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State Exchange Profiles: South Dakota

South Dakota

Updated as of April 19, 2013

Establishing the Exchange

On September 26, 2012, Governor Dennis Daugaard (R) announced that South Dakota would not establish an exchange.1However, the state intends to maintain regulatory authority over the health insurance market and perform the plan management function for the exchange.2 The decision to have a federally-facilitated exchange was made after an inter-agency work group and a taskforce of stakeholders and legislators explored the possibility of establishing a state-based exchange.3,4

On March 19, 2012, South Dakota enacted a law prohibiting plans in a state exchange from offering abortion coverage, except when it is necessary to preserve the life or health of the pregnant woman.5

Contracting with Plans: On March 11, 2013, Director of the Division of Insurance Merle Scheiber sent a letter to the Center for Consumer Information and Insurance Oversight (CCIIO) requesting to maintain control over plan management functions despite not having entered into a state-federal partnership exchange. The Division of Insurance (DOI) has the legal authority and operational capacity to oversee certification of Qualified Health Plans (QHPs). DOI will use the System for Electronic Rate and Form Filing (SERFF) to collect and analyze information on plan rates, covered benefits, and cost-sharing requirements. DOI will also ensure continued plan compliance, manage consumer complaints, and oversee decertification of issuers.6

Essential Health Benefits (EHB): The ACA requires that all non-grandfathered individual and small-group plans sold in a state, including those offered through the Exchange, cover certain defined health benefits. In the fall of 2012, Governor Daugaard selected the Wellmark Blue Cross Blue Shield’s Blue Select plan to be the South Dakota’s EHB benchmark.7

Exchange Funding

The South Dakota Office of the Governor received a federal Exchange Planning grant of $1 million in 2010. In May 2012, the Division of Insurance was award a Level One Establishment grant of $5.9 million to further the state’s planning and design of an exchange, including creation of a risk adjustment and reinsurance plan, studying the effects of adverse selection, designing an outreach and education plan, and writing an RFP for a comprehensive IT development plan.8

Next Steps

On March 29, 2013, South Dakota received approval from CCIIO to perform plan management activities. The federal government will retain control over all other Exchange functions.9


1. Press release from the office of Governor Daugaard. “South Dakota Will Not Build Health Insurance Exchange.” September 26, 2012. http://news.sd.gov/newsitem.aspx?id=13607
2. Division of Insurance Newsletter, South Dakota Department of Labor and Regulation. Fall 2012.http://dlr.sd.gov/insurance/publications/newsletter_fall12.pdf
3. South Dakota’s State Planning and Establishment Grant Project Report, Quarter 4. October 28, 2011.http://healthreform.sd.gov/documents/4thQuarterlyExchangePlanningGrantsReport_000.pdf
4. South Dakota’s Health Insurance Exchange Task Force Subcommittee Listing. June 17, 2011.http://healthreform.sd.gov/reports/HIE%20Task%20Force%20Subcommittee%20Listing.pdf
5. HB 1185. South Dakota’s 2012 act regarding coverage for abortions by plans in the exchange.http://legis.state.sd.us/sessions/2012/Bills/HB1185ENR.pdf
6. Letter from Director Scheiber to Gary Cohen. March 11, 2013.
7. Division of Insurance Newsletter, South Dakota Department of Labor and Regulation. Fall 2012.
8. HealthCare.gov factsheet. “South Dakota Affordable Insurance Exchange Grants Awards List.” Accessed June 8, 2012. http://www.healthcare.gov/news/factsheets/2011/05/exchanges/sd.html
9. Letter from Gary Cohen to Director Scheiber. March 29, 2013. http://cciio.cms.gov/Archive/Technical-Implementation-Letters/sd-pm-letter-03-29-2013.pdf