20:06:58:01.  Definitions. Unless otherwise provided, terms used in this chapter mean:

          (1)  "Aggregate lifetime dollar limit," a dollar limitation on the total amount of specified benefits that may be paid under a group health plan, or health insurance coverage offered in connection with such a plan, for any coverage unit;

          (2)  "Annual dollar limit," a dollar limitation on the total amount of specified benefits that may be paid in a 12-month period under a group health plan, or health insurance coverage offered in connection with such a plan, for any coverage unit;

          (3)  "Cumulative financial requirements," financial requirements that determine whether or to what extent benefits are provided based on accumulated amounts and include deductibles and out-of-pocket maximums. The term does not include aggregate lifetime or annual dollar limits because these two terms are excluded from the meaning of financial requirements;

          (4)  "Cumulative quantitative treatment limitations," treatment limitations that determine whether or to what extent benefits are provided based on accumulated amounts, such as annual or lifetime day or visit limits;

          (5)  "Financial requirements," include deductibles, co-payments, coinsurance, or out-of-pocket maximums. The term does not include aggregate lifetime or annual dollar limits;

          (6)  "Medical or surgical benefits," benefits with respect to items or services for medical conditions or surgical procedures, as defined under the terms of the plan, or health insurance coverage and in accordance with applicable federal and state law, but does not include mental health or substance use disorder benefits. Any condition defined by the plan as being or as not being a medical or surgical condition must be defined to be consistent with generally recognized independent standards of current medical practice;

          (7)  "Mental health benefits," benefits with respect to services for mental health conditions, as defined under the terms of the plan and in accordance with applicable federal and state law. Any condition defined by the plan as being or as not being a mental health condition must be defined to be consistent with generally recognized independent standards of current medical practice;

          (8)  "Substance use disorder benefits," benefits with respect to items or services for substance use disorders, as defined under the terms of the plan and in accordance with applicable federal and state law. Any disorder defined by the plan as being or as not being a substance use disorder must be defined to be consistent with generally recognized independent standards of current medical practice;

          (9)  "Treatment limitations," include limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically, such as 50 outpatient visits per year, and nonquantitative treatment limitations, which otherwise limit the scope or duration for treatment under a plan. A permanent exclusion of all benefits for a particular condition or disorder is not a treatment limitation for purposes of this definition.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79.

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-79(1), 58-18-79(15), 58-18-80.

          Cross-Reference: Illustrative list of nonquantitative limitations, § 20:06:58:24.

          20:06:58:02.  Parity requirements with respect to aggregate lifetime and annual dollar limits. A group health plan, or heath insurance coverage offered by an issuer in connection with a group health plan, that provides medical or surgical benefits and mental health or substance use disorder benefits must comply with § 20:06:58:03, 20:06:58:04, or 20:06:58:06. However, §§ 20:06:58:01 to 20:06:58:45, inclusive, do not apply if a plan, or health insurance coverage, satisfies the requirements of § 20:06:58:32 or § 20:06:58:34, relative to exemptions for small employers and for increased costs.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:03.  Plan with no limit or limits on less than one-third of all medical or surgical benefits. If a plan, or health insurance coverage, does not include an aggregate lifetime or annual dollar limit on any medical or surgical benefits or includes an aggregate lifetime or annual dollar limit that applies to less than one-third of all medical or surgical benefits, it may not impose an aggregate lifetime or annual dollar limit, respectively, on mental health or substance use disorder benefits.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:04.  Plan with a limit on at least two-thirds of all medical or surgical benefits. If a plan, or health insurance coverage, includes an aggregate lifetime or annual dollar limit on at least two-thirds of all medical or surgical benefits, it must either:

          (1)  Apply the aggregate lifetime or annual dollar limit both to the medical or surgical benefits to which the limit would otherwise apply and to mental health or substance use disorder benefits in a manner that does not distinguish between the medical or surgical benefits and mental health or substance use disorder benefits; or

          (2)  Not include an aggregate lifetime or annual dollar limit on mental health or substance use disorder benefits that is less than the aggregate lifetime or annual dollar limit, respectively, on medical or surgical benefits;

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          Cross-Reference: No separate cumulative financial requirements or cumulative quantitative treatment limitations, § 20:06:58:22.

          20:06:58:05.  Determining one-third and two-thirds of all medical or surgical benefits. For purposes of §§ 20:06:58:01 to 20:06:58:45, inclusive, the determination of whether the portion of medical or surgical benefits subject to an aggregate lifetime or annual dollar limit represents one-third or two-thirds of all medical or surgical benefits, is based on the dollar amount of all plan payments for medical or surgical benefits expected to be paid under the plan for the plan year, or for the portion of the plan year after a change in plan benefits that affects the applicability of the aggregate lifetime or annual dollar limits. Any reasonable method may be used to determine whether the dollar amount expected to be paid under the plan will constitute one-third or two-thirds of the dollar amount of all plan payments for medical or surgical benefits.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:06.  Plan not described in sections 20:06:58:03 or 20:06:58:04 of this chapter. A group health plan, or health insurance coverage, that is not described in § 20:06:58:03 or 20:06:58:04 with respect to aggregate lifetime or annual dollar limits on medical or surgical benefits must either:

          (1)  Impose no aggregate lifetime or annual dollar limit, as appropriate, on mental health or substance use disorder benefits; or

          (2)  Impose an aggregate lifetime or annual dollar limit on mental health or substance use disorder benefits that is no less than an average limit calculated for medical or surgical benefits in the following manner. The average limit is calculated by taking into account the weighted average of the aggregate lifetime or annual dollar limits, as appropriate, that are applicable to the categories of medical or surgical benefits. Limits based on delivery systems, such as inpatient, outpatient treatment or normal treatment of common, low-cost conditions such as treatment of normal births, do not constitute categories for purposes of subdivision 20:06:58:06(2). In addition, for purposes of determining weighted averages, any benefits that are not within a category that is subject to a separately-designated dollar limit under the plan are taken into account as a single separate category by using an estimate of the upper limit on the dollar amount that a plan may reasonably expect to incur with respect to such benefits, taking into account any other applicable restrictions under the plan.

          For purposes of this section, the weighting applicable to any category of medical or surgical benefits is determined in the manner set forth in § 20:06:58:05 for determining one-third or two-thirds of all medical or surgical benefits.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:07.  Parity requirements with respect to financial requirements and treatment limitations -- Clarification of classification of benefits. For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, when referring to a classification of benefits, the term "classification" means a classification as described in §§ 20:06:58:12 and 20:06:58:13.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(1), 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:08.  Parity requirements with respect to financial requirements and treatment limitations -- Clarification of type of financial requirement or treatment limitation. For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, when referring to a type of financial requirement or treatment limitation, the type means its nature. Types of financial requirements include deductibles, co-payments, coinsurance, and out-of-pocket maximums. Types of quantitative treatment limitations include annual, episode, and lifetime day and visit limits.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(1), 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          Cross-Reference: Illustrative list of nonquantitative treatment limitations, § 20:06:58:24.

          20:06:58:09.  Parity requirements with respect to financial requirements and treatment limitations -- Clarification of level of a type of financial requirement or treatment limitation. For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, when referring to a level of a type of financial requirement or treatment limitation, level is the magnitude of the type of financial requirement of treatment limitation. For example, different levels of coinsurance include 20 percent and 30 percent; different levels of a co-payment include $15 and $20; different levels of a deductible include $250 and $500; and different levels of an episode limit include 21 inpatient days per episode and 30 inpatient days per episode.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79.

          Law Implemented: SDCL 58-17-87, 58-18-79(1), 58-18-79(15), 58-18-80.

          20:06:58:10.  Parity requirements with respect to financial requirements and treatment limitations -- Clarification of coverage unit. For purposes of §§ 20:06:58:01 to 20:06:58:45, inclusive, a coverage unit means the way in which a plan, or health insurance coverage, groups individuals for purposes of determining benefits, premiums, or contributions. For example, different coverage units include self-only, family, and employee-plus-spouse.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79.

          Law Implemented: SDCL 58-17-87, 58-18-79(1), 58-18-79(15), 58-18-80.

          20:06:58:11.  General parity requirement. A group health plan, or health insurance coverage offered by an issuer in connection with a group health plan, that provides both medical or surgical benefits and mental health or substance use disorder benefits may not apply any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification this is more restrictive than the predominant financial requirement or treatment limitation of that type applied to substantially all, medical or surgical benefits, in the same classification. Whether a financial requirement or treatment limitation is a predominant financial requirement or treatment limitation that applies to substantially all medical surgical benefits in a classification is determined separately for each type of financial requirement or treatment limitation. The application of the rules found in §§ 20:06:58:11 to 20:06:58:13, inclusive, to financial requirements and quantitative treatment limitation is addressed in §§ 20:06:58:14 to 20:06:58:22, inclusive; the application of the rules of §§ 20:06:58:11 to 20:06:58:13, inclusive, to nonquantitative treatment limitations is addressed in §§ 20:06:58:24 and 20:06:58:25.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:12.  Classifications of benefits used for applying rules. If a plan, or health insurance coverage, provides mental health or substance use disorder benefits in any classification of benefits described in §§ 20:06:58:12 and 20:06:58:13, mental health or substance use disorder benefits must be provided in every classification in which medical or surgical benefits are provided. In determining the classification in which a particular benefit belongs, a plan, or health insurance issuer, must apply the same standards to medical or surgical benefits and to mental health or substance use disorder benefits. To the extent that a plan, or health insurance coverage, provides benefits in a classification and imposes any separate financial requirement or treatment limitation, or separate level of a financial requirement or treatment limitation, for benefits in the classification, the rules of §§ 20:06:58:07 to 20:06:58:25, inclusive, apply separately with respect to that classification for all financial requirement or treatment limitations.

          The following classifications of benefits are the only classifications used in applying the rules of §§ 20:06:58:07 to 20:06:58:25, inclusive:

          (1)  "Inpatient, in-network," benefits furnished on an inpatient basis and within a network of providers established or recognized under a plan or health insurance coverage;

          (2)  "Inpatient, out-of-network," benefits furnished on an inpatient basis and outside any network of providers established or recognized under a plan or health insurance coverage. This classification includes inpatient benefits under a plan, or health insurance coverage, that has no network or providers;

          (3)  "Outpatient, in-network," benefits furnished on an outpatient basis and within a network of providers established or recognized under a plan or health insurance coverage;

          (4)  "Outpatient, out-of-network," benefits furnished on an outpatient basis and outside any network of providers established or recognized under a plan or health insurance coverage. This classification includes outpatient benefits under a plan, or health insurance coverage, that has no network of providers;

          (5)  "Emergency care," benefits for emergency care;

          (6)  "Prescription drugs," benefits for prescription drugs.

          If a plan, or health insurance coverage, provides benefits only to the extent required under the PHS Act, 29 CFR 2713 (December 3, 2014), this section is not intended to require the plan, or health insurance coverage, to provide additional mental health or substance use disorder benefits in any classification.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          Cross-Reference: Special rule for multi-tiered prescription drug benefits, § 20:06:58:19.

          20:06:58:13.  Application to out-of-network providers. A plan, or health insurance coverage, that provides mental health or substance use disorder benefits in any classification of benefits must provide mental health or substance use disorder benefits in every classification in which medical or surgical benefits are provided, including out-of-network classifications.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:14.  Financial requirements and quantitative treatment limitations -- Determining substantially all. For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, a type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical or surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical or surgical benefits in that classification. Benefits expressed as subject to a zero level of a type of financial requirement are treated as benefits not subject to that type of financial requirement, and benefits expressed as subject to a quantitative treatment limitation that is unlimited are treated as benefits not subject to that type of quantitative treatment limitation. If a type of financial requirement or quantitative treatment limitation does not apply to at least two-thirds of all medical or surgical benefits in a classification, then that type cannot be applied to mental health or substance use disorder benefits in that classification.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:15.  Financial requirements and quantitative treatment limitations -- Determining predominant. If a type of financial requirement or quantitative treatment limitation applies to at least two-thirds of all medical or surgical benefits in a classification as determined under § 20:06:58:17, the level of the financial requirement or quantitative treatment limitation that is considered the predominant level of that type in a classification of benefits is the level that applies to more than one-half of medical or surgical benefits in that classification subject to the financial requirement or quantitative treatment limitation.

          If, with respect to a type of financial requirement or quantitative treatment limitation that applies to at least two-thirds of all medical or surgical benefits in a classification, there is no single level that applies to more than one-half of medical or surgical benefits in the classification subject to the financial requirement or quantitative treatment limitation, the plan, or health insurance issuer, may combine levels until the combination of levels applies to more than one-half of medical or surgical benefits subject to the financial requirement or quantitative treatment limitation in the classification. The least restrictive level within the combination is considered the predominate level of that type in the classification. A plan may combine the most restrictive levels first, with each less restrictive level added to the combination until the combination applies to more than one-half of the benefits subject to the financial requirement or treatment limitation.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:16.  Financial requirements and quantitative treatment limitations -- Determining portion based on plan payments. For purposes of §§ 20:06:58:07 to 20:06:58:25, inclusive, the determination of the portion of medical or surgical benefits in a classification of benefits subject to a financial requirement or quantitative treatment limitation, or subject to any level of a financial requirement or quantitative treatment limitation, is based on the dollar amount of all plan payments for medical or surgical benefits in the classification expected to be paid under the plan for the plan year or for the portion of the plan year after a change in plan benefits that affects the applicability of the financial requirement or quantitative treatment limitation.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:17.  Financial requirements and quantitative treatment limitations -- Determining clarifications for certain threshold requirements and dollar amount of plan payments. For any deductible, the dollar amount of plan payments includes all plan payments with respect to claims that would be subject to the deductible if it had not been satisfied. For any out-of-pocket maximum, the dollar amount of plan payments includes all plan payments associated with out-of-pocket payments that are taken into account towards the out-of-pocket maximum as well as all plan payments associated with out-of-pocket payments that would have been made towards the out-of-pocket maximum if it had not been satisfied.

          Any reasonable method may be used to determine the dollar amount expected to be paid under a plan for medical or surgical benefits subject to a financial requirement or quantitative treatment limitation or subject to any level of a financial requirement or quantitative treatment limitation.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:18.  Application to different coverage units. If a plan, or health insurance coverage, applies different levels of a financial requirement or quantitative treatment limitation to different coverage units in a classification of medical or surgical benefits, the predominant level that applies to substantially all medical or surgical benefits in the classification is determined separately for each coverage unit.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:19.  Special rule for multi-tiered prescription drug benefits. If a plan, or health insurance coverage, applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with § 20:06:58:23, relating to requirements for nonquantitative treatment limitations, and without regard to whether a drug is generally prescribed with respect to medical or surgical benefits or with respect to mental health or substance use disorder benefits, the plan, or health insurance coverage, satisfies the parity requirements of §§ 20:06:58:07 to 20:06:58:25, inclusive, with respect to prescription drug benefits. Reasonable factors include cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:20.  Special rule for multiple network tiers. If a plan, or health insurance coverage, provides benefits through multiple tiers of in-network providers, such as an in-network tier of preferred providers with more generous cost-sharing to participants than a separate in-network tier of participating providers, the plan may divide its benefits furnished on an in-network basis into sub-classifications that reflect network tiers, if the tiering is based on reasonable factors determined in accordance with § 20:06:58:23 and without regard to whether a provider provides services with respect to medical or surgical benefits or mental health or substance use disorder benefits. After the sub-classifications are established, the plan or issuer may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical or surgical benefits in the sub-classification using the methodology set forth in §§ 20:06:58:14 to 20:06:58:17, inclusive.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:21.  Special rule for sub-classifications permitted for office visits, separate from other outpatient services. For purposes of applying the financial requirement and treatment limitation rules of §§ 20:06:58:07 to 20:06:58:25, inclusive, a plan or issuer may divide its benefits furnished on an outpatient basis into the two sub-classifications described in this section. After the sub-classifications are established, the plan or issuer may not impose any financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or quantitative treatment limitation that applies to substantially all medical or surgical benefits in the sub-classification using the methodology set forth in paragraphs §§ 20:06:58:14 to 20:06:58:17, inclusive. Sub-classifications other than these special rules, such as separate sub-classifications for generalists and specialists, are not permitted. The two sub-classifications permitted under this section are:

          (1)  Office visits, such as physician visits; and

          (2)  All other outpatient items and services, such as outpatient surgery, facility charges for day treatment centers, laboratory charges, or other medical items.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:22.  No separate cumulative financial requirements or cumulative quantitative treatment limitations. A group health plan, or health insurance coverage, offered in connection with a group health plan, may not apply any cumulative financial requirement or cumulative quantitative treatment limitation for mental health or substance use disorder benefits in a classification that accumulates separately from any established for medical or surgical benefits in the same classification.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:23.  Nonquantitative treatment limitations. A group health plan, or health insurance coverage, may not impose a nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification unless, under the terms of the plan, or health insurance coverage, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical or surgical benefits in the classification.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:24.  Illustrative list of nonquantitative treatment limitations. Nonquantitative treatment limitations include:

          (1)  Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;

          (2)  Formulary design for prescription drugs;

          (3)  Standards for provider admission to participate in a network, including reimbursement rates;

          (4)  Plan methods for determining usual, customary, and reasonable charges;

          (5)  Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective, also known as fail-first policies or step therapy protocols;

          (6)  Exclusions based on failure to complete a course of treatment;

          (7)  For plans with multiple network tiers, such as preferred providers and participating providers, network tier design; and

          (8)  Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:25.  Exemptions. The rules in §§ 20:06:58:07 to 20:06:58:25, inclusive, do not apply if a group health plan, or health insurance coverage, satisfies the requirements of §§ 20:06:58:32 and 20:06:58:33 or §§ 20:06:58:34 to 20:06:58:43, inclusive.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:26.  Availability of plan information -- Criteria for medical necessity determinations. The criteria for medical necessity determinations made under a group health plan with respect to mental health or substance use disorder benefits, or health insurance coverage offered in connection with the plan with respect to such benefits, must be made available by the plan administrator, or health insurance issuer offering such coverage, to any current or potential participant, beneficiary, or contracting provider upon request.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:27.  Availability of plan information -- Reasons for denial. The reason for any denial under a group health plan, or health insurance coverage offered in connection with such plan, of reimbursement or payment for services with respect to mental health or substance use disorder benefits in the case of any participant or beneficiary must be made available by the plan administrator, or the health insurance issuer offering such coverage, to the participant or beneficiary, in accordance with this section.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:28.  Applicability and effective dates -- Group health plans. The requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, apply to a group health plan offering, medical or surgical benefits, and mental health or substance use disorder benefits. If, under an arrangement or arrangements to provide health care benefits by an employer or employee organization including for this purpose a joint board of trustees of a multiemployer trust affiliated with one or more multiemployer plans, any participant or beneficiary can simultaneously receive coverage for medical or surgical benefits and coverage for mental health or substance use disorder benefits, then the requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, apply separately with respect to each combination of medical or surgical benefits and of mental health or substance use disorder benefits, that any participant or beneficiary can simultaneously receive from that employer's or employee organization's arrangement or arrangements to provide medical care benefits, and all such combinations are considered for purposes of §§ 20:06:58:01 to 20:06:58:45, inclusive, to be a single group health plan.

          This chapter applies to group health plans in accordance with 45 C.F.R. § 146.136(i)(1) (December 3, 2014).

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-18-79, 58-18-80.

          20:06:58:29.  Applicability and effective dates -- Health insurance issuers. The requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, apply to a health insurance issuer offering health insurance coverage for mental health or substance use disorder benefits in connection with a group health plan subject to § 20:06:58:28. This chapter applies to health insurance issuers offering group health insurance coverage in accordance with 45 C.F.R. § 146.136(i)(1) (December 3, 2014).

          The requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, apply to health insurance coverage offered by health insurance issuer in the individual market in the same manner and to the same extent as such requirements apply to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the large group market. This chapter applies to health insurance issuers in the individual market in accordance with 45 C.F.R. § 147.160 (December 3, 2014). This chapter applies to non-grandfathered and grandfathered health plans.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:30.  Scope. Sections 20:06:58:01 to 20:06:58:45, inclusive, do not:

          (1)  Require a group health plan, or health insurance issuer offering coverage in connection with a group health plan, to provide any mental health benefits or substance use disorder benefits, and the provision of benefits by a plan, or health insurance coverage, for one or more mental health conditions or substance use disorders does not require the plan, or health insurance coverage under §§ 20:06:58:01 to 20:06:58:45, inclusive, to provide benefits for any other mental health condition or substance use disorder;

          (2)  Require a group health plan, or health insurance issuer offering coverage in connection with a group health plan, that provides coverage for mental health or substance use disorder benefits only to the extent required under 29 C.F.R. § 2713 (December 3, 2014) to provide additional mental health or substance use disorder benefits in any classification in accordance with §§ 20:06:58:01 to 20:06:58:45, inclusive; or

          (3)  Affect the terms and conditions relating to the amount, duration, or scope of mental health or substance use disorder benefits under the plan, or health insurance coverage, except as specifically provided in §§ 20:06:58:02 to 20:06:58:25, inclusive.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:31.  Coordination with EHB requirements. Nothing in §§ 20:06:58:32 to 20:06:58:43, inclusive, changes the requirements of 45 CFR 147.150 and 45 CFR 156.115 (December 3, 2014), providing that a health insurance issuer offering non-grandfathered health insurance coverage in the individual or small group market providing mental health and substance use disorder services, including behavioral health treatment services, as part of essential health benefits required under 45 CFR 156.110(a)(5) and 156.115(a) (December  3, 2014), must comply with the provisions of 45 CFR 146.136 (December 3, 2014) to satisfy the requirement to provide essential health benefits.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:32.  Small employer exemption. The requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, do not apply to a group health plan, or health insurance issuer offering coverage in connection with a group health plan, for a plan year of a small employer. For purposes of §§ 20:06:58:32 and 20:06:58:33, the term, small employer, means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed at least a single individual, but not more than 50 employees on business days during the preceding calendar year and who employs at least a single individual on the first day of the plan year.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:33.  Determining employer size. For purposes of § 20:06:58:32:

          (1)  All persons treated as a single employer under subsections (b), (c), (m), and (o) of the Internal Revenue Code of 1986, codified at 26 U.S.C. 414, are treated as one employer;

          (2)  If an employer was not in existence throughout the preceding calendar year, whether it is a small employer is determined based on the average number of employees the employer reasonably expects to employ on business days during the current calendar year; and

          (3)  Any reference to an employer for purposes of the small employer exemption includes a reference to a predecessor of the employer.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:34.  Increased cost exemption. If the application of §§ 20:06:58:01 to 20:06:58:45, inclusive, to a group health plan, or health insurance coverage offered in connection with such plans, results in an increase for the plan year involved of the actual total cost of coverage with respect to medical or surgical benefits and mental health and substance use disorder benefits as determined and certified under § 20:06:58:36 by an amount that exceeds the applicable percentage described in § 20:06:58:36 of the actual total plan costs, the provisions of this section shall not apply to such plan, or coverage, during the following plan year, and such exemption shall apply to the plan, or coverage, for one plan year. An employer or issuer may elect to continue to provide mental health and substance use disorder benefits in compliance with this section with respect to the plan or coverage involved regardless of any increase in total costs.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:35.  Applicable percentage. With respect to a plan or coverage, the applicable percentage described in §§ 20:06:58:34 to 20:06:58:43, inclusive, is:

          (1)  Two percent in the case of the first plan year in which this section is applied to the plan or coverage; and

          (2)  One percent in the case of each subsequent plan year.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:36.  Determinations by actuaries. Determinations as to increases in actual costs under a plan or coverage that are attributable to implementation of the requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, shall be made and certified by a qualified and licensed actuary who is a member in good standing of the American Academy of Actuaries. All such determinations must be based on the formula specified in paragraph § 20:06:58:37 and shall be in a written report prepared by the actuary.

          The group health plan or health insurance issuer shall maintain the written report described in this section, along with all supporting documentation relied upon by the actuary, for a period of six years following the notification made under § 20:06:58:39.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:37.  Formula. The formula to be used to make the determination under § 20:06:58:36 is expressed mathematically as [(E₁ -- E₀)/T₀] -- D>k. The components mean:

          (1)  E₁ is the actual total cost of coverage with respect to mental health and substance use disorder benefits for the base period, including claims paid by the plan or issuer with respect to mental health and substance use disorder benefits and administrative costs, amortized over time, attributable to providing these benefits consistent with the requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive;

          (2)  E₀ is the actual total cost of coverage with respect to mental health and substance use disorder benefits for the length of time immediately before the base period and that is equal in length to the base period, including claims paid by the plan or issuer with respect to mental health and substance use disorder benefits and administrative costs, amortized over time, attributable to providing these benefits;

          (3)  T₀ is the actual total cost of coverage with respect to all benefits during the base period;

          (4)  k is the applicable percentage of increased cost specified in paragraph § 20:06:58:35 that is expressed as a fraction for purposes of this formula; and

          (5)  D is the average change in spending that is calculated by applying the formula (E₁ -- E₀)/T₀ to mental health and substance use disorder spending in each of the five years and then calculating the average change in spending.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:38.  Six month determination. If a group health plan or health insurance issuer seeks an exemption under §§ 20:06:58:34 to 20:06:58:43, inclusive, determinations under § 20:06:58:36 may only be made after such plan or coverage has complied with §§ 20:06:58:01 to 20:06:58:45, inclusive, for at least the first six months of the plan year involved.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:39.  Notification. A group health plan or health insurance issuer that, based on the certification described under § 20:06:58:36, qualifies for an exemption under §§ 20:06:58:34 to 20:06:58:43, inclusive, and elects to implement the exemption, must notify participants and beneficiaries covered under the plan, the director, and the appropriate state agencies of such election.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:40.  Participants and beneficiaries -- Content of notice. The notice to participants and beneficiaries required pursuant to § 20:06:58:39 must include the following information:

          (1)  A statement that the plan or issuer is exempt from the requirements of this section and a description of the basis for the exemption;

          (2)  The name and telephone number of the individual to contact for further information;

          (3)  The plan or issuer name and plan number (PN);

          (4)  The plan administrator's name, address, and telephone number;

          (5)  For single-employer plans, the plan sponsor's name, address, and telephone number, if different from subdivision 3 of this section, and the plan sponsor's employer identification number (EIN);

          (6)  The effective date of such exemption;

          (7)  A statement regarding the ability of participants and beneficiaries to contact the plan administrator or health insurance issuer to see how benefits may be affected as a result of the plan's or issuer's election of the exemption; and

          (8)  A statement regarding the availability, upon request and free of charge, of a summary of the information on which the exemption is based, as required under § 20:06:58:43.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:41.  Use of summary of material reductions in covered services or benefits. A plan or issuer may satisfy the requirements of § 20:06:58:40 by providing participants and beneficiaries, in accordance with § 20:06:58:42, with a summary of material reductions in covered services or benefits consistent with 29 CFR 2520.104b-3(d) (December 3, 2014) that also includes the information specified in § 20:06:58:40. However, in all cases, the exemption under §§ 20:06:58:34 to 20:06:58:43, inclusive, is not effective until 30 days after notice required pursuant to § 20:06:58:39 has been sent.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:42.  Delivery. The plan or issuer is required to provide the notice described in §§ 20:06:58:40 to 20:06:58:43, inclusive, to all participants and beneficiaries. The plan or issuer may furnish the notice by any method of delivery that satisfies the requirements of section 104(b)(1) of ERISA (29 U.S.C. 1024(b)(1)) (December 3, 2014) and its implementing regulations. If the notice is provided to the participant and any beneficiaries at the participant's last known address, then the requirements of §§ 20:06:58:40 to 20:06:58:43, inclusive, are satisfied with respect to the participant and all beneficiaries residing at that address. If a beneficiary's last known address is different from the participant's last known address, a separate notice is required to be provided to the beneficiary at the beneficiary's last known address.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:43.  Availability of documentation. The plan or issuer must make available to participants and beneficiaries, or their representatives, on request and at no charge, a summary of the information on which the exemption was based. For purposes of §§ 20:06:58:34 to 20:06:58:43, inclusive, an individual who is not a participant or beneficiary and who presents a notice described in §§ 20:06:58:40 to 20:06:58:43, inclusive, is considered to be a representative. A representative may request the summary of information by providing the plan a copy of the notice provided to the participant under §§ 20:06:58:40 to 20:06:58:43, inclusive, with any personally identifiable information redacted. The summary of information must include the incurred expenditures, the base period, the dollar amount of claims incurred during the base period that would have been denied under the terms of the plan or coverage absent amendments required to comply with §§ 20:06:58:02 to 20:06:58:25, inclusive, the administration costs related to those claims, and other administrative costs attributable to complying with the requirements of this section. In no event may the summary of information include any personally identifiable information.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:44.  Sale of nonparity health insurance coverage. A health insurance issuer may not sell a policy, certificate, or contract of insurance that fails to comply with §§ 20:06:58:02 to 20:06:58:25, inclusive, except to a plan for a year for which the plan is exempt from requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, because the plan meets requirements under §§ 20:06:58:32 and 20:06:58:33 or §§ 20:06:58:34 to 20:06:58:43, inclusive.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.

          20:06:58:45.  Special effective date for certain collective-bargained plans. For a group health plan maintained pursuant to one or more collective bargaining agreements ratified before October 3, 2008, the requirements of §§ 20:06:58:01 to 20:06:58:45, inclusive, do not apply to the plan, or health insurance coverage offered in connection with the plan, for plan years beginning before the date on which the last of the collective bargaining agreements terminates, determined without regard to any extension agreed to after October 3, 2008.

          Source: 41 SDR 93, effective December 3, 2014.

          General Authority: SDCL 58-17-87, 58-18-79, 58-18-79(15).

          Law Implemented: SDCL 58-17-87, 58-18-79, 58-18-80.