Marcia Hultman

Cabinet Secretary

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Division of Insurance - COBRA

State Continuation

There is a special type of continuation coverage available in South Dakota. It provides that every policy of group health insurance must, if the employer ceases operations and terminates the policy or contract, have coverage continued for the employees and their eligible dependents for a period of 12 months, for which the employee and/or dependent shall be financially responsible.

In addition, if you, as an employer, either fail to submit premium payment to the insurance company resulting in loss of coverage to your employees or cancels the coverage and you do not notify the employees of such loss of coverage, the employees and their dependents are then eligible for continuation coverage, provided election is made within 60 days of the date of their being notified of the loss of coverage.

The employer shall provide notice of any nonpayment of premiums or cancellation of coverage to employees as soon as reasonably possible but no later than 10 days after the date of cancellation. If you, as an employer, fail to notify the employees and their dependents of the termination of coverage within 10 days, the employees and dependents may not be denied coverage by the insurer provided timely election is made after actual receipt of notice. Whether notice is provided or not, the election period for continuation of coverage may expire 90 days from the date the group coverage terminated.

Any former employee who is under continuation coverage at the time an employer ceases operation and terminates the policy, or fails to make premium payments resulting in loss of coverage, or cancels the insurance without notice, is eligible to remain on continuation coverage for the remainder of the continuation term or 12 months, whichever is less, if timely election is made and continuation payments are received.

For purposes of this section, the phrase "employer ceasing operations" means the business has closed or discontinued its business operations or, in the case of a sole proprietorship or an owner-operated business, the sale of such business that results in the purchaser establishing its own taxpayer identification number.

Continuation is only available to an employee who has been continuously insured under the group policy or under any creditable coverage which it replaced during the entire six-month period ending with such termination.

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If you still have questions on COBRA:

Contact the Division of Insurance