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Division of Insurance
Health Care Reform
With the introduction of federal health care reform, the South Dakota Department of Labor and Regulation, Division of Insurance adopted rules designed to update state rules to the federal minimum standards as defined in the Patient Protection and Affordable Care Act (PPACA). These rules are applicable to health insurance policies established in 2014 or after. These rules do not impact those health insurance plans deemed "grandfathered plans" - meaning plans that existed prior to March 23, 2010 and have not significantly changed since then, maintaining their grandfathered status. The 2014 rules package is highlighted below.
No Denials of Coverage Based on Health
Insurance companies in the individual health market are no longer able to decline someone based upon any health condition. Pre-existing condition exclusions on individual health insurance policies is no longer allowed. Likewise, pre-existing condition exclusions are no longer part of group health insurance policies.
After October 1, 2013, an individual wishing to purchase health insurance must apply for a policy during the federally established open enrollment period. Health insurance plans can be purchased from the federally facilitated exchange, known as the Marketplace, or through the general market. The open enrollment timeline and a listing of health insurance companies that are selling individual plans through the Marketplace is available here.
Individuals will not be able to purchase a policy inside the Marketplace outside of the open enrollment unless the person qualifies for a special enrollment. Examples of events that would qualify someone for a special enrollment period (SEP) include experiencing a family status change such as marriage, birth or adoption. Losing eligibility for health insurance will also trigger an SEP in order to obtain new coverage.
Under certain circumstances, insurance companies in South Dakota offering health insurance plans outside of the Marketplace are allowed to issue policies at other times during the year.
Health insurance companies were required to change how they calculated premiums. Rates will only be able to be varied by geographic area, family composition, tobacco use, and age. There are four approved rating areas in South Dakota; they can be viewed here.
In addition, the premium rates between young adults and those that are age 64 or older cannot vary by more than a 3:1 factor. Insurance companies are prohibited from charging a higher premium due to health condition.
New Plans after 2014
All non-grandfathered policies in 2014 and after are required to contain benefits that are referred to as "essential health benefits" (EHBs). There are 10 categories of EHBs which includes hospitalization, prescription drugs and mental health. In addition, policies will be characterized by metal levels: bronze, silver, gold and platinum. The metal level is based on the amount of coverage the policy is expected to provide. On average, a bronze plan is designed to pay 60% of health care expenses that are covered under the policy. The average percentage for silver, gold and platinum are 70%, 80% and 90%, respectively.
Implementing Federal Health Care Reform
Since its introduction, each year of federal health care reform implementation has brought about slight changes in federal law and rules. The best resource for information on federal health care reform and the Marketplace is available at healthcare.gov.