Continuation of Benefits Coverage (COBRA) - South Dakota

Summary of differences between federal and state regulations

Federal COBRA applies to employers who offer group health plans, and have 20 or more employees.

South Dakota law provides that employers with less than 20 employees must provide for continuation or conversion of a health insurance policy without evidence of insurability. 58-18-7. The state law provisions for the most part mirror those of federal COBRA.

58-18-7.13. The premium for a continuation policy may not be greater than one hundred two percent of the group rate under which a person is covered. For any month after the eighteenth month, the premium amount may not exceed one hundred fifty percent of the applicable premium.

58-18-7.15.   The insurer may elect to provide group insurance coverage in lieu of the issuance of a converted individual policy.

58-18C-1.   For continuation of coverage after the employer ceases operations and terminates the policy, persons covered under a group health plan have the right to continue coverage for 12 months at the employee’s expense. The employer shall provide notice of any nonpayment of premiums or cancellation of coverage to employees no later than ten days after the date of cancellation. If the employer fails to notify the employees and their dependents within ten days, the employees and dependents may not be denied coverage by the insurer provided timely election is made after actual receipt of notice.

58-18C-2.   Every policy shall also provide an employee with the right, upon the employer ceasing operations and the termination of the policy, to an individual conversion policy or contract without additional underwriting restrictions. The conversion policy shall consist of a plan of individual coverage that closely approximates the coverage provided under the group, and shall be renewable at the option of the insured.

58-18C-3.   Continuation and conversion are only available to an employee who has been continuously insured under the group policy and for similar benefits under any group policy which it replaced during the entire six-month period ending with the policy’s termination.

58-18C-8. The premium for a continuation policy may not be greater than one hundred twenty-five percent of the group rate under which a person is covered.

State

Contact

South Dakota Department of Revenue and Regulation, Division of Insurance

Regulations

South Dakota Statutes

Title 58 Insurance

Chapter 58-18 Group and Blanket Health Insurance Policies

Chapter 58-18C Continuation and Conversion Of Health Care

Federal

Contact

Employee Benefits Security Administration (EBSA)

Regulations

26 CFR 54.4980B-1 et seq.