefits.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-79.

ARSD 20:06:55:20 Group plans -- Applicability

Sections 20:06:55:15 to 20:06:55:19, inclusive, apply for plan years beginning after September 22, 2010, and apply to any employer based health plan, including health benefit plans subject to the provisions of SDCL 58-18-42 but do not apply to excepted benefits.

For plan or policy years beginning prior to January 1, 2014, a group health insurance policy is exempt from the annual limit requirements if the policy is approved for a waiver from such requirements by the U.S. Department of Health and Human Services but such exemption only applies for the specified period of time that the waiver from the U.S. Department of Health and Human Services is applicable.

At the time a policy receives a waiver from the U.S. Department of Health and Human Services, the health carrier shall notify prospective applicants and affected policyholders and the commissioner in each state where prospective applicants and any affected insured are known to reside.

At the time the waiver expires or is otherwise no longer in effect, the health carrier shall notify affected policyholders and the commissioner in each state where any affected insured is known to reside.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-43, 58-18-44, 58-18-45, 58-18-48, 58-18-51.1, 58-18-79.

ARSD 20:06:55:21 Individual plans -- Lifetime limits

No individual policy of insurance may establish a lifetime limit on the dollar value of essential benefits for any covered person or an unreasonable annual limit on the dollar value of essential benefits for any covered person. Nothing in this section prohibits a health plan from placing annual or lifetime limits on specific covered benefits that are not essential benefits. Essential benefits include ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services including oral and vision care. Nothing in this section prohibits a health plan from excluding all benefits for a given condition. The written notice requirements described in § 20:06:55:18 apply to individual plans of insurance.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:55:22 Individual plans -- Annual limits

With respect to policy years beginning prior to January 1, 2014, a health plan may establish, for any individual, an annual limit on the dollar amount of benefits that are essential health benefits provided the limit is no less than the following:

(1) For a plan year beginning after September 22, 2010, but before September 23, 2011, $750,000;

(2) For a plan year beginning after September 22, 2011, but before September 23, 2012, $1,250,000;

(3) For plan years beginning after September 22, 2012, but before January 1, 2014, $2,000,000.

For plan years beginning after December 31, 2013, no annual dollar limit is permitted for essential health benefits.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010; 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:55:23 Reinstatement of coverage

An individual whose coverage or benefits under a health plan ended by reason of reaching a lifetime limit on the dollar value of all benefits for the individual must be provided an opportunity for reinstatement of coverage provided that the individual policy or the group health plan remains in force.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:55:24 Individual plans -- Applicability

Except for those coverages that are excepted benefits pursuant to SDCL subdivision 58-17-69(13), §§ 20:06:55:21 to 20:06:55:23, inclusive, apply to any plan of individual health insurance coverage and to any health benefit plan subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive.

Sections 20:06:55:21 to 20:06:55:23, inclusive, do not apply to individual plans with respect to annual limits if the plans are grandfathered plans pursuant to 75 Fed. Reg. 116 (2010) to be codified at 26 C.F.R. § 54 and 602, 29 C.F.R. § 2590, and 45 C.F.R. § 147.

For plan or policy years beginning prior to January 1, 2014, an individual health insurance policy is exempt from the annual limit requirements if the policy is approved for a waiver from such requirements by the U.S. Department of Health and Human Services but such exemption only applies for the specified period of time that the waiver from the U.S. Department of Health and Human Services is applicable.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:55:25 Repealed.

Individual plans -- No preexisting condition for a person under the age of 19 -- Open enrollment.** Repealed.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010; 37 SDR 215, effective May 31, 2011; 38 SDR 40, effective September 20, 2011; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:55:25.01 Individual plans -- No preexisting condition

No health policy, certificate, or plan may limit or exclude coverage based upon a preexisting condition for a person. For policies issued after March 23, 2010, but before September 23, 2010, any remaining preexisting condition waiting period must be removed beginning on the first day of the policy year following September 22, 2010. For individual policies issued after September 22, 2010, no preexisting waiting period for persons under the age of 19 may be applied. For persons who are age 19 or over no preexisting condition may apply after December 31, 2013. This section does not apply to grandfathered plans.

If a health insurance issuer offers health insurance coverage in any level of coverage other than excepted benefits, the issuer shall also offer such coverage in that level as a plan in which the only enrollees are individuals who, as of the beginning of a plan year, have not attained the age of 21.

This section does not apply to a plan that is stand-alone dental.

Except for those coverages that are excepted benefits pursuant to § 20:06:55:27, this section applies to any plan of individual health insurance coverage and to any health benefit plan subject to the provisions of SDCL 58-17-66 to 58-17-87, inclusive.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-84, 58-17-87, 58-17-97.

ARSD 20:06:55:26 Group plans -- No preexisting condition for a person under the age of 19

No health policy, certificate, or plan may limit or exclude coverage based upon a preexisting condition for a person under the age of 19. Any prexisting condition waiting period for a covered person under the age of 19 must be removed no later than the first day of the plan year following September 22, 2010.

This section applies to any employer based health plan, including health benefit plans subject to the provisions of SDCL 58-18-42 and plans that are either grandfathered or not grandfathered.

History

Source: 37 SDR 63, effective September 23, 2010; 37 SDR 111, effective December 7, 2010.
General Authority: SDCL 58-18-79.
Law Implemented: SDCL 58-18-48, 58-18-51.1, 58-18-79, 58-18-86.

ARSD 20:06:55:27 Excepted benefits -- Defined

For any health insurance policy or certificate subject to the provisions of Title 58 the term excepted benefits are those benefits as defined in section 2791 (c) of the Public Health Service Act.

History

Source: 37 SDR 215, effective May 31, 2011.
General Authority: SDCL 58-11-63, 58-17-87, 58-18-79.
Law Implemented: SDCL 58-11-44, 58-17-69, 58-17-87, 58-18-31, 58-18-45, 58-18-79.

ARSD 20:06:55:28 Repealed

Disproportionate share reporting.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:55:29 Repealed

Disproportionate share based on loss ratio.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; 39 SDR 203, adopted June 10, 2013, repealed, January 1, 2014.

ARSD 20:06:55:30 Repealed

Disproportionate share based upon earned premium.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; 39 SDR 203, adopted June 10, 2013, repealed, January 1, 2014.

ARSD 20:06:55:31 Repealed

Length of disproportionate share approval.** Repealed.

History

Source: 37 SDR 215, effective May 31, 2011; 39 SDR 203, adopted June 10, 2013, repealed January 1, 2014.

ARSD 20:06:55:32 Definitions

(1) "Exchange," individual and SHOP Exchange;

(2) "HHS," United States Department of Health and Human Services;

(3) "Health insurance issuer," any person that provides health insurance in this state including an insurance company, a prepaid hospital, or similar plan, a health maintenance organization, a multiple employer welfare arrangement, or any other entity providing a plan of health insurance or health benefits subject to state insurance regulation. A health insurance issuer does not include a person providing only excepted benefits;

(4) "Individual Exchange," an Exchange as provided for by section 1311 of PPACA to provide coverage to individuals;

(5) "PPACA," means the Patient Protection and Affordable Care Act (P.L. 111-148, 2010), as amended by the Health Care and Education Reconciliation Act (P.L. 111-152, 2010);

(6) "SHOP Exchange," an Exchange provided for by section 1311 of PPACA to provide coverage to small employers.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:33 Certifying qualified health plans

A health insurance issuer selling plans in an Exchange may offer only health plans which have in effect a certification issued by the director as a qualified health plan, unless specifically provided for otherwise. A stand-alone dental plan must be certified by the director to participate in an Exchange.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:34 Issuer standards and certification criteria

In order to participate in an Exchange, a health insurance issuer must have in effect a certification issued or recognized by the director to demonstrate that each health plan it offers in an Exchange is a qualified health plan. The director may certify a health plan as a qualified health plan if the requirements of § 20:06:55:35 are met or the director determines that making the health plan available is in the interest of the qualified individuals and qualified employers. The director may not exclude a health plan on the following basis:

(1) Such plan is a fee-for-service plan;

(2) Through the imposition of premium price controls; or

(3) That the health plan provides treatments necessary to prevent patients' deaths in circumstances determined to be inappropriate or too costly.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:35 Qualified health plan defined

A qualified health plan is a health plan that has been certified by the division that such plan meets the following criteria:

(1) Provides the essential health benefits package described in § 20:06:56:03;

(2) Meets actuarial value standards as described in § 20:06:56:11;

(3) Is licensed by and in good standing with the director;

(4) Includes a network that is compliant with SDCL chapter 58-17F, § 20:06:55:36 and § 20:06:55:37;

(5) Complies with marketing laws;

(6) Is accredited based on local performance by an accrediting entity recognized by HHS as described in § 20:06:56:12;

(7) The rates comply with chapter 20:06:22 and § 20:06:55:45;

(8) Is non-discrimination compliant with chapter 20:06:45;

(9) Includes plan variations for individuals eligible for cost-sharing reductions and for American Indian and Alaska Native populations;

(10) Complies with the benefit design standards, as defined in § 20:06:56:08;

(11) Implements and reports on a quality improvement strategy or strategies to disclose and report information on health care quality and outcomes;

(12) Complies with the standards related to the risk adjustment program under 45 CFR part 153 (March 12, 2012).

Stand-alone dental plans are not required to comply with subdivisions (1),(2),(6),(7),(9),(10),(11), and (12). Stand-alone dental plans must meet the plan criteria identified in § 20:06:56:06.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:36 Exchange network adequacy standards

A qualified health plan issuer must ensure that the provider network of each qualified health plan meets the standards specified in SDCL chapter 58-17F. A qualified health plan in an Exchange may contract with any essential community provider. The service area of a qualified health plan is subject to the approval of the director and must cover a minimum geographical area that is at least the entire geographic area of a county, or a group of counties defined by the director. The service area of a qualified health plan must be established without regard to racial, ethnic, language, health status-related factors or other factors that exclude specific high utilizing, high cost or medically-underserved populations.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:37 Network adequacy standards

A qualified health plan issuer must ensure that the provider network of each of its qualified health plans meets the following standards:

(1) Includes essential community providers in accordance with §§ 20:06:55:38 and 20:06:55:39;

(2) Maintains a network that is sufficient in number and types of providers, including providers that specialize in mental health and substance abuse services, to assure that all services are accessible without unreasonable delay; and

(3) Is consistent with the network adequacy provisions of SDCL chapter 58-17F.

A qualified health plan issuer must make its provider directory for a qualified health plan available for publication online to potential enrollees in hard copy upon request. In the provider directory, a qualified health plan issuer must identify providers that are not accepting new patients.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:38 Essential community providers defined

Essential community providers are providers that serve predominantly low-income, medically underserved individuals, unless the provider lost its status as a result of a violation of Federal law:

(1) Health care providers defined in section 340B(a)(4) of the Public Health Service Act (Pub. L. 102-585), as amended by PPACA, Health Care and Education Reconciliation Act (Pub. L. 111-152), and Medicare and Medicaid Extenders Act of 2010 (Pub. L. 111-309); and

(2) Providers described in section 1927(c)(1)(D)(i)(IV) of the Public Health Service Act as set forth by section 221 of Pub. L. 111-8 (March 11, 2009).

Nothing in this section shall be construed to require a qualified health plan issuer to contract with an essential community provider if such provider refuses to accept the generally applicable payment rates of such issuer.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:39 Essential community providers

A qualified health plan issuer must have a sufficient number and geographic distribution of essential community providers, where available, to ensure reasonable and timely access to a broad range of such providers for low-income, medically underserved individuals in the qualified health plan's service area.

A qualified health plan issuer that provides a majority of covered professional services through physicians employed by the issuer or through a single contracted medical group may, with approval from the director, as an alternative to the standard set forth above comply as follows:

A qualified health plan issuer must have a sufficient number and geographic distribution of employed providers and hospital facilities, or providers of its contracted medical group and hospital facilities to ensure reasonable and timely access for low-income, medically underserved individuals in the qualified health plans service area.

Nothing in this section shall be construed to require any qualified health plan to provide coverage for any specific medical procedure provided by the essential community provider.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:40 Payment of federally-qualified health centers

If an item or service covered by a qualified health plan is provided by a federally-qualified health center to an enrollee of a qualified health plan, the qualified health plan issuer must pay the federally-qualified health center for the item or service an amount that is not less than the amount of payment that would be required to be paid to the center under section 1902(bb) of PPACA for such item or service. Nothing in this section would preclude a qualified health plan issuer and federally-qualified health center from mutually agreeing upon payment rates other than those that would be paid to the center under section 1902(bb) of PPACA, as long as such mutually agreed upon rates are at least equal to the generally applicable payment rates of the issuer.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:41 Treatment of direct primary care medical homes

A qualified health plan issuer may provide coverage through a direct primary care medical home that meets the criteria established by HHS, so long as the qualified health plan meets all requirements that are otherwise applicable and the services covered by the direct primary care medical home are coordinated with the qualified health plan issuer.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:42 Recertification of qualified health plans

Each qualified health plan offered in an Exchange must obtain annual recertification from the director in accordance with the criteria as outlined in § 20:06:55:35 each year. Upon determining the recertification status of a qualified health plan the director shall notify qualified health plan issuers.

If a qualified health plan issuer elects not to seek recertification with an Exchange for its qualified health plan, the qualified health plan issuer must provide written notice of the election to each enrollee.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:43 Decertification of qualified health plan

If an issuer offering a qualified health plan is no longer in compliance with the general certification criteria as outlined in § 20:06:55:35 the issuer may not offer coverage through an Exchange.

If a qualified health plan is decertified or otherwise not approved to offer coverage through an Exchange the qualified health plan issuer must terminate coverage for enrollees only after:

(1) The plan provides notification as described in § 20:06:55:46; and

(2) Enrollees have an opportunity to enroll in other coverage.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:44 Non-renewal and decertification of qualified health plans

If a qualified health plan issuer elects not to seek recertification with the director, the qualified health plan issuer must:

(1) Notify the director of its decision prior to the beginning of the recertification process;

(2) Fulfill its obligation to cover benefits for each enrollee through the end of the plan or benefit year;

(3) Fulfill data reporting obligations from the last plan or benefit year of the certification;

(4) Provide notice to enrollee in writing; and

(5) Terminate coverage for enrollees in the qualified health plan once enrollees have an opportunity to enroll in other coverage.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:45 Rates

A qualified health plan issuer must set rates for an entire benefit year, or for the SHOP Exchange, plan year. An issuer must submit rate and benefit information to the director. A qualified health plan issuer must submit to the director a justification for a rate increase prior to the implementation of the increase. A qualified health plan issuer must prominently post the justification for a rate increase on its website. A qualified health plan issuer may vary premiums by the geographic rating area described in § 20:06:22:29.

Stand-alone dental plans are not subject to § 20:06:22:29. Stand-alone dental must file rates in accordance with SDCL 58-17-4.1 and SDCL 58-39-8. Any stand-alone dental plan that is not subject to rate approval pursuant to SDCL 58-17-4.1 or SDCL 58-39-8 must file rates with the director for informational purposes only.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:46 Health plan applications and notices

A qualified health plan issuer must provide all applications and notices to enrollees in plain language and in a manner that is accessible and timely to individuals living with disabilities including accessible websites and the provision of auxiliary aids and services at no cost to the individual in accordance with the Americans with Disabilities Act, Pub. L. No. 101-336 (1990), as amended, and section 504 of the Rehabilitation Act, Pub. L. No. 93-112 (1973), as amended. Individuals who are limited English proficient through the provision of language services at no cost to the individual.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:47 Accreditation of qualified health plan issuers

A qualified health plan issuer must be accredited on the basis of local performance of a qualified health plan in accordance with § 20:06:56:12.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:48 Repealed

Initial open enrollment period.** Repealed.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014; 45 SDR 45, effective October 10, 2018.

ARSD 20:06:55:49 Annual open enrollment period

All health insurance issuers must provide for an annual open enrollment period for the individual market inside the Exchange.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014; 41 SDR 93, effective December 3, 2014; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:50 Changing qualified health plans

A health insurance issuer must allow a qualified individual or enrollee in an Exchange to enroll in or change from one qualified health plan (QHP) to another as a result of the following triggering events:

(1) The qualified individual or his or her dependent either:

(i) Loses minimum essential coverage except for in the case of nonpayment of premium. The date of the loss of coverage is the last day the consumer would have coverage under their previous plan or coverage;

(ii) Is enrolled in any non-calendar year health insurance policy, even if the qualified individual or their dependent has the option to renew such coverage. The date of the loss of coverage is the last day of the plan or policy year;

(iii) Loses pregnancy-related coverage described under section 1902(a)(10)(A)(i)(IV) and (a)(10)(A)(ii)(IX) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV), (a)(10)(A)(ii)(IX) (July 1, 2018). The date of the loss of coverage is the last day the consumer would have pregnancy-related coverage; or

(iv) Loses medically needy coverage as described under section 1902(a)(10)(C) of the Social Security Act only once per calendar year. The date of the loss of coverage is the last day the consumer would have medically needy coverage;

(2) The qualified individual:

(i) Gains a dependent or becomes a dependent through marriage, birth, adoption, placement for adoption, placement in foster care, or through a child support order or other court order;

(a) In the case of marriage, at least one spouse must demonstrate having minimum essential coverage for 1 or more days during the 60 days preceding the date of marriage;

(ii) Loses a dependent or is no longer considered a dependent through divorce or legal separation as defined by state law in the state in which the divorce or legal separation occurs, or if the enrollee, or his or her dependent, dies;

(3) An individual, who was not previously a citizen, national, or lawfully present individual gains such status;

(4) A qualified individual's enrollment or non-enrollment in a qualified health plan is unintentional, inadvertent, or erroneous and is the result of the error, misrepresentation, or inaction of an officer, employee, or agent of the health insurance issuer. In such cases, the health insurance issuer may take such action as may be necessary to correct or eliminate the effects of such error, misrepresentation, or inaction;

(5) An enrollee adequately demonstrates to the director that the qualified health plan in which the individual is enrolled substantially violated a material provision of its contract in relation to the individual;

(6) A qualified individual or enrollee gains access to new qualified health plans as a result of a permanent move and had minimum essential coverage as described in 26 CFR 1.5000A-l(b) for one or more days during the 60 days preceding the date of the permanent move;

(7) A qualified individual or enrollee meets other exceptional circumstances as the director may provide;

(8) An Indian, as defined by section 4 of the Indian Health Care Improvement Act, Pub. L. No. 94-437 (1976), as amended, may enroll in a qualified health plan or change from one qualified health plan to another one time per month and is not subject to any qualifying event;

(9) Newly eligible or ineligible for advance payments of the premium tax credit, or change in eligibility for cost-sharing reductions:

(i) The enrollee is determined newly eligible or newly ineligible for advance payments of the premium tax credit or has a change in eligibility for cost-sharing reductions;

(ii) The enrollee's dependent enrolled in the same QHP is determined newly eligible or newly ineligible for advance payments of the premium tax credit or has a change in eligibility for cost-sharing reductions; or

(iii) A qualified individual or his or her dependent who is enrolled in an eligible employer-sponsored plan is determined newly eligible for advance payments of the premium tax credit based in part on a finding that such individual is ineligible for qualifying coverage in an eligible-employer sponsored plan in accordance with 26 CFR 1.36B-2(c)(3) (April 15, 2016), including as a result of their employer discontinuing or changing available coverage within the next 60 days, provided that such individual is allowed to terminate existing coverage;

(iv) A qualified individual in a non-Medicaid expansion state who was previously ineligible for advance payments of the premium tax credit solely because of a household income below 100 percent of the FPL, who was ineligible for Medicaid during that same timeframe, and who has experienced a change in household income that makes the qualified individual newly eligible for advance payments of the premium tax credit;

(10) Is a victim of domestic abuse or spousal abandonment, as defined by 26 CFR 1.36B-2T, as amended, including a dependent or unmarried victim within a household, is enrolled in minimum essential coverage and seeks to enroll in coverage separate from the perpetrator of the abuse or abandonment; or is a dependent of a victim of domestic abuse or spousal abandonment, on the same application as the victim, may enroll in coverage at the same time as the victim;

(11) Applies for coverage on the Exchange during the annual open enrollment period or due to a qualifying event, is assessed by the Exchange as potentially eligible for Medicaid or the Children's Health Insurance Program (CHIP), and is determined ineligible for Medicaid or CHIP by the State Medicaid or CHIP agency either after open enrollment has ended or more than 60 days after the qualifying event or applies for coverage at the State Medicaid or CHIP agency during the annual open enrollment period, and is determined ineligible for Medicaid or CHIP after open enrollment has ended;

(12) The qualified individual or enrollee, or his or her dependent, adequately demonstrates to the Exchange that a material error related to plan benefits, service area, or premium influenced the qualified individual's or enrollee's decision to purchase a QHP through the Exchange; or

(13) At the option of the Exchange, the qualified individual provides satisfactory documentary evidence to verify his or her eligibility for an insurance affordability program or enrollment in a QHP through the Exchange following termination of Exchange enrollment due to a failure to verify such status within the time period specified in § 155.315 or is under 100 percent of the FPL and did not enroll in coverage while waiting for HHS to verify his or her citizenship, status as a national, or lawful presence.

A qualified individual or enrollee has 60 days from the date of a triggering event to select a QHP. A qualified individual or the individual's dependent who is described in subsection 1 of this section has 60 days before and after the loss of coverage to select a QHP. A qualified individual or the individual's dependent who is described in subsection 9 of this section has 60 days before and after the loss of eligibility for qualifying coverage in an eligible employer-sponsored plan to select a QHP.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014; 41 SDR 93, effective December 3, 2014; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:50.01 Loss of coverage

Loss of coverage does not include termination or loss due to:

(1) Failure to pay premiums on a timely basis, including COBRA premiums prior to expiration of COBRA coverage; or

(2) Situations allowing for a rescission.

If the triggering event is loss of qualified health plan a qualified individual or enrollee may only move to a different plan at the same level of coverage as the enrollees current plan.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:50.02 Special enrollment period effective dates

After December 31, 2013, a health insurance issuer must provide special enrollment periods consistent with this section inside the Exchange, during which qualified individuals and enrollees may enroll in nongrandfathered health plans or change enrollment from one plan to another. Once a qualified individual is determined eligible for a special enrollment period, the health insurance issuer must ensure that the qualified individual's date of coverage is:

(1) Between the first and the fifteenth day of any month, the plan must ensure a coverage effective date of the first day of the following month;

(2) Between the sixteenth and the last day of any month, the plan must ensure a coverage effective date of the first day of the second following month;

(3) In the case of birth, adoption or placement for adoption, or placement in foster care, the plan must ensure that coverage is effective on the date of birth, adoption, placement for adoption, or placement in foster care. If the Exchange permits the qualified individual or enrollee to elect a coverage effective date of the first day of the month following the date of birth, adoption, placement for adoption, or placement in foster care, the Exchange must ensure coverage is effective on such date elected by the qualified individual or enrollee;

(4) In the case of marriage, or in the case where a qualified individual loses minimum essential coverage, the plan must ensure coverage is effective on the first day of the month following plan selection;

(5) In the case of a qualified individual or enrollee eligible for a special enrollment period as described in §§ 20:06:55:50(4), 20:06:55:50(5), or 20:06:55:50(7) the plan must ensure coverage is effective on an appropriate date based on the circumstances of the special enrollment period;

(6) In a case where an individual loses coverage as described in subdivision 20:06:55:50(1) if the plan selection is made before or on the day of the loss of coverage, the Exchange must ensure that the coverage effective date is on the first day of the month following the loss of coverage. If the plan selection is made after the loss of coverage, the Exchange must ensure that coverage is effective in accordance with subsection (1) and (2) of this section or on the first day of the month following plan selection in accordance with subsection (3) and (4) of this section;

(7) In the case of a court order the plan must ensure that coverage is effective for a qualified individual or enrollee on the date the court order is effective, or it may permit the qualified individual or enrollee to elect a coverage effective date in accordance with subdivision (1). If the Exchange permits the qualified individual or enrollee to elect a coverage effective date in accordance with subdivision (1) of this section, the Exchange must ensure coverage is effective on the date duly selected by the qualified individual or enrollee; and

(8) If an enrollee or his or her dependent dies, the plan must ensure that coverage is effective on the first day of the month following the plan selection, or it may permit the enrollee or his or her dependent to elect a coverage effective date in accordance with subdivision (1). If the Exchange permits the enrollee or his or her dependent to elect a coverage effective date in accordance with subdivision (1) of this rule, the Exchange must ensure coverage is effective on the date duly selected by the enrollee or his or her dependent.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014; 41 SDR 93, effective December 3, 2014; 45 SDR 45, effective October 10, 2018.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:51 Compensation

A qualified health plan issuer must pay the same broker compensation for a qualified health plan offered through an Exchange that the qualified health plan issuer pays for a similar health plan offered outside an Exchange.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:52 Plan offerings in the exchange

A qualified health plan issuer must offer at least one qualified health plan in the silver level and at least one plan in the gold level to participate in an Exchange.

Sections 20:06:55:25, 20:06:55:28, 20:06:55:29, 20:06:55:30, and 20:06:55:31 are repealed effective January 1, 2014.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:55:53 Applicability and effective dates

The open enrollment provisions of §§ 20:06:55:48 and 20:06:55:49 do not apply to any coverage issued to an employer that covers at least two individuals.

Sections 20:06:55:25, 20:06:55:28, 20:06:55:29, 20:06:55:30, and 20:06:55:31 are repealed effective January 1, 2014.

Sections 20:06:55:33 to 20:06:55:52, inclusive, are effective January 1, 2014.

History

Source: 39 SDR 203, adopted June 10, 2013, effective January 1, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

Chapter 20:06:56 Minimum benefit standards

ARSD 20:06:56:01 Definitions

(1) "Actuarial value," a measure of the percentage of expected health care costs a health plan will cover for a standard population and can be considered a general summary measure of health plan generosity;

(2) "Actuarial value calculator," used to determine the actuarial value of applicable plans. It is developed using a set of claims data weighted to reflect the standard population projected to enroll in the individual and small group markets for the identified year of enrollment;

(3) "Base-benchmark plan," the plan that is selected by the state from the options described in 45 CFR §156.100(a), or a default benchmark plan, as described in 45 CFR §156.100(c), prior to any adjustments made pursuant to the benchmark standards described in 45 CFR §156.110;

(4) "De minimis variation," is the allowable variation in the actuarial value of a health plan that does not result in a material difference in the true dollar value of the health plan is +/-2 percentage points;

(5) "Essential health benefits benchmark plan," is the standardized set of essential health benefits that must be met by a qualified health plan;

(6) "HHS," United States Department of Health and Human Services;

(7) "Premium adjustment percentage," the percentage by which the average per capita premium for health insurance coverage for the preceding calendar year exceeds such average per capita premium for health insurance.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87.
Law Implemented: SDCL 58-17-87.

ARSD 20:06:56:02 Covering essential health benefits

Health insurance coverage in the individual and small group markets must cover essential health benefits for plan years beginning after December 31, 2013. Sections 20:06:56:01 through 20:06:56:10 apply to those plans offered inside an Exchange and those offered outside an Exchange.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:03 Essential health benefit packages

The essential health benefits package consists of the following categories of benefits:

(1) Ambulatory patient services;

(2) Emergency services;

(3) Hospitalization;

(4) Maternity and newborn care;

(5) Mental health and substance use disorder services, including behavioral health treatment;

(6) Prescription drugs;

(7) Rehabilitative and habilitative services and devices;

(8) Laboratory services;

(9) Preventive and wellness services and chronic disease management; and

(10) Pediatric services, including oral and vision care.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:04 Substantially equal benefits

Plans must provide for benefits that are substantially equal to the essential health benefits-benchmark plan including:

(1) Covered benefits listed in § 20:06:56:02;

(2) Limitations on coverage including coverage of benefit amount, duration, and scope; and

(3) Prescription drug benefits described in § 20:06:56:08.

History

Source: 39 SDR 203, effective June 10, 2013; 40 SDR 102, effective December 3, 2013
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:05 Substituted benefits

A plan may substitute benefits from the essential health benefits benchmark benefit plan if it meets the following conditions:

(1) The substitute benefit is actuarial equivalent to the essential health benefit;

(2) The substitute benefit is made only within the same essential benefit category; and

(3) The benefit is not a prescription drug benefit.

The plan must submit evidence of the actuarial equivalence of the substituted benefit to the director. The certification must be conducted by a member of the American Academy of Actuaries, be based on an analysis performed in accordance with generally accepted actuarial principles and methodologies, and use a standardized plan population. Actuarial equivalence of benefits is determined regardless of cost sharing.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:06 Pediatric dental

A stand-alone dental plan covering pediatric dental may be used to cover the pediatric dental component of essential health benefits required by § 20:06:56:02. A stand-alone dental plan covering the pediatric dental category under § 20:06:56:02 must demonstrate to the director that it has a reasonable annual limitation on cost-sharing. An issuer must demonstrate that the stand-alone dental plan offers the pediatric dental essential health benefit within a de minimis variation of +/-2 percentage points of the level of coverage in subsections (1) and (2) at either:

(1) A low level of coverage with an AV of 70 percent; or

(2) A high level of coverage with an AV of 85 percent.

The coverage levels described above must be certified by a member of the American Academy of Actuaries using generally accepted actuarial principles and provided to the division.

A health benefit plan offered in the small group or individual market, which does not include minimum essential pediatric dental benefits, offers the minimum essential health benefits required under law only, if:

(1) There is at least one dental benefits carrier offering the federally-required minimum pediatric dental benefits in the state;

(2) The health benefit plan makes prominent disclosure at the time that it offers the plan, in a form approved by the director, that the health benefit plan does not provide the essential pediatric dental benefits; and

(3) That the dental benefits carriers providing the federally required minimum pediatric dental benefits and other dental benefits are licensed to offer dental benefits in the state.

For health benefit plans offered outside an exchange, pediatric dental coverage may only be excluded when an issuer is reasonably assured an individual has obtained such coverage through an exchange certified stand-alone dental plan being offered outside the exchange. A carrier may use any reasonable method for obtaining reasonable assurance including an attestation on an insurance application or other documentation from the applicant or the applicant's dental insurer.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:07 Prohibited benefits

An issuer of a plan offering essential health benefits may not include routine non-pediatric dental services, routine non-pediatric eye exam services, or long-term/custodial nursing home care benefits, or not medically necessary orthodontia as essential health benefits.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:08 Prescription drug benefits

A health plan does not provide essential health benefits unless it covers at least the greater of:

(1) One drug in every United States Pharmacopeia (USP) category and class; or

(2) The same number of prescription drugs in each category and class as the essential health benefits benchmark.

The plan is required to submit its drug list to the director. A health plan does not fail to provide essential health benefits for prescription drug solely because it does not offer drugs for services prohibited under SDCL 58-17-147. A health plan providing essential health benefits as defined in § 20:06:56:03 must have procedures in place that allow an enrollee to request clinically appropriate drugs not covered by the health plan. Such procedures must include a process for an enrollee, the enrollee's designee, or the enrollee's prescribing physician or other prescriber to request an expedited review based on exigent circumstances.

Exigent circumstances exist when an enrollee is suffering from a health condition that may seriously jeopardize the enrollee's life, health, or ability to regain maximum function or when an enrollee is undergoing a current course of treatment using a non-formulary drug.

A health plan must make its coverage determination on an expedited review request based on exigent circumstances and notify the enrollee or the enrollee's designee and the prescribing physician or other prescriber, as appropriate of its coverage determination no later than 24 hours after it receives the request.

A health plan that grants an exception based on exigent circumstances must provide coverage of the non-formulary drug for the duration of the exigency.

Reference: United States Pharmacopeia (USP).

History

Source: 39 SDR 203, effective June 10, 2013; 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:09 Prohibited discriminatory benefit design

A health insurance issuer does not provide essential health benefits if its benefit design, or the implementation of its benefit design, discriminates based on an individual's age, expected length of life, present or predicted disability, degree of medical dependency, quality of life, or other health conditions. An issuer must not employ discriminatory marketing practices or benefit designs that will have the effect of discouraging the enrollment of individuals with significant health needs in nongrandfathered health plans. Issuers may continue to use reasonable medical management techniques that are evidence based.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:10 Actuarial value calculator

A health insurance issuer may use the actuarial value calculator to determine the actuarial value of a health plan made available by Health and Human Services. Actuarial Value within a de minimis variation determines whether a health plan offers a bronze, silver, gold, or platinum level of coverage.

If a health plan's design is not compatible with the actuarial value calculator, the issuer must meet the following:

(1) Submit the actuarial certification from an actuary, who is a member of the American Academy of Actuaries, on the chosen methodology identified in subdivisions (2) and (3) of this section;

(2) Calculate the plan's actuarial value by estimating a fit of its plan design into the parameters of the actuarial value calculator and having an actuary, who is a member of the American Academy of Actuaries, certify that the plan design was fit appropriately in accordance with generally accepted actuarial principles and methodologies; or

(3) Use the actuarial value calculator to determine the actuarial value for the plan provisions that fit within the calculator parameters and have an actuary, who is a member of the American Academy of Actuaries, calculate and certify, in accordance with generally accepted actuarial principles and methodologies, appropriate adjustments to the actuarial value identified by the calculator, for plan design features that deviate substantially from the parameters of the actuarial value calculator.

The calculation methods described in subdivisions (2) and (3) of this section may include only in-network cost-sharing, including multi-tier networks.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:11 Levels of coverage

The levels of coverage are calculated as follows:

(1) A bronze health plan is a health plan that has an actuarial value of 60 percent;

(2) A silver health plan is a health plan that has an actuarial value of 70 percent;

(3) A gold health plan is a health plan that has an actuarial value of 80 percent; and

(4) A platinum health plan is a health plan that has an actuarial value of 90 percent.

Actuarial value within a de minimis variation determines whether a health plan offers a bronze, silver, gold, or platinum level of coverage.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:12 Accreditation

A qualified health plan must be accredited in the following categories by an accrediting entity recognized by HHS prior to certification:

(1) Clinical quality measures, such as the healthcare effectiveness Data and Information Set;

(2) Patient experience ratings on a standardized Consumer Assessment of Healthcare Providers and Systems survey;

(3) Consumer access;

(4) Utilization management;

(5) Quality assurance;

(6) Provider credentialing;

(7) Complaints and appeals;

(8) Network adequacy and access; and

(9) Patient information programs.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:13 Accreditation timeline

During certification for an issuer's initial year of qualified health plan certification a qualified health plan issuer without existing commercial, Medicaid, or Exchange health plan accreditation granted by a recognized accrediting entity for the same state in which the issuer is applying to offer coverage must have scheduled or plan to schedule a review of qualified health plan policies and procedures of the applying qualified health plan issuer with a recognized accrediting entity.

Prior to a qualified health plan issuer's second year and third year of qualified health plan certification, a qualified health plan issuer must be accredited by a recognized accrediting entity on the policies and procedures that are applicable to their Exchange products, or a qualified health plan issuer must have commercial or Medicaid health plan accreditation granted by a recognized accrediting entity for the same state in which the issuer is offering Exchange coverage and the administrative policies and procedures underlying that accreditation must be the same or similar to the administrative policies and procedures used in connection with the qualified health plan.

Prior to the qualified health plan issuer's fourth year of qualified health plan certification and in every subsequent year of certification, a qualified health plan issuer must be accredited in accordance with § 20:06:56:12.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:14 Provider credentialing

A health insurance issuer's selection standards for participating providers shall be developed for primary care professionals and each health care professional specialty. The standards shall be used in determining the selection of health care professionals by the health insurance issuer, its intermediaries, and any provider networks with which it contracts. The standards shall meet the requirements of the National Association of Insurance Commissioners Health Care Professional Credentialing Verification Model Act.

Reference: National Association of Insurance Commissioners Health Care Professional Credentialing Verification Model Act.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:15 Annual limitation on cost sharing

For a plan year beginning in calendar year 2014, cost sharing may not exceed the following:

(1) For self-only coverage--the annual dollar limit as described in 26 U.S.C. § 223(c)(2)(A)(ii)(I) of the Internal Revenue Code of 1986 as amended, for self-only coverage that is in effect for 2014; or

(2) For other than self-only coverage--the annual dollar limit in 26 U.S.C § 223(c)(2)(A)(ii)(II) of the Internal Revenue Code of 1986 as amended, for non-self-only coverage that is in effect for 2014.

For a plan year beginning in a calendar year after December 31, 2014, cost sharing may not exceed the following:

(1) For self-only coverage--the dollar amount limit for calendar year 2014 increased by an amount equal to the product of that amount and the premium adjustment percentage;

(2) For other than self-only coverage--twice the dollar limit for self-only coverage described in subsection 1.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:16 Annual limitation on deductibles for plans in the small group market

For a plan year beginning in calendar year 2014, the annual deductible for a health plan in the small group market may not exceed the following

(1) For self-only coverage--$2,000; or

(2) For coverage other than self-only--$4,000.

For a plan year beginning in a calendar year after 2014, the annual deductible for a health plan in the small group market may not exceed the following:

(1) For self-only coverage--the annual limitation on deductibles for calendar year 2014 increased by an amount equal to the product of that amount and the premium adjustment percentage; and

(2) For other than self-only coverage--twice the annual deductible limit for self-only coverage.

A health plan's annual deductible may exceed the annual deductible limit if that plan may not reasonably reach the actuarial value of a given level of coverage without exceeding the annual deductible limit.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:17 Network plan cost sharing

In the case of a plan using a network of providers, cost-sharing paid by, or on behalf of, an enrollee for benefits provided outside of such network shall not count towards the annual limitation on cost-sharing or the annual limitation on deductibles.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:18 Increase annual dollar limits in multiples of 50

For a plan year beginning in a calendar year after December 31, 2014, any increase in the annual dollar limits that do not result in a multiple of 50 dollars must be rounded to the next lowest multiple of 50 dollars.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:19 Catastrophic plan

20:06:5 6:19. Catastrophic plan. A health plan not providing a bronze, silver, gold, or platinum level of coverage shall be treated as meeting the requirements of subsection (d) with respect to any plan year if:

(1) The only individuals who are eligible to enroll in the plan are individuals described in 1302 (e); and

(2) The plan provides except as provided in clause 1302 (e), the essential health benefits determined under section 1302 of the ACA, except that the plan provides no benefits for any plan year until the individual has incurred cost-sharing expenses in an amount equal to the annual limitation in effect under subsection (c)(1) of section 1302 for the plan year except as provided for in section 2713; and coverage for at least three primary care visits. An individual is described in this paragraph for any plan year if the individual has not attained the age of 30 before the beginning of the plan year; or has a certification in effect for any plan year under this title that the individual is exempt from the requirement under section 5000A of the Internal Revenue Code of 1986 by reason of section 5000A(e)(1) of such Code relating to individuals without affordable coverage; or section 5000A(e)(5) of such Code relating to individuals with hardships.

If a health insurance issuer offers a health plan described in this section, the issuer may only offer the plan in the individual market.

The cost-sharing incurred under a health plan described in this section with respect to self-only coverage or coverage other than self-only coverage for a plan year beginning in 2014 shall not exceed the dollar amounts in effect under section 223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 for self-only and family coverage, respectively, for taxable years beginning in 2014.

In the case of any plan year beginning in a calendar year after December 31, 2014, the limitation under this section shall in the case of self-only coverage, be equal to the dollar amount under described above for self-only coverage for plan years beginning in 2014, increased by an amount equal to the product of that amount and the premium adjustment percentage for the calendar year; and in the case of other coverage, twice the amount in effect. If the amount of any increase is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:20 Applicability

The provisions of §§ 20:06:56:01 to 20:06:56:19, inclusive, only apply to non-grandfathered plans effective January 1, 2014, and does not apply to an excepted benefit as defined in § 20:06:55:27.

History

Source: 39 SDR 203, effective June 10, 2013.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:56:21 Exception for uniform modification of coverage

Only at the time of coverage renewal may issuers modify the health insurance coverage for a product offered to a group health plan or an individual, as applicable, in the large group market, the individual market, and the small group market if, for coverage available in this market, other than only through one or more bona fide associations.

Modifications made uniformly and solely pursuant to applicable federal or state requirements are considered a uniform modification of coverage in the small group and individual market if:

(1) The modification is made within a reasonable time period after the imposition or modification of the federal or state requirement;

(2) The modification is directly related to the imposition or modification of the federal or state requirement;

(3) Other types of modifications made uniformly are considered a uniform modification of coverage if the health insurance coverage for the product in the individual or small group market meets all of the following criteria:

(i) The product is offered by the same health insurance issuer;

(ii) The product is offered as the same product network type;

(iii) The product continues to cover at least a majority of the same service area;

(iv) Within the product, each plan has the same cost-sharing structure as before the modification, except for any variation in cost sharing solely related to changes in cost and utilization of medical care, or to maintain the same metal tier level described in sections 1302(d) and (e) of the Affordable Care Act (December 3, 2014); and

(v) The product provides the same covered benefits, except for any changes in benefits that cumulatively impact the plan-adjusted index rate for any plan within the product within an allowable variation of +/- two percentage points.

The director may broaden the standards in subsection 3(iii) and (iv) of this section after consideration of the impact on the insurance-buying public.

If an issuer in the individual market is renewing non-grandfathered coverage or uniformly modifying non-grandfathered coverage the issuer must provide to each individual written notice of the renewal before the date of the first day of the next annual open enrollment period.

If an issuer in the small group market is renewing coverage or uniformly modifying coverage the issuer must provide to each plan sponsor or individual written notice of the renewal at least 60 calendar days before the date of the coverage will be renewed.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

Chapter 20:06:57 Self-funded multiple employer trusts

ARSD 20:06:57:01 Definitions

(1) "Multiple employer trust," a self-funded entity which obtains authorization pursuant to SDCL 58-18-88 and this chapter to operate in South Dakota.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89.

ARSD 20:06:57:02 Authorization

No person may establish or maintain a self-insured employee benefit plan for the purpose of providing health insurance which is a multiple employer trust in this state unless the multiple employer trust first obtains and maintains authorization pursuant to SDCL 58-18-88 and this chapter.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89.

ARSD 20:06:57:03 Application for authorization

A person applying for authorization pursuant to SDCL 58-18-88 shall submit a plan of operation with the director. The application and plan of operation shall include the following:

(1) A business plan including a copy of all contracts or other instruments which the multiple employer trust proposes to make with or sell to its members, a copy of the plan description, and the printed materials to be used in the solicitation of members;

(2) Copies of all articles, bylaws, agreements, trust documents, or other documents or instruments describing the rights and obligations of employers, employees, and beneficiaries;

(3) A current list of all members of the employer group or association sponsoring the multiple employer trust and a description of the relationship among the employers which serves as the basis for the formation of the association or employer group;

(4) A description of the activities of the association or group of employers on behalf of its members other than the sponsorship of the multiple employer trust;

(5) Current financial statements of the multiple employer trust which shall include, at a minimum, balance sheets, income statement, cash flow statement, and a detailed listing of assets;

(6) An actuarial opinion prepared, signed, and dated by a member of the American Academy of Actuaries which states that appropriate loss and loss adjustment reserves have been established, that adequate premiums are being charged, and that the association multiple employer trust is operating in accordance with sound actuarial principles;

(7) A statement from an authorized representative of the applicant which certifies all of the following:

(a) The multiple employer trust is administered by an authorized insurer or an authorized third-party administrator;

(b) The multiple employer trust is eligible for authorization pursuant to SDCL 58-18-88;

(c) The association or group of employers sponsoring the multiple employer trust is engaged in substantial activity for its members other than sponsorship of an employer benefit plan; and

(d) The association is a nonprofit entity organized and authorized to do business under applicable South Dakota law;

(8) A statement from an authorized representative of the applicant which certifies that the applicable provisions of SDCL chapter 58-18, ARSD chapter 20:06:42, and this chapter have been met;

(9) A statement from the applicant that, to the best of its knowledge and belief, the multiple employer trust is in compliance with all applicable provisions of the Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.);

(10) A description of the mechanism approved by the director to ensure that claims will be paid in the event that a member of the multiple employer trust is unable to comply with the multiple employer trust's contribution requirements;

(11) A copy of the most recent Form M-1 filed by the multiple employer trust with the U.S. Department of Labor, Pension and Welfare Benefits Administration, if applicable; and

(12) Any additional information requested by the director.

History

Source: 40 SDR 102, effective December 3, 2013; 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-79, 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89.

ARSD 20:06:57:03.01 Waiver for out-of-state association plans

20:06 : 57 : 03.01 . Waiver for out-of-state association plans. In addition to the information required by § 20:06:57:03, an association not formed in South Dakota which is seeking a waiver must include the following information in its application:

(1) A narrative statement describing the association's activities and the reasons a waiver is in the best interests of the public and should be granted;

(2) A certification attesting that the association is in full compliance with the laws of all the states where the association does business, including, where applicable, copies of all licenses or other approvals to operate in those states;

(3) A certification attesting that the association and all health plans sponsored by the association are in full compliance with the laws of all states where the association does business; and

(4) Any further information requested by the director.

History

Source: 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-79, 58-18-89.
Law Implemented: SDCL 58-18-3, 58-18-6, 58-18-88.

ARSD 20:06:57:03.02 Coverage eligibility

20 : 06 : 57 : 03.02 . Coverage eligibility. Multiple employer trusts must be sponsored by associations meeting the requirements of § 20:06:42:01 to provide coverage to members.

History

Source: 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-79, 58-18-89.
Law Implemented: SDCL 58-18-3, 58-18-6, 58-18-88.

ARSD 20:06:57:04 Investigation of application

The director shall investigate the application and supporting documents submitted by the applicant pursuant to SDCL 58-18-88 and this chapter and may conduct any investigation which the director may deem necessary and to examine under oath any persons interested in or connected with the multiple employer trust.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89.

ARSD 20:06:57:05 Issuance of authorization

The director may issue an authorization to the multiple employer trust upon finding that the applicant multiple employer trust has met all requirements of SDCL 58-18-88 and this chapter. The director shall notify denied applicants of the reasons for denial. An unsuccessful applicant may file a new application for an authorization at any time, but not within 60 days of a previous denial by the director.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89.

ARSD 20:06:57:06 Report to director of modification

A multiple employer trust shall immediately notify the director of any material change in ownership, control, or other fact or circumstance that may affect qualification for an authorization in this state.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-89.

ARSD 20:06:57:07 Surplus

Unless otherwise provided in this section, a multiple employer trust shall deposit with an organization or trustee meeting the requirements of SDCL chapter 58-7 cash, securities, or any combination of these that is acceptable in the same amount provided in SDCL 58-6-23 for insurers. The director may increase the amount required to be deposited based on the director's written determination that such an increase is necessary to adequately secure any potential liability of the multiple employer trust to its enrollees, subject to SDCL chapter 58-29B proceedings.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-6-23, ch 58-7, 58-18-88, 58-18-89, ch 58-29B.

ARSD 20:06:57:08 Reserves and stop-loss coverage

(1) A multiple employer trust shall have at all times aggregate excess stop-loss coverage providing the multiple employer trust with coverage for risks in this state with an attachment point which is not greater than:

(a) 120 percent of actuarially projected losses on a calendar-year basis; or

(b) Five percent of annual expected claims for purposes of this section and shall provide for adjustments in the amount of that percentage as may be necessary to carry out the purposes of this section as determined by sound actuarial principles;

(2) A multiple employer trust shall establish and maintain appropriate loss and loss adjustment reserves determined by sound actuarial principles;

(3) A multiple employer trust shall set premiums to fund at least 100 percent of the multiple employer trust's actuarially projected losses plus all other costs of the multiple employer trust;

(4) All coverage obtained pursuant to this section shall contain a provision allowing for at least 90 days' notice to the director upon cancellation or nonrenewal of the contract;

(5) No contract or policy of per occurrence or aggregate excess insurance may be recognized in considering the ability of an applicant to fulfill its financial obligations under this section, unless such contract or policy is issued by a company that is:

(a) Licensed to transact business in this state; or

(b) Authorized to do business in this state as a reinsurer in one of the permitted methods regarding credit for reinsurance as provided in SDCL chapter 58-14.

History

Source: 40 SDR 102, effective December 3, 2013; 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-14-17, 58-18-79, 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89.

ARSD 20:06:57:08.01 Multiple employer trust minimum loss ratio

20 : 06 : 57 : 08.01 . Multiple employer trust minimum loss ratio. A multiple employer trust that does not utilize community rating for its membership must maintain a minimum loss ratio (MLR) of eighty-five percent. MLR shall be calculated as follows:

(Claims + Claims Adjustment Expenses) / (Contributions - Applicable Taxes & Fees)

History

Source: 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-79, 58-18-89.
Law Implemented: SDCL 58-18-3, 58-18-6, 58-18-88.

ARSD 20:06:57:08.02 Multiple employer trust dividends

20 : 06 : 57 : 08.02 . Multiple employer trust dividends. A multiple employer trust may provide dividends to employer members in the same manner as domestic insurers.

History

Source: 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-79, 58-18-89.
Law Implemented: SDCL 58-18-3, 58-18-6, 58-18-88.

ARSD 20:06:57:09 Annual report

A multiple employer trust shall file an annual report on or before the first day of March. The annual reports must be submitted for the preceding calendar year and must be verified by at least two of the trust's principal officers. The annual report shall be on the form designated by the director. The annual report shall be completed using statutory accounting practices and shall include information required by the director. The director may request additional reports and information from a multiple employer trust as deemed necessary to supplement the annual report. The annual report shall include:

(1) An independent actuarial opinion prepared in conformance with SDCL chapter 58-26 and ARSD chapter 20:06:37. The director may conduct an independent actuarial review of a multiple employer trust in addition to the actuarial opinion required by this rule. The cost of any actuarial review shall be paid by the multiple employer trust;

(2) A certificate of compliance signed and dated by the appropriate official representing the multiple employer trust that certifies the following:

(a) That the plan meets the requirements of this rule and the applicable provisions of the South Dakota statutes and regulations;

(b) That an independent actuarial opinion is attached to the certificate which attests to the adequacy of reserves, rates, and the financial condition of the plan. The actuarial opinion must include a brief commentary about the adequacy of the reserves, rates, and other financial condition of the plan, a test of the prior year's claim reserve, a brief description of how the reserves were calculated, and whether the plan is able to cover all reasonably anticipated expenses. The actuarial opinion shall be prepared, signed, and dated by a member of the American Academy of Actuaries;

(c) That a written complaint procedure for reviewing and resolving grievances from covered persons in accordance with SDCL chapter 58-17I has been implemented. The certificate shall list the number of complaints filed by participants under the written complaint procedure and the percentage of participants filing written complaints in the prior calendar year; and

(d) That the multiple employer trust has contracted with an insurer authorized to do business in this state or with a third-party administrator who holds a current license or registration pursuant to SDCL chapter 58-29D.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-17I-16, 58-18-89, 58-29D-34.
Law Implemented: SDCL ch 58-17I, 58-18-89, ch 58-26, ch 58-29D.

ARSD 20:06:57:10 Contracts by multiple employer trusts

All contracts issued by a multiple employer trust shall comply with the following:

(1) Each multiple employer trust application for insurance and each policy and certificate issued by a multiple employer trust shall contain in ten-point type on the front page the following notice prominently displayed:

NOTICE

This policy is issued by a multiple employer trust. Multiple employer trusts

are not subject to all of the insurance laws and regulations of South Dakota.

This policy is not covered by the South Dakota Life and Health Insurance

Guaranty Association in the event of plan failure. Your participation in this

plan makes you subject to assessments for health plan costs. By accepting

coverage, you must participate in this plan for a minimum of three years to

avoid penalties for early departure.

(2) A multiple employer trust must offer on a guarantee-issue basis health benefits to all individuals who qualify as members or enrollees of the association;

(3) A multiple employer trust may offer only medical, dental, optical, surgical, hospital, accident and sickness, prescription, or disability benefits;

(4) All contracts or policies issued by a multiple employer trust shall:

(a) Conform to all the provisions of P.L. 104-191, the Health Insurance Portability and Accountability Act of 1996, including guaranteed issue of all products, preexisting condition limitations, renewability, and portability provisions as well as the issuance of prior coverage certificates to enrollees no longer eligible for plan coverage; and

(b) Comply with all coverage mandates that are applicable to group health insurance under this title.

History

Source: 40 SDR 102, effective December 3, 2013; 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL ch 58-15, 58-18-88, 58-18-89.

ARSD 20:06:57:11 Disclosure

A multiple employer trust shall make the following disclosure to each employer member of the multiple employer trust:

The benefits and coverages described herein are provided through a self-insured trust fund established and funded in full or in part by a group of employers. It is not a licensed insurance company.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-89.

ARSD 20:06:57:12 Agreements and management contracts

Any agreement between a multiple employer trust and any administrator, service company, or other entity shall be filed with the director for approval.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-89.

ARSD 20:06:57:13 Examination

Each multiple employer trust is subject to examination by the director in accordance with SDCL chapter 58-3. Chapter 58-3 governs all aspects of the examination. The director may make an examination of a multiple employer trust as often as the director considers it necessary, but not less frequently than once every five years. The expenses of the examination shall be assessed against the multiple employer trust being examined in a manner in which expenses of examinations are assessed against an insurance company under SDCL chapter 58-3. Multiple employer trusts are subject to the examination fund assessment pursuant to SDCL 58-3-3.1.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-3-26, 58-18-89.
Law Implemented: SDCL ch 58-3, 58-18-88, 58-18-89.

ARSD 20:06:57:14 Independent audit

Multiple employer trusts are subject to SDCL chapter 58-43.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89, 58-43-24.
Law Implemented: SDCL 58-18-88, 58-18-89, ch 58-43.

ARSD 20:06:57:15 Trade practices

Multiple employer trusts are subject to applicable provisions of the Unfair Trade Practices Act, SDCL chapter 58-33.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89, ch 58-33.

ARSD 20:06:57:16 Insolvency. Insolvency

Insolvency.** The provisions of SDCL chapter 58-29B apply to multiple employer trusts which are considered insurers for purposes of that chapter.

History

Source: 40 SDR 102, effective December 3, 2013; 45 SDR 158, effective June 27, 2019.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89, ch 58-29B.

ARSD 20:06:57:17 Minimum coverage standards for health policies

The minimum coverage standards for health policies offered by multiple employer trusts are those of a bronze plan as delineated in ARSD 20:06:56:11.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89.

ARSD 20:06:57:18 Applicability of chapter

This chapter does not apply to fully-insured entities.

History

Source: 40 SDR 102, effective December 3, 2013.
General Authority: SDCL 58-18-89.
Law Implemented: SDCL 58-18-88, 58-18-89.

Chapter 20:06:58 Mental Health Parity

ARSD 20:06:58:01 Definitions

Unless otherwise provided, terms used in this chapter mean:

(1) "Aggregate lifetime dollar limit," a dollar limitation on the total amount of specified benefits that may be paid under a group health plan, or health insurance coverage offered in connection with such a plan, for any coverage unit;

(2) "Annual dollar limit," a dollar limitation on the total amount of specified benefits that may be paid in a 12-month period under a group health plan, or health insurance coverage offered in connection with such a plan, for any coverage unit;

(3) "Cumulative financial requirements," financial requirements that determine whether or to what extent benefits are provided based on accumulated amounts and include deductibles and out-of-pocket maximums. The term does not include aggregate lifetime or annual dollar limits because these two terms are excluded from the meaning of financial requirements;

(4) "Cumulative quantitative treatment limitations," treatment limitations that determine whether or to what extent benefits are provided based on accumulated amounts, such as annual or lifetime day or visit limits;

(5) "Financial requirements," include deductibles, co-payments, coinsurance, or out-of-pocket maximums. The term does not include aggregate lifetime or annual dollar limits;

(6) "Medical or surgical benefits," benefits with respect to items or services for medical conditions or surgical procedures, as defined under the terms of the plan, or health insurance coverage and in accordance with applicable federal and state law, but does not include mental health or substance use disorder benefits. Any condition defined by the plan as being or as not being a medical or surgical condition must be defined to be consistent with generally recognized independent standards of current medical practice;

(7) "Mental health benefits," benefits with respect to services for mental health conditions, as defined under the terms of the plan and in accordance with applicable federal and state law. Any condition defined by the plan as being or as not being a mental health condition must be defined to be consistent with generally recognized independent standards of current medical practice;

(8) "Substance use disorder benefits," benefits with respect to items or services for substance use disorders, as defined under the terms of the plan and in accordance with applicable federal and state law. Any disorder defined by the plan as being or as not being a substance use disorder must be defined to be consistent with generally recognized independent standards of current medical practice;

(9) "Treatment limitations," include limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically, such as 50 outpatient visits per year, and nonquantitative treatment limitations, which otherwise limit the scope or duration for treatment under a plan. A permanent exclusion of all benefits for a particular condition or disorder is not a treatment limitation for purposes of this definition.

Cross-Reference: Illustrative list of nonquantitative limitations, § 20:06:58:24.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-79(1), 58-18-79(15), 58-18-80.

ARSD 20:06:58:02 Parity requirements with respect to aggregate lifetime and annual dollar limits

A group health plan, or heath insurance coverage offered by an issuer in connection with a group health plan, that provides medical or surgical benefits and mental health or substance use disorder benefits must comply with § 20:06:58:03, 20:06:58:04, or 20:06:58:06. However, §§ 20:06:58:01 to 20:06:58:45, inclusive, do not apply if a plan, or health insurance coverage, satisfies the requirements of § 20:06:58:32 or § 20:06:58:34, relative to exemptions for small employers and for increased costs.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:03 Plan with no limit or limits on less than one-third of all medical or surgical benefits

If a plan, or health insurance coverage, does not include an aggregate lifetime or annual dollar limit on any medical or surgical benefits or includes an aggregate lifetime or annual dollar limit that applies to less than one-third of all medical or surgical benefits, it may not impose an aggregate lifetime or annual dollar limit, respectively, on mental health or substance use disorder benefits.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:04 Plan with a limit on at least two-thirds of all medical or surgical benefits

If a plan, or health insurance coverage, includes an aggregate lifetime or annual dollar limit on at least two-thirds of all medical or surgical benefits, it must either:

(1) Apply the aggregate lifetime or annual dollar limit both to the medical or surgical benefits to which the limit would otherwise apply and to mental health or substance use disorder benefits in a manner that does not distinguish between the medical or surgical benefits and mental health or substance use disorder benefits; or

(2) Not include an aggregate lifetime or annual dollar limit on mental health or substance use disorder benefits that is less than the aggregate lifetime or annual dollar limit, respectively, on medical or surgical benefits;

Cross-Reference: No separate cumulative financial requirements or cumulative quantitative treatment limitations, § 20:06:58:22.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:05 Determining one-third and two-thirds of all medical or surgical benefits

For purposes of §§ 20:06:58:01 to 20:06:58:45, inclusive, the determination of whether the portion of medical or surgical benefits subject to an aggregate lifetime or annual dollar limit represents one-third or two-thirds of all medical or surgical benefits, is based on the dollar amount of all plan payments for medical or surgical benefits expected to be paid under the plan for the plan year, or for the portion of the plan year after a change in plan benefits that affects the applicability of the aggregate lifetime or annual dollar limits. Any reasonable method may be used to determine whether the dollar amount expected to be paid under the plan will constitute one-third or two-thirds of the dollar amount of all plan payments for medical or surgical benefits.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:06 Plan not described in sections 20:06:58:03 or 20:06:58:04 of this chapter

A group health plan, or health insurance coverage, that is not described in § 20:06:58:03 or 20:06:58:04 with respect to aggregate lifetime or annual dollar limits on medical or surgical benefits must either:

(1) Impose no aggregate lifetime or annual dollar limit, as appropriate, on mental health or substance use disorder benefits; or

(2) Impose an aggregate lifetime or annual dollar limit on mental health or substance use disorder benefits that is no less than an average limit calculated for medical or surgical benefits in the following manner. The average limit is calculated by taking into account the weighted average of the aggregate lifetime or annual dollar limits, as appropriate, that are applicable to the categories of medical or surgical benefits. Limits based on delivery systems, such as inpatient, outpatient treatment or normal treatment of common, low-cost conditions such as treatment of normal births, do not constitute categories for purposes of subdivision 20:06:58:06(2). In addition, for purposes of determining weighted averages, any benefits that are not within a category that is subject to a separately-designated dollar limit under the plan are taken into account as a single separate category by using an estimate of the upper limit on the dollar amount that a plan may reasonably expect to incur with respect to such benefits, taking into account any other applicable restrictions under the plan.

For purposes of this section, the weighting applicable to any category of medical or surgical benefits is determined in the manner set forth in § 20:06:58:05 for determining one-third or two-thirds of all medical or surgical benefits.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:07 Parity requirements with respect to financial requirements and treatment limitations -- Clarification of classification of benefits

For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, when referring to a classification of benefits, the term "classification" means a classification as described in §§ 20:06:58:12 and 20:06:58:13.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(1), 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:08 Parity requirements with respect to financial requirements and treatment limitations -- Clarification of type of financial requirement or treatment limitation

For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, when referring to a type of financial requirement or treatment limitation, the type means its nature. Types of financial requirements include deductibles, co-payments, coinsurance, and out-of-pocket maximums. Types of quantitative treatment limitations include annual, episode, and lifetime day and visit limits.

Cross-Reference: Illustrative list of nonquantitative treatment limitations, § 20:06:58:24.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(1), 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:09 Parity requirements with respect to financial requirements and treatment limitations -- Clarification of level of a type of financial requirement or treatment limitation

For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, when referring to a level of a type of financial requirement or treatment limitation, level is the magnitude of the type of financial requirement of treatment limitation. For example, different levels of coinsurance include 20 percent and 30 percent; different levels of a co-payment include $15 and $20; different levels of a deductible include $250 and $500; and different levels of an episode limit include 21 inpatient days per episode and 30 inpatient days per episode.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79(1), 58-18-79(15), 58-18-80.

ARSD 20:06:58:10 Parity requirements with respect to financial requirements and treatment limitations -- Clarification of coverage unit

For purposes of §§ 20:06:58:01 to 20:06:58:45, inclusive, a coverage unit means the way in which a plan, or health insurance coverage, groups individuals for purposes of determining benefits, premiums, or contributions. For example, different coverage units include self-only, family, and employee-plus-spouse.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79.
Law Implemented: SDCL 58-17-87, 58-18-79(1), 58-18-79(15), 58-18-80.

ARSD 20:06:58:11 General parity requirement

A group health plan, or health insurance coverage offered by an issuer in connection with a group health plan, that provides both medical or surgical benefits and mental health or substance use disorder benefits may not apply any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification this is more restrictive than the predominant financial requirement or treatment limitation of that type applied to substantially all, medical or surgical benefits, in the same classification. Whether a financial requirement or treatment limitation is a predominant financial requirement or treatment limitation that applies to substantially all medical surgical benefits in a classification is determined separately for each type of financial requirement or treatment limitation. The application of the rules found in §§ 20:06:58:11 to 20:06:58:13, inclusive, to financial requirements and quantitative treatment limitation is addressed in §§ 20:06:58:14 to 20:06:58:22, inclusive; the application of the rules of §§ 20:06:58:11 to 20:06:58:13, inclusive, to nonquantitative treatment limitations is addressed in §§ 20:06:58:24 and 20:06:58:25.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:12 Classifications of benefits used for applying rules

If a plan, or health insurance coverage, provides mental health or substance use disorder benefits in any classification of benefits described in §§ 20:06:58:12 and 20:06:58:13, mental health or substance use disorder benefits must be provided in every classification in which medical or surgical benefits are provided. In determining the classification in which a particular benefit belongs, a plan, or health insurance issuer, must apply the same standards to medical or surgical benefits and to mental health or substance use disorder benefits. To the extent that a plan, or health insurance coverage, provides benefits in a classification and imposes any separate financial requirement or treatment limitation, or separate level of a financial requirement or treatment limitation, for benefits in the classification, the rules of §§ 20:06:58:07 to 20:06:58:25, inclusive, apply separately with respect to that classification for all financial requirement or treatment limitations.

The following classifications of benefits are the only classifications used in applying the rules of §§ 20:06:58:07 to 20:06:58:25, inclusive:

(1) "Inpatient, in-network," benefits furnished on an inpatient basis and within a network of providers established or recognized under a plan or health insurance coverage;

(2) "Inpatient, out-of-network," benefits furnished on an inpatient basis and outside any network of providers established or recognized under a plan or health insurance coverage. This classification includes inpatient benefits under a plan, or health insurance coverage, that has no network or providers;

(3) "Outpatient, in-network," benefits furnished on an outpatient basis and within a network of providers established or recognized under a plan or health insurance coverage;

(4) "Outpatient, out-of-network," benefits furnished on an outpatient basis and outside any network of providers established or recognized under a plan or health insurance coverage. This classification includes outpatient benefits under a plan, or health insurance coverage, that has no network of providers;

(5) "Emergency care," benefits for emergency care;

(6) "Prescription drugs," benefits for prescription drugs.

If a plan, or health insurance coverage, provides benefits only to the extent required under the PHS Act, 29 CFR 2713 (December 3, 2014), this section is not intended to require the plan, or health insurance coverage, to provide additional mental health or substance use disorder benefits in any classification.

Cross-Reference: Special rule for multi-tiered prescription drug benefits, § 20:06:58:19.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:13 Application to out-of-network providers

A plan, or health insurance coverage, that provides mental health or substance use disorder benefits in any classification of benefits must provide mental health or substance use disorder benefits in every classification in which medical or surgical benefits are provided, including out-of-network classifications.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:14 Financial requirements and quantitative treatment limitations -- Determining substantially all

For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, a type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical or surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical or surgical benefits in that classification. Benefits expressed as subject to a zero level of a type of financial requirement are treated as benefits not subject to that type of financial requirement, and benefits expressed as subject to a quantitative treatment limitation that is unlimited are treated as benefits not subject to that type of quantitative treatment limitation. If a type of financial requirement or quantitative treatment limitation does not apply to at least two-thirds of all medical or surgical benefits in a classification, then that type cannot be applied to mental health or substance use disorder benefits in that classification.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:15 Financial requirements and quantitative treatment limitations -- Determining predominant

If a type of financial requirement or quantitative treatment limitation applies to at least two-thirds of all medical or surgical benefits in a classification as determined under § 20:06:58:17, the level of the financial requirement or quantitative treatment limitation that is considered the predominant level of that type in a classification of benefits is the level that applies to more than one-half of medical or surgical benefits in that classification subject to the financial requirement or quantitative treatment limitation.

If, with respect to a type of financial requirement or quantitative treatment limitation that applies to at least two-thirds of all medical or surgical benefits in a classification, there is no single level that applies to more than one-half of medical or surgical benefits in the classification subject to the financial requirement or quantitative treatment limitation, the plan, or health insurance issuer, may combine levels until the combination of levels applies to more than one-half of medical or surgical benefits subject to the financial requirement or quantitative treatment limitation in the classification. The least restrictive level within the combination is considered the predominate level of that type in the classification. A plan may combine the most restrictive levels first, with each less restrictive level added to the combination until the combination applies to more than one-half of the benefits subject to the financial requirement or treatment limitation.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:16 Financial requirements and quantitative treatment imiitations -- Determining portion based on plan payments

Financial requirements and quantitative treatment limitations -- Determining portion based on plan payments.** For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, the determination of the portion of medical or surgical benefits in a classification of benefits subject to a financial requirement or quantitative treatment limitation, or subject to any level of a financial requirement or quantitative treatment limitation, is based on the dollar amount of all plan payments for medical or surgical benefits in the classification expected to be paid under the plan for the plan year or for the portion of the plan year after a change in plan benefits that affects the applicability of the financial requirement or quantitative treatment limitation.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:17 Financial requirements and quantitative treatment limitations -- Determining clarifications for certain threshold requirements and dollar amount of plan payments

For any deductible, the dollar amount of plan payments includes all plan payments with respect to claims that would be subject to the deductible if it had not been satisfied. For any out-of-pocket maximum, the dollar amount of plan payments includes all plan payments associated with out-of-pocket payments that are taken into account towards the out-of-pocket maximum as well as all plan payments associated with out-of-pocket payments that would have been made towards the out-of-pocket maximum if it had not been satisfied.

Any reasonable method may be used to determine the dollar amount expected to be paid under a plan for medical or surgical benefits subject to a financial requirement or quantitative treatment limitation or subject to any level of a financial requirement or quantitative treatment limitation.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:18 Application to different coverage units

If a plan, or health insurance coverage, applies different levels of a financial requirement or quantitative treatment limitation to different coverage units in a classification of medical or surgical benefits, the predominant level that applies to substantially all medical or surgical benefits in the classification is determined separately for each coverage unit.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:19 Special rule for multi-tiered prescription drug benefits

If a plan, or health insurance coverage, applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with § 20:06:58:23, relating to requirements for nonquantitative treatment limitations, and without regard to whether a drug is generally prescribed with respect to medical or surgical benefits or with respect to mental health or substance use disorder benefits, the plan, or health insurance coverage, satisfies the parity requirements of §§ 20:06:58:07 to 20:06:58:25, inclusive, with respect to prescription drug benefits. Reasonable factors include cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:20 Special rule for multiple network tiers

If a plan, or health insurance coverage, provides benefits through multiple tiers of in-network providers, such as an in-network tier of preferred providers with more generous cost-sharing to participants than a separate in-network tier of participating providers, the plan may divide its benefits furnished on an in-network basis into sub-classifications that reflect network tiers, if the tiering is based on reasonable factors determined in accordance with § 20:06:58:23 and without regard to whether a provider provides services with respect to medical or surgical benefits or mental health or substance use disorder benefits. After the sub-classifications are established, the plan or issuer may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical or surgical benefits in the sub-classification using the methodology set forth in §§ 20:06:58:14 to 20:06:58:17, inclusive.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:21 Special rule for sub-classifications permitted for office visits, separate from other outpatient services

For purposes of applying the financial requirement and treatment limitation rules of §§ 20:06:58:07 to 20:06:58:25, inclusive, a plan or issuer may divide its benefits furnished on an outpatient basis into the two sub-classifications described in this section. After the sub-classifications are established, the plan or issuer may not impose any financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or quantitative treatment limitation that applies to substantially all medical or surgical benefits in the sub-classification using the methodology set forth in paragraphs §§ 20:06:58:14 to 20:06:58:17, inclusive. Sub-classifications other than these special rules, such as separate sub-classifications for generalists and specialists, are not permitted. The two sub-classifications permitted under this section are:

(1) Office visits, such as physician visits; and

(2) All other outpatient items and services, such as outpatient surgery, facility charges for day treatment centers, laboratory charges, or other medical items.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:22 No separate cumulative financial requirements or cumulative quantitative treatment limitations

A group health plan, or health insurance coverage, offered in connection with a group health plan, may not apply any cumulative financial requirement or cumulative quantitative treatment limitation for mental health or substance use disorder benefits in a classification that accumulates separately from any established for medical or surgical benefits in the same classification.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:23 Nonquantitive treatment limitations

Nonquantitative treatment limitations.** A group health plan, or health insurance coverage, may not impose a nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification unless, under the terms of the plan, or health insurance coverage, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical or surgical benefits in the classification.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:24 Illustrative list of nonquantitative treatment limitations

Nonquantitative treatment limitations include:

(1) Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;

(2) Formulary design for prescription drugs;

(3) Standards for provider admission to participate in a network, including reimbursement rates;

(4) Plan methods for determining usual, customary, and reasonable charges;

(5) Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective, also known as fail-first policies or step therapy protocols;

(6) Exclusions based on failure to complete a course of treatment;

(7) For plans with multiple network tiers, such as preferred providers and participating providers, network tier design; and

(8) Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:25 Exemptions

The rules in §§ 20:06:58:07 to 20:06:58:25, inclusive, do not apply if a group health plan, or health insurance coverage, satisfies the requirements of §§ 20:06:58:32 and 20:06:58:33 or §§ 20:06:58:34 to 20:06:58:43, inclusive.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:26 Availability of plan information -- Criteria for medical necessity determinations

The criteria for medical necessity determinations made under a group health plan with respect to mental health or substance use disorder benefits, or health insurance coverage offered in connection with the plan with respect to such benefits, must be made available by the plan administrator, or health insurance issuer offering such coverage, to any current or potential participant, beneficiary, or contracting provider upon request.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:27 Availability of plan information -- Reasons for denial

The reason for any denial under a group health plan, or health insurance coverage offered in connection with such plan, of reimbursement or payment for services with respect to mental health or substance use disorder benefits in the case of any participant or beneficiary must be made available by the plan administrator, or the health insurance issuer offering such coverage, to the participant or beneficiary, in accordance with this section.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:28 Applicability and effective dates -- Group health plans

The requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, apply to a group health plan offering, medical or surgical benefits, and mental health or substance use disorder benefits. If, under an arrangement or arrangements to provide health care benefits by an employer or employee organization including for this purpose a joint board of trustees of a multiemployer trust affiliated with one or more multiemployer plans, any participant or beneficiary can simultaneously receive coverage for medical or surgical benefits and coverage for mental health or substance use disorder benefits, then the requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, apply separately with respect to each combination of medical or surgical benefits and of mental health or substance use disorder benefits, that any participant or beneficiary can simultaneously receive from that employer's or employee organization's arrangement or arrangements to provide medical care benefits, and all such combinations are considered for purposes of §§ 20:06:58:01 to 20:06:58:45, inclusive, to be a single group health plan.

This chapter applies to group health plans in accordance with 45 C.F.R. § 146.136(i)(1) (December 3, 2014).

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-18-79, 58-18-80.

ARSD 20:06:58:29 Applicability and effective dates -- Health insurance issuers

The requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, apply to a health insurance issuer offering health insurance coverage for mental health or substance use disorder benefits in connection with a group health plan subject to § 20:06:58:28. This chapter applies to health insurance issuers offering group health insurance coverage in accordance with 45 C.F.R. § 146.136(i)(1) (December 3, 2014).

The requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, apply to health insurance coverage offered by health insurance issuer in the individual market in the same manner and to the same extent as such requirements apply to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the large group market. This chapter applies to health insurance issuers in the individual market in accordance with 45 C.F.R. § 147.160 (December 3, 2014). This chapter applies to non-grandfathered and grandfathered health plans.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:30 Scope

Sections 20:06:58:01 to 20:06:58:45, inclusive, do not:

(1) Require a group health plan, or health insurance issuer offering coverage in connection with a group health plan, to provide any mental health benefits or substance use disorder benefits, and the provision of benefits by a plan, or health insurance coverage, for one or more mental health conditions or substance use disorders does not require the plan, or health insurance coverage under §§ 20:06:58:01 to 20:06:58:45, inclusive, to provide benefits for any other mental health condition or substance use disorder;

(2) Require a group health plan, or health insurance issuer offering coverage in connection with a group health plan, that provides coverage for mental health or substance use disorder benefits only to the extent required under 29 C.F.R. § 2713 (December 3, 2014) to provide additional mental health or substance use disorder benefits in any classification in accordance with §§ 20:06:58:01 to 20:06:58:45, inclusive; or

(3) Affect the terms and conditions relating to the amount, duration, or scope of mental health or substance use disorder benefits under the plan, or health insurance coverage, except as specifically provided in §§ 20:06:58:02 to 20:06:58:25, inclusive.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:31 Coordination with EHB requirements

Nothing in §§ 20:06:58:32 to 20:06:58:43, inclusive, changes the requirements of 45 CFR 147.150 and 45 CFR 156.115 (December 3, 2014), providing that a health insurance issuer offering non-grandfathered health insurance coverage in the individual or small group market providing mental health and substance use disorder services, including behavioral health treatment services, as part of essential health benefits required under 45 CFR 156.110(a)(5) and 156.115(a) (December 3, 2014), must comply with the provisions of 45 CFR 146.136 (December 3, 2014) to satisfy the requirement to provide essential health benefits.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:32 Small employer exemption

The requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, do not apply to a group health plan, or health insurance issuer offering coverage in connection with a group health plan, for a plan year of a small employer. For purposes of §§ 20:06:58:32 and 20:06:58:33, the term, small employer, means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed at least a single individual, but not more than 50 employees on business days during the preceding calendar year and who employs at least a single individual on the first day of the plan year.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:33 Determining employer size

For purposes of § 20:06:58:32:

(1) All persons treated as a single employer under subsections (b), (c), (m), and (o) of the Internal Revenue Code of 1986, codified at 26 U.S.C. 414, are treated as one employer;

(2) If an employer was not in existence throughout the preceding calendar year, whether it is a small employer is determined based on the average number of employees the employer reasonably expects to employ on business days during the current calendar year; and

(3) Any reference to an employer for purposes of the small employer exemption includes a reference to a predecessor of the employer.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:34 Increased cost exemption

If the application of §§ 20:06:58:01 to 20:06:58:45, inclusive, to a group health plan, or health insurance coverage offered in connection with such plans, results in an increase for the plan year involved of the actual total cost of coverage with respect to medical or surgical benefits and mental health and substance use disorder benefits as determined and certified under § 20:06:58:36 by an amount that exceeds the applicable percentage described in § 20:06:58:36 of the actual total plan costs, the provisions of this section shall not apply to such plan, or coverage, during the following plan year, and such exemption shall apply to the plan, or coverage, for one plan year. An employer or issuer may elect to continue to provide mental health and substance use disorder benefits in compliance with this section with respect to the plan or coverage involved regardless of any increase in total costs.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:35 Applicable percentage

With respect to a plan or coverage, the applicable percentage described in §§ 20:06:58:34 to 20:06:58:43, inclusive, is:

(1) Two percent in the case of the first plan year in which this section is applied to the plan or coverage; and

(2) One percent in the case of each subsequent plan year.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:36 Determinations by actuaries

Determinations as to increases in actual costs under a plan or coverage that are attributable to implementation of the requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, shall be made and certified by a qualified and licensed actuary who is a member in good standing of the American Academy of Actuaries. All such determinations must be based on the formula specified in paragraph § 20:06:58:37 and shall be in a written report prepared by the actuary.

The group health plan or health insurance issuer shall maintain the written report described in this section, along with all supporting documentation relied upon by the actuary, for a period of six years following the notification made under § 20:06:58:39.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:37 Formula

The formula to be used to make the determination under § 20:06:58:36 is expressed mathematically as [(E₁--E₀)/T₀] -- D>k. The components mean:

(1) E₁ is the actual total cost of coverage with respect to mental health and substance use disorder benefits for the base period, including claims paid by the plan or issuer with respect to mental health and substance use disorder benefits and administrative costs, amortized over time, attributable to providing these benefits consistent with the requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive;

(2) E₀ is the actual total cost of coverage with respect to mental health and substance use disorder benefits for the length of time immediately before the base period and that is equal in length to the base period, including claims paid by the plan or issuer with respect to mental health and substance use disorder benefits and administrative costs, amortized over time, attributable to providing these benefits;

(3) T₀ is the actual total cost of coverage with respect to all benefits during the base period;

(4) k is the applicable percentage of increased cost specified in paragraph § 20:06:58:35 that is expressed as a fraction for purposes of this formula; and

(5) D is the average change in spending that is calculated by applying the formula (E₁ -- E₀)/T₀ to mental health and substance use disorder spending in each of the five years and then calculating the average change in spending.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:38 Six-month determination

Six month determination.** If a group health plan or health insurance issuer seeks an exemption under §§ 20:06:58:34 to 20:06:58:43, inclusive, determinations under § 20:06:58:36 may only be made after such plan or coverage has complied with §§ 20:06:58:01 to 20:06:58:45, inclusive, for at least the first six months of the plan year involved.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:39 Notification

A group health plan or health insurance issuer that, based on the certification described under § 20:06:58:36, qualifies for an exemption under §§ 20:06:58:34 to 20:06:58:43, inclusive, and elects to implement the exemption, must notify participants and beneficiaries covered under the plan, the director, and the appropriate state agencies of such election.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:40 Participants and beneficiaries -- Content of notice

The notice to participants and beneficiaries required pursuant to § 20:06:58:39 must include the following information:

(1) A statement that the plan or issuer is exempt from the requirements of this section and a description of the basis for the exemption;

(2) The name and telephone number of the individual to contact for further information;

(3) The plan or issuer name and plan number (PN);

(4) The plan administrator's name, address, and telephone number;

(5) For single-employer plans, the plan sponsor's name, address, and telephone number, if different from subdivision 3 of this section, and the plan sponsor's employer identification number (EIN);

(6) The effective date of such exemption;

(7) A statement regarding the ability of participants and beneficiaries to contact the plan administrator or health insurance issuer to see how benefits may be affected as a result of the plan's or issuer's election of the exemption; and

(8) A statement regarding the availability, upon request and free of charge, of a summary of the information on which the exemption is based, as required under § 20:06:58:43.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:41 Use of summary of material reductions in covered services of benefits

Use of summary of material reductions in covered services or benefits.** A plan or issuer may satisfy the requirements of § 20:06:58:40 by providing participants and beneficiaries, in accordance with § 20:06:58:42, with a summary of material reductions in covered services or benefits consistent with 29 CFR 2520.104b-3(d) (December 3, 2014) that also includes the information specified in § 20:06:58:40. However, in all cases, the exemption under §§ 20:06:58:34 to 20:06:58:43, inclusive, is not effective until 30 days after notice required pursuant to § 20:06:58:39 has been sent.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:42 Delivery

The plan or issuer is required to provide the notice described in §§ 20:06:58:40 to 20:06:58:43, inclusive, to all participants and beneficiaries. The plan or issuer may furnish the notice by any method of delivery that satisfies the requirements of section 104(b)(1) of ERISA (29 U.S.C. 1024(b)(1)) (December 3, 2014) and its implementing regulations. If the notice is provided to the participant and any beneficiaries at the participant's last known address, then the requirements of §§ 20:06:58:40 to 20:06:58:43, inclusive, are satisfied with respect to the participant and all beneficiaries residing at that address. If a beneficiary's last known address is different from the participant's last known address, a separate notice is required to be provided to the beneficiary at the beneficiary's last known address.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:43 Availability of documentation

The plan or issuer must make available to participants and beneficiaries, or their representatives, on request and at no charge, a summary of the information on which the exemption was based. For purposes of §§ 20:06:58:34 to 20:06:58:43, inclusive, an individual who is not a participant or beneficiary and who presents a notice described in §§ 20:06:58:40 to 20:06:58:43, inclusive, is considered to be a representative. A representative may request the summary of information by providing the plan a copy of the notice provided to the participant under §§ 20:06:58:40 to 20:06:58:43, inclusive, with any personally identifiable information redacted. The summary of information must include the incurred expenditures, the base period, the dollar amount of claims incurred during the base period that would have been denied under the terms of the plan or coverage absent amendments required to comply with §§ 20:06:58:02 to 20:06:58:25, inclusive, the administration costs related to those claims, and other administrative costs attributable to complying with the requirements of this section. In no event may the summary of information include any personally identifiable information.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:44 Sale of nonparity health insurance coverage

A health insurance issuer may not sell a policy, certificate, or contract of insurance that fails to comply with §§ 20:06:58:02 to 20:06:58:25, inclusive, except to a plan for a year for which the plan is exempt from requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, because the plan meets requirements under §§ 20:06:58:32 and 20:06:58:33 or §§ 20:06:58:34 to 20:06:58:43, inclusive.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

ARSD 20:06:58:45 Special effective date for certain collective-bargained plans

For a group health plan maintained pursuant to one or more collective bargaining agreements ratified before October 3, 2008, the requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, do not apply to the plan, or health insurance coverage offered in connection with the plan, for plan years beginning before the date on which the last of the collective bargaining agreements terminates, determined without regard to any extension agreed to after October 3, 2008.

History

Source: 41 SDR 93, effective December 3, 2014.
General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).
Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

Chapter 20:06:59 Principle-based reserving

ARSD 20:06:59:01 Valuation manual--Operative date

Valuation manual -- Operative date. The valuation of reserve liabilities for life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts must be calculated in accordance with the standards in the Valuation Manual of the National Association of Insurance Commissioners, 2026 edition. The operative date for the valuation manual is January 1, 2026.

Reference: Valuation Manual of the National Association of Insurance Commissioners, 2026 edition, National Association of Insurance Commissioners (NAIC). Copies may be obtained from the NAIC, 1100 Walnut Street, Ste. 1500, Kansas City, MO 64106-2197; (816) 783-8300; http://www.naic.org. Cost: $0.

History

Source: 43 SDR 80, effective December 5, 2016; 45 SDR 10, effective August 2, 2018; 46 SDR 26, effective September 4, 2019; 46 SDR 147, effective July 2, 2020; 47 SDR 137, effective June 28, 2021; 49 SDR 9, effective August 9, 2022; 50 SDR 13, effective August 10, 2023; 50 SDR 157, effective July 1, 2024; 51 SDR 142, effective July 3, 2025; 52 SDR 125, effective July 1, 2026.
General Authority: SDCL 58-26-45.1.
Law Implemented: SDCL 58-26-44.1(11), 58-26-45.1.

Chapter 20:06:60 Insurer corporate governance

ARSD 20:06:60:01 Definition of senior management

20 : 06 : 60 : 01 . Definition of senior management. The term "senior management" means a corporate officer who either reports or has a duty to report information to the board of directors, to shareholders, or to regulators. The term may include a chief executive officer, a chief financial officer, a chief operations officer, a chief procurement officer, a chief legal officer, a chief information officer, or any other "c" level executive.

History

Source: 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-5-166.
Law Implemented: SDCL 58-5-166.

ARSD 20:06:60:02 Contents of corporate governance annual disclosure

20 : 06 : 60 : 02 . Contents of co r porate governance annual disclosure. An insurer or an insurance group shall, with the descriptive filing of its corporate governance annual disclosure, attach and label the documents that are used in its governance process. To the extent information is substantially similar to information in a document that was previously filed with the director, the insurer or insurance group shall, in lieu of submitting that document, attach a statement that identifies the specific location within the document and the date it was filed.

History

Source: 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-5-166.
Law Implemented: SDCL 58-5-163, 58-5-165, 58-5-166.

ARSD 20:06:60:03 Annual upate

20 : 06 : 60 : 03 . Annual upate. Each year following the initial filing of the corporate governance annual disclosure, the insurer or insurance group shall include with the submission of its corporate governance annual disclosure a statement that identifies any difference between the information reported in the disclosure filed for the current year and the disclosure filed for the prior year, or certify no difference exits.

History

Source: 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-5-166.
Law Implemented: SDCL 58-5-163, 58-5-166.

ARSD 20:06:60:04 Description of corporate framework

20 : 06 : 60 : 04 . Description of corporate framework. The corporate governance annual disclosure must fully describe the insurer's or insurance group's corporate governance framework and structure, including:

(1) All individuals, the board, and any committees responsible for overseeing the insurer or insurance group and their legal relationship to the insurer or insurance group;

(2) The rationale for the current board size and structure;

(3) The duties of the board and each of its committees, and identification of the bylaws, charters, informal mandates, or other governance documents in which these duties are specified; and

(4) A description of how the leadership of the insurance group is structured, including a discussion of the roles of chief executive officer and chairman of the board.

History

Source: 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-5-166.
Law Implemented: SDCL 58-5-166.

ARSD 20:06:60:05 Description of policies and practices

20 : 06 : 60 : 05 . Description of policies and practices. The corporate governance annual disclosure of an insurer or insurance group must describe the policies and practices of the insurer's or insurance group's board and committees, or, if governed by another entity, the board and committees of the insurer's or insurance group's most senior governing entity. The description must include:

(1) How the qualifications, expertise, and experience of each board member meet the needs of the insurer or insurance group;

(2) How an appropriate amount of independence is maintained on the board and its committees;

(3) The number of meetings held by the board and its committees over the reporting period as well as information on director attendance;

(4) How members of the board and its committees are identified, nominated, and elected, including:

(a) Whether a nomination committee is in place to identify and select individuals for consideration;

(b) Whether term limits are placed on directors;

(d) Whether a board diversity policy is in place and, if so, how it functions;

(5) The processes in place for the board to evaluate its performance and the performance of its committees; and

(6) Any recent measures taken by the board to improve performance, including any board or committee training programs that have been put in place.

History

Source: 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-5-166.
Law Implemented: SDCL 58-5-166.

ARSD 20:06:60:06 Description of senior management

20 : 06 : 60 : 06 . Description of senior management. The insurer or insurance group shall describe the policies and practices for directing senior management in its corporate governance annual disclosure, including:

(1) Suitability standards and any other processes or practices that determine whether officers and key persons in control functions have the appropriate background, experience, and integrity to fulfill their prospective roles, such as:

(a) Identification of the specific positions for which suitability standards have been developed and a description of the standards employed; and

(b) Any changes in suitability standards and procedures to monitor and evaluate such changes regarding suitability for specific positions;

(2) The insurer's or insurance group's code of business conduct and ethics, which may include:

(a) Compliance with laws, rules, and regulations; and

(b) Proactive reporting of any illegal or unethical behavior;

(3) The insurer's or insurance group's processes for performance evaluation, compensation, and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description must include sufficient detail to allow the director to understand how the organization ensures that compensation programs neither encourage nor reward excessive risk taking. Elements to be discussed may include:

(a) The board's role in overseeing management compensation programs and practices;

(b) The various elements of compensation awarded in the insurer’s or insurance group's compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid;

(d) Whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels;

(e) Any claw back provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; and

(f) Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees; and

(4) The insurer's or insurance group's plan for chief executive officer and senior management succession.

History

Source: 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-5-166.
Law Implemented: SDCL 58-5-166.

ARSD 20:06:60:07 Description of board oversight

20 : 06 : 60 : 07 . Description of board oversight. The insurer or insurance group shall describe the processes in its corporate governance annual disclosure by which the board, its committees, and senior management ensure an appropriate amount of oversight of the critical risk areas impacting the insurer’s business activities, including:

(1) How oversight and management responsibilities are delegated between the board, its committees, and senior management;

(2) How the board is kept informed of the insurer's strategic plans, the associated risks, and steps that senior management is taking to monitor and manage those risks; and

(3) The process and frequency by which information on each critical risk area is reported to and reviewed by senior management and the board, which may include:

(a) Risk management processes, which may refer to an Own Risk and Solvency Assessment Summary Report if filed pursuant to SDCL chapter 58-5A;

(b) Actuarial function;

(d) Reinsurance decision-making processes;

(e) Business strategy or finance decision-making processes;

(f) Compliance function;

(g) Financial reporting or internal auditing; and

(h) Market conduct decision-making processes.

History

Source: 46 SDR 147, effective July 2, 2020.
General Authority: SDCL 58-5-166.
Law Implemented: SDCL 58-5-166.