CHAPTER 272
(SB 163)
Multiple employer trusts authorized.
ENTITLED, An Act to
authorize certain multiple employer trusts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section
1.
That chapter
58-18B
be amended by adding thereto a NEW SECTION to read as
follows:
The rating requirements of this chapter do not apply to an association if all of the following
criteria are met:
(1) The trade, industry, or professional association is comprised in part of homogenous
small employers, meets the requirements for the issuance of group health insurance
pursuant to
§
58-18-3 and if applicable,
§
58-18-4, has a constitution or bylaws, has
been organized under the laws of South Dakota and maintained in good faith for
purposes other than providing insurance for at least ten continuous years, and will
provide coverage to not fewer than five hundred employees by January 1, 2007;
(2) The group health plan provides coverage to association members' employees and
dependents on a community rated basis;
(3) The director, after consideration of the impact on the insurance-buying public, has
determined that the arrangement is in the best interest of the public.
Section
2.
That chapter
58-18
be amended by adding thereto a NEW SECTION to read as
follows:
A self-funded multiple employer trust, as defined in section 3 of the federal Employee
Retirement Income Security Act of 1974, 29 U.S.C.
§
1002, paragraph 40, may be authorized by
the director if the multiple employer trust meets all of the following conditions:
(1) The multiple employer trust is administered by an authorized insurer or a licensed third-
party administrator;
(2) The multiple employer trust meets all of the requirements of section 1 of this Act;
(3) The multiple employer trust is established by a homogenous trade, industry, or
professional association of employers that has a constitution or bylaws, is organized
under the laws of South Dakota and has been maintained in good faith for purposes
other than providing insurance for at least ten continuous years;
(4) The association sponsoring the multiple employer trust is engaged in substantial activity
for its members other than sponsorship of an employer welfare benefit plan;
(5) The association sponsoring the multiple employer trust is a nonprofit entity organized
under applicable South Dakota law;
(6) The multiple employer trust, upon authorization by the director, participates in the
South Dakota Life and Health Insurance Guaranty Association pursuant to chapter 58-
29C and is a member pursuant to subdivision 58-29C-48(12);
(7) The multiple employer trust:
(a) Meets the capital and surplus requirements of
§
58-6-23;
(b) Meets the risk based capital requirements of
§
58-4-48;
(c) Is subject to the hazardous financial condition requirements of
§
§
58-4-39 to 58-
4-42, inclusive;
(d) Invests its assets pursuant to the requirements of chapters 58-26 and 58-27;
(e) Is subject to chapter 58-3 on the same basis as insurers;
(f) Is subject to the insurers supervision, rehabilitation, and liquidation provisions
of chapter 58-29B.
Section
3.
That chapter
58-18
be amended by adding thereto a NEW SECTION to read as
follows:
The director shall promulgate rules, pursuant to chapter 1-26, pertaining to multiple employer
trusts in the following areas:
(1) Consumer protection issues including minimum coverage standards for health policies;
claims processing and payment practices; resolution of consumer complaints;
compliance with federal HIPAA standards; plan termination processes and managed
care protections; financial and market conduct record keeping and reporting; and unfair
trade practices; and
(2) Financial and plan solvency issues including investment capital requirements; surplus
and deposit requirements; claims reserves, stop loss coverage, and standards for entry
and exit of plan members including a nonrefundable minimum deposit of not less than
two thousand five hundred dollars plus two percent of first year contributions on an
annual basis; and production of financial statements, audited financial statements, and
actuarial opinions.
Section
4.
That chapter
58-18
be amended by adding thereto a NEW SECTION to read as
follows:
Except as otherwise provided in this Act, a multiple employer trust organized pursuant to this
Act may not be deemed to be or considered to be an insurance company or association of any kind
or character under Title 58, or subject to the provisions of
§
§
58-8-6 to 58-8-19, inclusive.
Section
5.
That chapter
58-18
be amended by adding thereto a NEW SECTION to read as
follows:
A multiple employer trust authorized by this Act may have its authorization suspended or
revoked by the director for violating any provision of this Act or because its capital is impaired,
and in either instance the director may take action in lieu of suspension or revocation as though
the trust were an insurer as provided by
§
58-4-28.1.
Section
6.
That chapter
58-18
be amended by adding thereto a NEW SECTION to read as
follows:
If not otherwise provided, a multiple employer trust doing business in this state on a self-
funded basis shall pay premium taxes as required in chapter 10-44 based upon the amount each
participating employer contributes, including any amounts contributed by employees and
dependents, to the plan on an annual basis. If a multiple employer trust purchases excess or stop
loss coverage, the multiple employer trust may not be taxed additionally for that coverage.
Section
7.
That chapter
58-18
be amended by adding thereto a NEW SECTION to read as
follows:
No agent may sell, solicit, or negotiate a self-funded multiple employer trust authorized by this
Act unless the agent is licensed to sell life and health insurance pursuant to chapter 58-30.
Section
8.
That chapter
58-18
be amended by adding thereto a NEW SECTION to read as
follows:
The provisions of this Act do not apply to any single employer self-funded plan as preempted
by Employee Retirement Income Security Act of 1974, 29 U.S.C.
§
1144 or any arrangement
exempted pursuant to
§
1-24-17. A self-funded multiple employer trust authorized by this Act may
include as participating employers both small employers and large employers.
Signed March 2, 2005