Medicare's structure, Medicaid and the basics of long-term care are covered in the national Senior and Special Needs guide. This guide covers South Dakota's rules for selling Medicare supplement policies (SDCL 58-17A and ARSD 20:06:13) and long-term care policies (SDCL 58-17B and ARSD 20:06:21).

Medicare supplement (Medigap)

Open enrollment

• During the 6 months that begin with the first day of the month a person is 65 or older and enrolled in Part B, an insurer can't deny coverage, condition it or price it based on health (SDCL 58-17A-17).
• The same right applies to anyone under 65 who becomes eligible for Medicare because of disability, if they apply within 6 months of enrolling in Part B (ARSD 20:06:13:84).

Policy terms

• Preexisting conditions: benefits can't be excluded for losses more than 6 months after the effective date. The look-back is also 6 months (58-17A-3).
  • A replacement policy may apply only the time left on the old policy's exclusion period (58-17A-3.1).
• Guaranteed renewable. The only grounds to cancel or nonrenew are nonpayment or material misrepresentation (ARSD 20:06:13:60).
• Medicare SELECT plans must pay for emergency or unforeseen out-of-network care when a network provider can't reasonably provide it (ARSD 20:06:13:68).

Selling rules

• Free look: 30 days from delivery. The refund is paid directly to the applicant within 30 days of the return (58-17A-8).
• Outline of coverage: delivered at the time of application, with a written acknowledgment (58-17A-5; ARSD 20:06:13:37).
• Buyer's guide: given at application when an agent sells the policy. The insurer keeps the signed acknowledgment for 5 years (ARSD 20:06:13:28).
• The policy and outline display, on the first page, the notice that the policy may not cover all of your medical expenses (ARSD 20:06:13:57).
• No duplication: you can't sell a Medigap policy to someone who already has one, unless it replaces the old one (58-17A-15).
  • A replacement needs a notice signed by the applicant and the agent, with a copy left with the applicant (ARSD 20:06:13:35).
• Suitability: consider the totality of the person's circumstances (ARSD 20:06:13:43.02):
  • their finances
  • their need for coverage at the time of sale
  • the values, benefits and costs of the existing coverage
• Commissions: first-year compensation can't exceed 200% of second-year compensation. Renewal compensation equals the second-year level for at least 5 years (ARSD 20:06:13:61).
• Cold lead advertising is prohibited (ARSD 20:06:13:58). That's marketing that hides the fact that an agent will contact the person to sell insurance.
• An agent who fails to provide a required form violates the Unfair Trade Practices Act (ARSD 20:06:13:44).

Long-term care

Policy protections

• An individual LTC policy must be guaranteed renewable for life at minimum (58-17B-3).
• It can't be cancelled or nonrenewed because of age or declining health (58-17B-5).
• Free look: 30 days from delivery, with a full premium refund (58-17B-9).
• No prior-hospitalization requirement for any benefit (58-17B-7).
• Preexisting conditions may be excluded only for losses beginning within 6 months of the effective date. The look-back is 6 months (58-17B-6).
• A replacement policy must credit time already served under the old policy's waiting, elimination and preexisting periods (58-17B-5.1).
• Benefits can't be reduced for a temporary absence of up to 14 days a year from a nursing home or assisted-living facility (58-17B-16).
• Alzheimer's disease can't be excluded under a mental or nervous disorder exclusion (ARSD 20:06:21:04).

Benefit triggers

• Activities of daily living are bathing, dressing, eating, continence, toileting and transferring (ARSD 20:06:21:01).
• A chronically ill person:
  • can't perform at least 2 ADLs for at least 90 days, or
  • needs substantial supervision because of a severe cognitive impairment

Minimum benefits and inflation

• At least one year of nursing-facility coverage, with a daily benefit of at least $100, unless an exception applies (ARSD 20:06:21:79).
• Insurers must offer an annual cost-of-living adjustment endorsement (58-17B-13). The increase is based on the CPI medical-care component or a fixed 5–10% (ARSD 20:06:21:06).

Selling rules

• The shopper's guide is delivered before an application is presented (ARSD 20:06:21:54).
• The outline of coverage is delivered at application (58-17B-10).
• The Long-Term Care Insurance Personal Worksheet is used at or before application (ARSD 20:06:21:53.02).
• Twisting, high-pressure tactics, cold lead advertising and misrepresentation are prohibited (ARSD 20:06:21:32).

Partnership policies

• For Medicaid eligibility, countable assets are reduced dollar for dollar by the benefits paid under an approved partnership policy (SDCL 28-6-37).
• Inflation protection depends on the buyer's age (ARSD 20:06:21:76):

Common exam traps

• Medigap free look: 30 days. LTC free look: 30 days. Compare the 10-day free look for individual health policies.
• Medigap open enrollment includes under-65 disabled beneficiaries in South Dakota.
• Preexisting-condition limits for both Medigap and LTC are 6 months.
• The LTC shopper's guide comes before the application. The outline comes at application.
• Medigap commissions: year one is capped at 200% of year two.