Medicare in South Dakota

Only 20 percent of South Dakota Medicare beneficiaries select Medicare Advantage plans

Photo credit: Patrick Slaven | Flickr

At a glance: Medicare health insurance in South Dakota

Medicare enrollment in South Dakota

2020 Medicare enrollment dates171,794 South Dakota residents were enrolled in Medicare coverage as of November 2018. That’s only about 19 percent of the state’s population, compared with a little more than 18 percent of the United States population enrolled in Medicare.

Most people become eligible for Medicare when they turn 65 years old, but people also become eligible for Medicare after they have been receiving disability benefits for 24 months. Nationwide, 16 percent of all Medicare beneficiaries are eligible due to disability. In South Dakota, just 12 percent of Medicare beneficiaries are eligible because they’re disabled.

Medicare Advantage in South Dakota

Medicare beneficiaries can choose to receive their benefits directly from the federal government via Original Medicare or enroll in a private Medicare Advantage plan (as long as Advantage plans are available in their area, which is the case in most of the country).

Original Medicare includes Medicare Parts A and B. Medicare Advantage includes all of the benefits of Medicare Parts A and B, and Advantage plans typically have additional benefits, such as integrated Part D prescription drug coverage and extras like dental and vision. But provider networks are limited with Medicare Advantage, and out-of-pocket costs are often higher than they would be under Original Medicare plus a Medigap plan. There are pros and cons to either option, and no single solution that works for everyone.

Only 20 percent of Medicare beneficiaries in South Dakota had selected Medicare Advantage plans as of 2017, compared with an average of 33 percent nationwide. As of November 2018, just 35,403 Medicare beneficiaries in South Dakota were enrolled in private Medicare plans (as opposed to Original Medicare; that figure does not include people who had private coverage to supplement Original Medicare). That’s 20 percent of the state’s Medicare population, and although those 35,403 people mostly have Medicare Advantage, there are some enrollees in South Dakota who have Medicare Cost plans.

For 2019, South Dakota residents can select from among at least seven Medicare Advantage plans, and up to 21 plans, depending on where they live.

Medicare’s annual election period (October 15 to December 7 each year) gives Medicare beneficiaries the opportunity to switch between Medicare Advantage and Original Medicare (and add or drop a Medicare Part D prescription plan). And as of 2019, Medicare Advantage enrollees also have the option to switch to a different Advantage plan or to Original Medicare during the Medicare Advantage open enrollment period, which runs from January 1 to March 31.

Medigap in South Dakota

More than half of Original Medicare beneficiaries receive supplemental coverage through an employer-sponsored plan or Medicaid. But for those who don’t, Medigap plans (also known as Medicare supplement plans) are designed to pay some or all of the out-of-pocket costs (deductibles and coinsurance) that Medicare beneficiaries would otherwise have to pay themselves. Original Medicare does not limit out-of-pocket costs, so most enrollees maintain some form of supplemental coverage; Medigap plans are what’s available for people who don’t have access to an employer-sponsored plan (including retiree plans) or Medicaid.

Although Medigap plans are sold by private insurers, the plans are standardized under federal rules. There are ten different plan designs (differentiated by letters, A through N), and the benefits offered by a particular plan (Plan A, Plan F, etc.) are the same regardless of which insurer is selling the plan. So plan comparisons are much easier for Medigap policies than for other types of health insurance; consumers can base their decision on premiums and less tangible things like customer service, since the benefits themselves are uniform.

49 insurers are licensed to offer Medigap plans in South Dakota. According to an AHIP analysis, 64,475 people in the state had Medigap coverage as of 2016. Avera and Sanford, both of which offer other types of health coverage in South Dakota and have extensive provider networks in the state, offer Medicare SELECT Medigap plans.

Unlike other private Medicare coverage (Medicare Advantage and Medicare Part D plans), there is no annual open enrollment window for Medigap plans. Instead, federal rules provide a one-time six-month window when Medigap coverage is guaranteed-issue. This window starts when a person is at least 65 and enrolled in Medicare Part B (you must be enrolled in both Part A and Part B to buy a Medigap plan).

People who aren’t yet 65 can enroll in Medicare if they’re disabled and have been receiving disability benefits for at least two years (16 percent of Medicare beneficiaries nationwide are under age 65). Federal rules do not guarantee access to Medigap plans for people who are under 65, but the majority of the states have rules to ensure that disabled Medicare beneficiaries have at least some access to Medigap plans.

In South Dakota, Medicare beneficiaries under the age of 65 have the same Medigap open enrollment period as people who are gaining access to Medicare due to age. These enrollees have six months from the time they enroll in Medicare Part B to select a guaranteed-issue Medigap plan. For South Dakota Medigap plans that base rates on the age of the enrollee (which is nearly all of them), the premiums for people under age 65 are equal to the premiums for people who are 75, because state regulations prohibit Medigap insurers from charging enrollees under age 65 more than they charge enrollees who are 75 (see ARSD 20:06:13:84). This is a much more restrictive model than many other states use, as it keeps Medigap premium fairly low for people under age 65 (in many states, Medigap premiums for people under 65 are two to four times more expensive for those under 65, versus people who are 65; in South Dakota, the difference in price is less than 35 percent in most cases).

People who are enrolled in Medicare prior to age 65 will have another Medigap open enrollment period, when they turn 65, during which they can switch to a different Medigap plan and get the lower premiums that apply to people who are eligible for Medicare due to age, rather than disability.

Although the Affordable Care Act eliminated pre-existing condition exclusions in most of the private health insurance market, those regulations don’t apply to Medigap plans. Medigap insurers can impose a pre-existing condition waiting period of up to six months, if you didn’t have at least six months of continuous coverage prior to your enrollment. And if you apply for a Medigap plan after your initial enrollment window closes (assuming you aren’t eligible for one of the limited guaranteed-issue rights), the insurer can look back at your medical history in determining whether to accept your application, and at what premium.

Medicare Part D in South Dakota

Original Medicare does not cover outpatient prescription drugs. More than half of Original Medicare beneficiaries have supplemental coverage via an employer-sponsored plan (from a current or former employer or spouse’s employer) or Medicaid, and these plans often include prescription coverage. But Medicare enrollees without drug coverage through Medicaid or an employer-sponsored plan need to obtain Medicare Part D prescription coverage. Part D coverage can be purchased as a stand-alone plan, or as part of a Medicare Advantage plan that includes Part D prescription drug coverage.

In 2019 in South Dakota, there are 28 stand-alone Part D plans for sale, with premiums that range from about $15 to $94/month.

As of late 2018, there were 105,960 Medicare beneficiaries in South Dakota who had prescription coverage under stand-alone Part D plans. Another 12,862 had Part D prescription coverage as part of their Medicare Advantage plans.

Medicare spending in South Dakota

In 2016, Original Medicare’s average per-beneficiary spending in South Dakota was $8,158 (based on data that were standardized to eliminate regional differences in payment rates, and did not include costs for Medicare Advantage).

Nationwide, average per beneficiary Original Medicare spending was $9,533 per enrollee, so Medicare spending in South Dakota was about 14 percent lower than average, and the state was tied with Colorado and Iowa with the ninth-lowest average per-beneficiary Medicare spending. Per-beneficiary Original Medicare spending was highest in Louisiana, at $11,399, and lowest in Hawaii, at just $6,441.

You can read more about Medicare in South Dakota in our state Medicare guide. You can also contact SHIINE, South Dakota’s Senior Health Insurance Information and Insurance Education program, with questions related to Medicare coverage in South Dakota.

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 Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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