Short-term health plans in South Dakota
- South Dakota short-term insurance policies used to be subject to state regulations that were more restrictive than federal rules, but that changed in late 2020.
- Under new rules, short-term health insurance in South Dakota is only limited to initial terms of less than 12 months, and total duration, including renewals, of up to 36 months.
- Prior to late 2020, short-term plans in South Dakota were limited to six months terms and could not be renewed.
- At least five insurers offer short-term plans in South Dakota.
Short-term health plan duration in South Dakota
Prior to December 2020, South Dakota law (State Statute 58-17-70(5)) defined short-term health insurance in South Dakota as nonrenewable and with terms of no more than six months. But that changed in December 2020, under new regulations that the South Dakota Division of Insurance finalized.
The new regulations remove the six-month cap and nonrenewability rules. Instead, plans are allowed to follow the federal rules that the Trump administration finalized in 2018: They can have initial terms of up to 364 days, and total duration, including renewals, of up to 36 months.
The Biden administration may change those rules, but for the time being, short-term health insurance plans in South Dakota are allowed to have initial terms of up to a year, and total duration of up to three years if the plan is renewable.
South Dakota’s short-term health insurance regulations
South Dakota statute requires insurers who provide short-term health insurance to provide a disclosure informing consumers that the plan does not cover pre-existing conditions, and does not count as minimum essential coverage.
Which insurers offer short-term plans in South Dakota?
At least five insurers offer short-term health insurance in South Dakota as of 2021:
- Independence American Insurance Company
- National General
- UnitedHealthcare (Golden Rule)
- Sanford (new as of 2020; SERFF filing SANF-132326727 has details)
Who can get short-term health insurance in South Dakota?
Short-term health insurance in South Dakota is available to residents (an individual or families) who meet insurers’ underwriting guidelines. Typically, this means being under 65 years old (some insurers put the age limit at 64 years) and in fairly good health.
Short-term health insurance plans usually include blanket exclusions for pre-existing conditions, so these types of plans are not adequate for someone who needs medical care for ongoing or pre-existing conditions.
If you’re in need of health insurance coverage in South Dakota, check if you are eligible for a special enrollment period that would allow you to enroll in an ACA-compliant major medical plan. (If you are eligible, visit the healthcare.gov website to apply; note that a COVID-related special enrollment period is open from February 15 to May 15, 2021, allowing anyone eligible to use the marketplace to sign up for ACA-compliant coverage, with needing to have a qualifying life event). After the COVID enrollment window ends, people will still be able to enroll in a plan through the South Dakota marketplace (or directly from an insurer) if they experience a qualifying event. These plans are purchased on a month-to-month basis, so you can enroll in a plan even if you only need coverage for a few months before another policy takes effect (with a premium subsidy if you’re eligible).
An agent or broker can provide information on coverage options and costs for short-term health insurance and determine which will policies best fit your needs. Some things to keep in mind are the allowable plan durations (some insurers cap their plans at shorter durations than the maximum the state allows), whether the insurer offers guaranteed renewability, and the specific benefits the plan covers.
Pay attention to things such as whether the plan covers outpatient prescription drugs (most short-term health insurance plans do not, but some do), and whether it imposes specific dollar limitations on services such as inpatient care, surgery, etc. (in addition to the plan’s overall benefit maximum).
When should I consider short-term health insurance in South Dakota?
Excluding coverage for pre-existing conditions can make short-term policies appear more affordable than ACA-compliant (Obamacare) policies. However, that upfront affordability disappears if you end up paying out of pocket for healthcare services related to an uncovered condition. That said, there may be situations when enrolling in a short-term plan might be an attractive option, such as:
- If you missed open enrollment for ACA-compliant coverage and do not have a qualifying event that would trigger a special enrollment period.
- If you are newly employed and have a waiting period until you can be covered by your new employer’s health insurance plan; short-term insurance is typically a much more affordable (but less comprehensive) stopgap than COBRA or an ACA-compliant plan.
- If you will soon be eligible for Medicare.
- If you’re not eligible for Medicaid or a premium subsidy in the exchange, an ACA-compliant plan might be unaffordable. Some examples of who are ineligible for premium subsidies:
- Folks who earn more than 400% of the poverty level (for 2021 coverage, that amounts to $51,040 for a single person; if your ACA-specific modified adjusted gross income is slightly above the subsidy-eligible threshold, there are steps you can take to reduce it).
- People caught in the ACA’s family glitch.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.