- Open enrollment for 2021 health plans ended on December 15, 2020, but a COVID-related enrollment window runs through May 15, 2021. After that, a qualifying event will be necessary to enroll or make changes to 2021 coverage.
- South Dakota has enacted a law that allows Farm Bureau to sell health plans that aren’t considered health insurance and are not regulated by state or federal insurance laws.
- Average premiums increased by 2.6 percent in South Dakota’s individual market for 2021.
- Short-term health plans are available in South Dakota with initial plan terms up to six months.
- Enrollment reached a record high during the open enrollment period for 2021 coverage, with more than 31,000 people buying plans.
- Insurer participation in the South Dakota exchange: Avera and Sanford have continued to offer plans statewide each year.
South Dakota exchange overview
South Dakota uses the federally run exchange/marketplace, so residents enroll through HealthCare.gov. Enrollment reached a record high in South Dakota’s marketplace during the open enrollment period for 2021 coverage, with 31,375 people enrolling in coverage through the exchange.
South Dakota has two carriers — Avera and Sanford — offering plans in the exchange for 2020. And they are also the only carriers offering plans in South Dakota’s individual market (including off-exchange) in 2020, as two other carriers that previously offered plans outside the exchange opted to leave the state’s individual market at the end of 2016.
When can I enroll in 2021 health insurance in South Dakota?
As a result of the COVID pandemic, there is an ongoing opportunity to enroll in coverage until May 15, 2021.
Open enrollment for 2021 health plans ran from November 1 through December 15, 2020. Outside of that window, South Dakota residents would normally need to have a qualifying event in order to enroll in an ACA-compliant plan or make a plan change. But due to the COVID pandemic, the Biden administration has opened an enrollment window on HealthCare.gov, which continues through May 15, 2021.
Uninsured South Dakota residents can use this window, as can anyone enrolled in non-ACA-compliant coverage, such as short-term health insurance or health care sharing ministry plans. And the COVID-related enrollment window is also available to people who already have coverage through the marketplace and would like to select a different plan. During this enrollment window, coverage takes effect the first of the month after a person enrolls.
After May 15, 2021, people will once again need qualifying events in order to sign up for coverage outside of the open enrollment period. Open enrollment will start again, for 2022 coverage, on November 1, 2021.
How much does health insurance cost in South Dakota?
Across the more than 29,000 people who enrolled in plans through South Dakota’s exchange for 2020, the average full-price monthly premium is $687. But most enrollees — about 92 percent — receive premium subsidies. After the subsidies are applied, the average premium is just $136/month.
South Dakota enacts legislation to allow Farm Bureau to sell non-insurance plans in the state
In February 2021, South Dakota Governor Kristi Noem signed S.B.87 into law, allowing Farm Bureau (or another agricultural organization domiciled in the state for at least 25 years) to sell health plans that won’t have to conform to state or federal insurance laws or regulations.
Under the terms of the legislation, the plans would not be considered health insurance, so they will not be regulated by the South Dakota Division of Insurance, the way health insurance policies are. Tennessee, Kansas, Iowa, and Indiana already allow this type of plan to be sold, and South Dakota will now join them.
To roll out the new plans, South Dakota Farm Bureau intends to partner with a third-party administrator, which would be licensed and regulated by the state. SDFB does plan to include coverage for the Affordable Care Act’s essential health benefits in its new plans, but it’s expected that they will use medical underwriting as a mechanism to keep costs down.
South Dakota also enacted legislation in 2019 that allows association health plans to operate in the state. This aligns the state’s rules with federal regulations issued by the Trump administration in 2018, and the South Dakota bill had unanimous support in both chambers of the state’s legislature. The federal rules were soon struck down by a judge, however, preventing the expanded access to association health plans nationwide. The Trump administration appealed that decision, but the court has stayed the appeal at the request of the Biden administration.
Two insurers offer coverage for 2021; average rate increases of about 2.6%
The South Dakota Division of Insurance doesn’t publicize information about rate filings until regulators have finalized the rates. But unlike some states, regulators in South Dakota do have the authority to reject rate filings that aren’t justified, or to require insurers to make adjustments to proposed rates. The Division of Insurance reviewed the insurer’s proposed 2021 rates over the summer of 2020, and approved the following average rate increases (approved as-filed, without a need for modifications):
- Avera: 4.29 percent average rate increase
- Sanford: 0.24 percent average rate increase
Avera had just under 20,000 enrollees in South Dakota’s individual market in 2020, while Sanford had just under 15,000. Overall, the weighted average rate increase for 2021 was just under 2.6 percent.
For perspective, here’s a look at how premiums have changed in South Dakota’s exchange in the early years of ACA implementation:
2015: According to a report released by the U.S. Department of Health and Human Services (HHS), the average cost for a bronze plan —the lowest-cost option — in South Dakota was $298 a month in 2014. The national average for a bronze policy was $249 a month in 2014. But the news was much better for 2015. A Commonwealth Fund analysis of average premiums across all metal levels for a 40-year-old non-smoker found an average premium decrease of 21 percent in South Dakota from 2014 to 2015. And an interactive map from the NY Times Upshot shows that in most areas of the state, people who switched from the 2014 benchmark (second-lowest-cost silver) plan to the new benchmark plan for 2015 were able to obtain premium decreases.
When we include both on and off-exchange plans and look at the entire individual market in South Dakota, the average premium increase for 2015 was 2 percent, as calculated by PricewaterhouseCooper.
2016: By 2016, only two insurers were offering plans in South Dakota’s exchange (that continues to be the case in 2019). Avera’s average rate increase was 13.98 percent and Sanford’s was 15 percent.
2017: Avera increased their average premiums by 38.15 percent for 2017, and Sanford increased theirs by an average of 36.34 percent. Since both carriers implemented very similar—and quite significant—rate increases, premium subsidies also grew sharply in South Dakota for 2017. HHS reported that the average benchmark plan (the second-lowest-cost silver plan in each area) premium would increase by 39 percent in South Dakota. Subsidies are tied to the cost of the benchmark plan, so they also had to increase to keep up with the higher prices in 2017.
2018: The average rate increase for Avera was 29 percent. For Sanford, it was about 16 percent. 2018 was the first year that cost-sharing reductions were not funded by the federal government, so the insurers added the cost of CSR to premiums for 2018, as described below.
2019: The weighted average rate increase in South Dakota’s individual market was a little more than 5 percent for 2019.
2020: The approved rate changes for 2020 in South Dakota’s individual market amounted to an average increase of 6.5 percent:
- Avera: 5.5 percent average rate increase (approved filing (AVER-131948724) available via SERFF). Avera had 16,683 members in 2019
- Sanford: 7.5 percent average rate increase (approved filing (SANF-132018969) available via SERFF). Sanford had 16,578 members in 2019.
Average rate changes for 2018 jumped after Trump cut off CSR funding
Avera and Sanford both continued to offer plans for 2018. Regulators approved rates in September 2017 that were a little lower than the insurers and proposed. Those rates were based on the assumption that cost-sharing reduction (CSR) funding would continue in 2018. However, when the Trump Administration announced in October 2017 that CSR funding would end immediately, South Dakota was one of the states that worked with CSM to allow insurers to use an emergency refiling process to submit new rates, with the cost of CSR added to premiums.
Here are the average 2018 rate increases — before accounting for premium subsidies — for South Dakota exchange enrollees:
- Avera: Initially proposed average rate increase of 20 percent; regulators approved an average rate increase of 17 percent in September, but insurers were allowed to refile rates after Trump cut off CSR funding, and the final approved average rate increase was 29 percent (27,000 members).
- Sanford: Initially proposed average rate increase of 11 to 14 percent; regulators approved an average rate increase of 7.5 percent in September, but insurers were allowed to refile rates after Trump cut off CSR funding, and the final approved average rate increase was 15.9 percent (8,270 members)
Initially, the proposed rates were based on the assumption that the federal government would continue to fund cost-sharing reductions (CSRs). Both insurers indicated that if CSR funding were to be eliminated (which ended up being the case), the rates would have to rise even more to compensate for the cost of providing CSRs to eligible enrollees. And in the days after CSR funding was eliminated, both of South Dakota’s insurers were allowed to refile for 2018, with the cost of CSR added to premiums.
In April 2017, a Kaiser Family Foundation analysis estimated that premiums for silver plans would have to rise by 16 percent in South Dakota (in addition to the rate increase that would otherwise apply) if CSRs weren’t funded.
The rate filings for South Dakota plans are available via SERFF. Avera’s revised filing (AVER-131179213) notes that “To keep the Silver rates lower than those for Gold plans, despite the additional load for the non-funding of CSR payments, Avera adjusted the profit and risk load.” They kept the profit and risk load the same as initially proposed for Gold, Bronze, Catastrophic, and off-exchange Silver plans. But they cut it almost in half for on-exchange silver plans. This is interesting, as it’s different from the approaches that insurers in most other states took. Insurers in most states simply added the cost of CSR to silver plans, and let the chips fall where they would. The result is that Gold plans in some areas of the country were cheaper than Silver plans, and Bronze (and sometimes Gold) plans were often free for enrollees who receive premium subsidies. But Avera’s approach helped to ensure that pricing would still “make sense” for their 2018 products, in terms of having the plans follow a least expensive to most expensive path as they move up from Bronze to Gold.
Sanford’s filing (SANF-131180312) that was based on a lack of federal funding for CSR was initially filed in early September. But the insurer notes that the filing was withdrawn once they decided to finalize their alternate rate proposal that was based on the assumption that CSR funding would continue in 2018. Sanford had to reverse course and switch to the higher rates (with the cost of CSR added to silver plan premiums) in October, after CSR funding was eliminated.
People who receive premium subsidies were largely insulated from the rising premiums, as the premium subsidies grow each year to keep pace with the cost of coverage. The subsidy amounts are based on keeping the after-subsidy cost of the second-lowest-cost silver plan (benchmark plan) at an affordable level — but the subsidies can be applied to any metal-level plan). And the IRS reduced the percentage of income that people have to pay for the benchmark plan in 2018, which means that net premiums were actually slightly lower in 2018 than they were in 2017 (note that some enrollees may have had to switch plans to see a decrease in net premiums, as the benchmark plan can change from one year to the next).
91 percent of South Dakota exchange enrollees were receiving premium subsidies in 2017. But the other 9 percent — as well as everyone who buys coverage outside the exchange — had to shoulder the full impact of the rate increases for 2018. However, since the cost of CSR was added only to silver plans, people who don’t get premium subsidies (and who thus are generally also ineligible for CSR benefits, as those have lower income limits for eligibility) were able to pick non-Silver plans for 2018 and avoid at least the portion of the average rate increase that was added to cover the cost of CSR.
Enrollment reached a record high in 2021
Enrollment in South Dakota’s exchange started out quite low in 2014, with just over 13,000 people enrolling. That was only an estimated 11.1 percent of South Dakota’s subsidy-eligible residents enrolled in coverage through the exchange – tying Iowa for the lowest percentage in the nation.
The fact that Wellmark did not participate in the exchange was cited as one of the reasons for the low enrollment in South Dakota’s exchange in 2014. The carrier’s huge market share and name recognition coupled with the fact that existing Wellmark members had no means of keeping their carrier and also obtaining subsidies, meant that enrollment lagged behind the rest of the country in South Dakota.
South Dakota’s percentage increase in exchange enrollments in 2016 was the ninth highest in the US, and the fourth highest of the states that use Healthcare.gov. This could be due in part to the sharp rate increases for Wellmark’s off-exchange plans in 2016, which may have encouraged former Wellmark members to shop on the exchange instead.
Across all the states that use HealthCare.gov, the general trend thus far has been peak enrollment in 2016, with slight declines over the next few years and then an uptick in enrollment for 2021. But South Dakota is among just a handful of states where enrollment climbed steadily over each of the first five years of exchange operation. It did drop slightly in 2019, but has grown again in both 2020 and 2021, reaching a record high in 2021.
Here’s a summary of how enrollment (during open enrollment) has changed each year in South Dakota’s exchange:
- 2014: 13,104 people enrolled
- 2015: 21,393 people enrolled
- 2016: 25,999 people enrolled
- 2017: 29,622 people enrolled
- 2018: 29,652 people enrolled
- 2019: 29,069 people enrolled (the first time enrollment dropped in SD’s exchange)
- 2020: 29,331 people enrolled
- 2021: 31,375 people enrolled
The increase in South Dakota’s exchange enrollment in 2017 was likely due in large part to the fact that Wellmark and DakotaCare both terminated their off-exchange plans in South Dakota at the end of 2016, and their enrollees had to seek coverage from Avera or Sanford instead, both of which offer plans on and off the exchange. There were ten HealthCare.gov states that saw enrollment growth in 2017, and South Dakota’s percentage increase in total enrollment was the second-highest.
Across all states that use HealthCare.gov, there was an average enrollment decline of 3.8 percent in 2019, so South Dakota’s enrollment drop that year was less significant than average. And enrollment in the state’s exchange increased in 2017, 2018, and 2020, despite the fact that average enrollment in HealthCare.gov states declined in each of those years. South Dakota was one of just a handful of HealthCare.gov states where enrollment increased from 2019 to 2020.
What health insurance companies sell individual coverage in South Dakota?
When the exchanges debuted in 2014, three insurers — DakotaCare, Avera, and Sanford — offered plans the South Dakota exchange. All three offered their plans statewide.
Although there were no new carriers in the South Dakota exchange in 2015, the three existing carriers offered a variety of plans, including some new HSA-qualified options from Avera and an Avera plan that gave insureds lower out-of-pocket costs if they used an Avera provider.
Wellmark Blue Cross Blue Shield had 73 percent of the market share in South Dakota prior to the 2014 open enrollment period, but the insurance giant opted to stay out of the exchange in 2014, in 2015, and in 2016 (despite their lack of participation in the exchange, Wellmark said they sold more policies outside the exchange in South Dakota in 2014 than the two on-exchange carriers combined). After the end of 2016, Wellmark exited South Dakota’s ACA-compliant market altogether, and stopped selling even off-exchange plans.
As of 2016, DakotaCare switched to only offering plans outside the exchange. About 7,200 DakotaCare enrollees who had coverage through the exchange in 2015 needed to select a new plan from Avera or Sanford if they wished to continue to have coverage—and subsidies—through the exchange in 2016.
Celtic, Wellmark, and DakotaCare were offering plans outside the exchange in South Dakota as of 2016, but all three insurers opted to exit the ACA-compliant market in South Dakota at the end of 2016. The South Dakota Division of Insurance confirmed that Sanford and Avera were the only carriers offering individual market coverage in the state as of 2017, on or off-exchange.
So since 2016, Avera and Sanford have been the only insurers offering plans in the South Dakota exchange, but both insurers have offered coverage statewide each year.
Insurance ballot initiative made headlines in 2014
South Dakota was in the national news in the fall of 2014 because of a ballot initiative pertaining to health insurance networks that voters overwhelmingly approved in November. Amendment 17 was billed by supporters as “freedom to choose your doctor” but critics pointed out that it’s not as simple as proponents made it seem. Doctors and small or specialty hospitals were generally in favor of Amendment 17, while large insurers (including Sanford and Avera) and hospital networks were opposed. Ultimately, the measure passed 62 percent to 38 percent.
This does not mean that patients can choose any doctor they want though. Rather, it means that any doctor who is willing and able to comply with the terms and conditions of the health insurance carrier could enter the carrier’s network.
Because narrower networks have become commonplace over the last year, policy experts in other states were closely watching the outcome of the SD ballot initiative. A total of 27 states have “any willing provider” laws on their books, although only about half of them are as broad as South Dakota’s.
In the 2016 legislative session, a bill (HB1067) was introduced in an effort to roll back some of the provisions in Amendment 17, allowing carriers the option to offer both closed-network and open-network plans (plans with closed networks would be less expensive). The bill didn’t advance out of committee, and this article is a good summary of the controversy surrounding HB1067.
South Dakota continues to reject Medicaid expansion
South Dakota has not expanded Medicaid under the ACA, and Governor Kristi Noem, who took office in 2019, is opposed to the idea of expanding Medicaid to cover the state’s low-income population — despite the fact that the federal government would fund 90 percent of the cost.
Because the state has not accepted federal funds to expand Medicaid, 20,000 South Dakota residents fall into the coverage gap — they earn too much money to qualify for Medicaid, but too little to qualify for subsidies in the exchange. If the state expands Medicaid, they will be eligible for coverage under Medicaid.
The lack of Medicaid expansion disproportionately affects the Native American population in South Dakota. Officials estimate that there are 14,000 Native Americans who would gain access to Medicaid if the state were to expand the program. This includes people who earn between 100 percent and 138 percent of poverty and are currently eligible for subsidies in the exchange. Many of them have not opted for private exchange plans though, for a variety of economic and cultural reasons.
Former Governor Dennis Daugaard, a Republican, was in favor of Medicaid expansion, and as of late October 2014, 45 percent of surveyed South Dakota residents said they favored Medicaid expansion, while just 37 percent opposed it.
In December 2015, Daugaard unveiled his proposal to expand Medicaid without needing to use additional state funds. The plan would have utilized savings on a program that the state already had to cover a portion of the cost of care for Native Americans provided at non-IHS facilities; Native Americans who are eligible for expanded Medicaid would have been covered under Medicaid instead, and the savings on that program would more than offset the state’s portion of Medicaid expansion costs.
By the end of February 2016, however, Daugaard had said that Medicaid expansion would not be addressed during the 2016 legislative session. He noted that there was still the possibility of a special legislative session later in the year, or the issue might be revisited during the 2017 legislative session. Hopes were high for a special session as late as mid-June 2016, but by June 22, Daugaard had confirmed that there would be no special session in 2016 to address Medicaid expansion, and that the issue would be pushed out past the 2016 election, into 2017 at the earliest.
Daugaard had previously twice submitted a proposal to HHS for a waiver that would allow the state to expand Medicaid to people with incomes up to 100% of poverty level, instead of 138% of poverty level. HHS rejected Daugaard’s proposals though, saying that expansion must extend to people with incomes between 100% and 138% of poverty level in order to be approved (the Obama administration rejected states’ attempts to expand Medicaid only to people under the poverty level, but Utah is trying to gain approval from the Trump administration for full federal funding (ie, a 90/10 split) of Medicaid expansion that only applies to people earning up to the poverty level).
Grandmothered plans can renew
On November 26, 2013 the state announced that it would allow carriers to extend existing policies per President Obama’s suggestion that non-compliant plans be allowed to remain in effect for one more year. Sanford, Wellmark and DakotaCare all opted to allow existing policies to be renewed into 2014, giving insureds another option to compare with the new ACA-compliant plans.
The state has continued to go along with additional federal extensions for grandmothered plans, most recently allowing these plans to remain in force until the end of 2021 (the Biden administration announced another extension in January 2021, allowing grandmothered plans to continue through 2022, but South Dakota had not yet published guidance related to that extension as of February 2021). But enrollment in grandmothered plans has dwindled, as people can no longer purchase them. In Sanford’s 2018 filing (SANF-131588434), the insurer indicated that 504 people were still enrolled in grandmothered Sanford plans as of 2018.
Exchange history and outreach
Former Gov. Dennis Daugaard announced in late September 2012 that HHS would be running the state’s exchange, citing the high cost — estimated at $6.3 to $7.7 million — for ongoing operation of the exchange.
The state is not playing any role in promoting ACA-compliant health insurance options or educating consumers about the marketplace. That decision leaves outreach efforts to the insurers and federally funded “navigators.” Navigators are affiliated with established community outreach and advocacy groups, and they are trained to help consumers understand and use the new online marketplace.
Western South Dakota Community Action Partnership received a $100,000 navigator grant in 2018, in 2019, and again in 2020 just as they did the year before. Navigator grants are much smaller than they were in previous years, as the Trump administration has reduced funding by about 84 percent, although it stayed level for the final years of the Trump administration. The Biden administration is expected to increase funding for exchange outreach and navigator organizations.
South Dakota health insurance exchange links
State Exchange Profile: South Dakota
The Henry J. Kaiser Family Foundation overview of South Dakota’s progress toward creating a state health insurance exchange.
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.