Changes to Existing Law

Group health insurance may be under a policy issued to an a bona fide association5 of employers, including a labor union, which shall have that has a constitution and bylaws and6 which that has been organized and is maintained in good faith for purposes other than that of with at least one substantial business purpose unrelated to obtaining insurance, insuring8 members, employees, or employees of members of the association for the benefit of persons9 other than the association or its officers or trustees. The term "employees" as used herein For the purposes of this section, the term, employees, may include retired employees, and the term, employers, includes working owners without employees who qualify as both an employer and employee.

A self-funded multiple employer trust, as defined in section 3 of the federal3 Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002, paragraph 40, that is sponsored by an association, may be authorized by the director if the multiple employer trust5 meets all of the following conditions: (1)The multiple employer trust is administered by an authorized insurer or a licensed or registered third-party administrator; (2)The multiple employer trust meets all of the requirements of § 58-18B-59 is sponsored and maintained by a bona fide association of employers eligible to procure coverage under §§ 58-18-3 and 58-18-4; (3)The association sponsoring the multiple employer trust is established by employers in a homogenous trade, industry, line of business, or professional association of employers that profession with commonality of interest. The association has a14 constitution or bylaws, and 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 has a substantial18 activity for its members business purpose other than sponsorship of an employer19 welfare benefit plan; (5)The association sponsoring the multiple employer trust is a nonprofit entity organized21 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 chapter24 - 4 -SB 58-29C and is a member pursuant to subdivision 58-29C-48(12) trust's board of trustees is authorized to assess participating employers in an amount necessary to remedy deficiencies at any time the assets and stop loss insurance policies of the multiple employer trust are insufficient to: (a)Pay claims made against the multiple employer trust; (b)Discharge liabilities and obligations relating to health benefit plan claims; or (c)Maintain adequate reserves and surpluses; (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 to11 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 provisions15 of chapter 58-29B; (g)Maintains premium rates that meet a minimum loss ratio of eighty-five percent or be community rated; and (h)Complies with all coverage mandates that are applicable to group health insurance under this title; (8)Each sponsoring association is comprised of and controlled by employer members, consists of five hundred or more covered employees, and has been in existence for a period of three continuous years; (9)Any solicitation or sales materials to prospective members discloses the provisions24 - 5 -SB regarding fees and assessments for participation in the multiple employer trust; and (10)The director, after consideration of the impact on the insurance-buying public, determines that the arrangement is in the best interests of the public. The director may authorize a multiple employer trust that is not an association meeting the requirements of subdivisions (2) to (5), inclusive, of this section, if the multiple employer trust is comprised exclusively of employers engaged in a common industry for which there is some degree of common ownership, the ownership of two or more participating employers has existed since July 1, 2007, the employers forming the trust were previously providing health benefits collectively to their employees in this state, and the director finds that authorizing the multiple employer trust pursuant to this section is in the public interest.

Except as otherwise provided in §§ 58-18-88 to 58-18-94, inclusive, and § 58- 18B-59, a this chapter, an authorized multiple employer trust organized pursuant to §§ 58-18-88 to 58-18-94, inclusive, and § 58-18B-59 may not be deemed determined to be or considered to20 be an insurance company or association of any kind or character under Title 58 this title, or21 subject to the provisions of §§ 58-8-6 to 58-8-19, inclusive.

A multiple employer trust authorized by §§ 58-18-88 to 58-18-94, inclusive, and24 - 6 -SB § 58-18B-59 under this chapter may have its authorization suspended or revoked by the director1 for violating any applicable provision of §§ 58-18-88 to 58-18-94, inclusive, and § 58-18B-59 or because its capital is impaired, and in either instance the this title. The director may take3 action in lieu of suspension or revocation as though the trust were an insurer as provided by4 § 58-4-28.1.

No agent may sell, solicit, or negotiate a self-funded multiple employer trust7 authorized by §§ 58-18-88 to 58-18-94, inclusive, and § 58-18B-59 under this chapter unless8 the agent is licensed to sell life and health insurance pursuant to chapter 58-30.

The provisions of §§ 58-18-88 to 58-18-94, inclusive, and § 58-18B-59 this chapter regarding multiple employer trusts do not apply to any single employer self-funded plan12 as preempted by Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1144 or any13 arrangement exempted pursuant to § 1-24-17. A An authorized self-funded multiple employer14 trust authorized by §§ 58-18-88 to 58-18-94, inclusive, and § 58-18B-59 may include as15 participating employers both small employers and large employers.