A self-funded multiple employer trust, as defined in section 3 of the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002, paragraph 40, that is sponsored by an association, may be authorized by the director if the multiple employer trust meets all of the following conditions:

(1) The multiple employer trust is administered by an authorized insurer or a licensed or registered third-party administrator;

(2) The multiple employer trust is sponsored and maintained by a bona fide association of employers eligible to procure coverage under §§ 58-18-3 and 58-18-4;

(3) The association sponsoring the multiple employer trust is established by employers in a homogenous trade, industry, line of business, or profession with commonality of interest. The association has a constitution or bylaws, and is organized under the laws of South Dakota;

(4) The association sponsoring the multiple employer trust has a substantial business purpose other than sponsorship of an employer welfare benefit plan;

(5) The association sponsoring the multiple employer trust is a nonprofit entity organized under applicable South Dakota law;

(6) The multiple employer trust’s board of trustees shall assess participating employers in an amount necessary to remedy deficiencies at any time the assets and stop loss insurance policies of the multiple employer trust are insufficient to:

(a) Pay claims made against the multiple employer trust;

(b) Discharge liabilities and obligations relating to health benefit plan claims; or

(c) Maintain adequate reserves and surpluses;

(7) The multiple employer trust:

(a) Meets the capital and surplus requirements of § 58-6-23;

(b) Meets the risk based capital requirements of § 58-4-48;

(c) Is subject to the hazardous financial condition requirements of §§ 58-4-39 to 58-4-42, inclusive;

(d) Invests its assets pursuant to the requirements of chapters 58-26 and 58-27;

(e) Is subject to chapter 58-3 on the same basis as insurers;

(f) Is subject to the insurers supervision, rehabilitation, and liquidation provisions of chapter 58-29B;

(g) Maintains a minimum loss ratio of eighty-five percent or be community rated; and

(h) Complies with all coverage mandates that are applicable to group health insurance under this title;

(8) Each sponsoring association is comprised of and controlled by employer members, consists of five hundred or more covered employees, and has been in existence for a period of three continuous years;

(9) Any solicitation or sales materials to prospective members discloses the provisions regarding fees and assessments for participation in the multiple employer trust; and

(10) The director, after consideration of the impact on the insurance-buying public, determines that the arrangement is in the best interests of the public.

Source: SL 2005, ch 272, § 2; SL 2014, ch 238, § 1; SL 2019, ch 212, § 6.