South Carolina statute creates a body called the South Carolina Small Employer Insurer Reinsurance Program, and the single most useful thing to know about it is that an employer never touches it. It cannot sell a plan. It has no members an employer can become. The choice it turns on belongs to the insurer, and it is reported to the Director rather than negotiated with a buyer. If someone describes it as a program your business might use, the statute says otherwise in three separate places.
What the statute creates
S.C. Code § 38-71-1410(A) provides: “There is hereby created a nonprofit entity to be known as the South Carolina Small Employer Insurer Reinsurance Program, which shall become operational on July 1, 1995.”
The definitions article refers to it simply as “the program” at § 38-71-1330(15). Its history line runs 1994 Act No. 339, § 11; 1997 Act No. 5, § 15; and 2006 Act No. 332, § 7, effective June 1, 2006.
What it is, functionally, is a risk-sharing pool that sits behind carriers. A small employer insurer that has elected reinsuring-insurer status may cede small-employer risk into it under rules the program sets, and the program pays the reinsured share of claims above a retention the board establishes. Those retention, coinsurance, and maximum-limit levels are numbers the board may adjust annually with the Director’s approval, and they are not published here.
It is denied the power to sell anything
The clearest sentence in the section is the exception clause in its powers grant. Under § 38-71-1410(G), the program has the general powers and authority granted under South Carolina law to insurance companies and health maintenance organizations licensed to transact business, “except the power to issue health insurance plans directly to either groups or individuals.”
That is not an eligibility restriction an employer might argue around. It is a limit on the entity’s capacity. The program cannot issue a plan to a group; it therefore cannot issue one to your group. Its enumerated powers run to defining the plans for which reinsurance will be provided, issuing reinsurance policies, setting the rules for reinsuring risks, assessing reinsuring insurers, and borrowing money — carrier-side activity from beginning to end.
The election belongs to the insurer
The second provision that places the program outside the employer relationship is the election itself. Section 38-71-1380(A)(1) requires that within sixty days after the plan of operation is approved by the Director, each small employer insurer notify the Director of its intention to operate as a risk-assuming insurer or a reinsuring insurer. The notice runs from the insurer to the regulator. No employer signs it, consents to it, or is told of it as a term of coverage.
The two paths are defined separately. A small employer insurer may elect to become a risk-assuming insurer on application to and approval by the Director under § 38-71-1390, and the statute provides that such an application is approved unless the Director disapproves it within sixty days, with a right to a public hearing within sixty days after a disapproval. The Director’s review considers the insurer’s financial condition and that of any parent or guaranteeing corporation, its history of assuming and managing risk, its ability to manage small-employer risk without the program’s reinsurance, and its commitment to fairly market to all small employers. Alternatively, under § 38-71-1400, an insurer may elect to become a reinsuring insurer, and each reinsuring insurer must conduct business with its members and subscribers, and administer claims for coverage reinsured by the program, in the same manner as it administers claims it writes without reinsurance.
The election is durable. Section 38-71-1380(A)(2) makes the decision binding for a five-year period, except that the initial decision is binding for two years, and permits the Director to allow a modification at any time for good cause shown. An insurer that moves from reinsuring to risk-assuming status may not continue to reinsure any plan with the program, and pays a prorated assessment on business issued while it was a reinsuring insurer.
Cession does not change what the employer is charged
The third provision is the one that closes the question for a buyer. Section 38-71-1410(J) provides that if a health insurance plan for a small employer is entirely or partially reinsured with the program, the premium charged to the small employer for any rating period for the coverage issued must meet the premium rate requirements set forth in § 38-71-910 and following.
That is the ordinary small-group rating subarticle — the index-rate and class-of-business machinery at §§ 38-71-920 and 38-71-940. Whether or not a group has been ceded, the same rating restrictions apply to the employer’s premium in the same way. There is no reinsured rate and no unreinsured rate from the employer’s side of the transaction.
Who runs it, and who pays for it
Governance is statutory. Under § 38-71-1410(B), the program operates subject to the supervision and control of a board consisting of eight members appointed by the Director, plus the Director or a designated representative serving ex officio. The Director is directed to include representatives of small employers and small employer insurers, and at least five members must be representatives of insurers, one of whom must be a licensed independent insurance agent representing multiple health and accident insurance carriers. Board members serve staggered initial terms, with subsequent members serving three-year terms, and a vacancy is filled by the Director.
The board submits a plan of operation to the Director within 180 days of appointment under § 38-71-1410(D); if it does not, § 38-71-1410(E) directs the Director, after notice and hearing, to adopt and promulgate a temporary plan of operation. A separate advisory committee under § 38-71-1420 recommends the basic and standard health insurance plans, and § 38-71-1430 contemplates an annual public report.
Funding is where the employer’s absence is most visible. Under § 38-71-1410(K), the board determines and reports the program’s net loss for the previous calendar year before March first, and any net loss is recouped by assessments of reinsuring insurers, apportioned on each insurer’s share of small-employer premiums earned. Employers are not assessed. The section also permits a deferment where payment would place a reinsuring insurer in a financially impaired condition, and § 38-71-1410(N) exempts the program from taxes.
What is not established here
The statute is on the books, and the South Carolina Code as published is current through the 2025 Session of the General Assembly. That is the limit of what this page affirms.
Not affirmed: whether the board is presently seated, whether a plan of operation is currently in force, and whether any insurer is ceding risk to the program today. A search of the Department of Insurance site returned rate-filing material rather than any program report of the kind § 38-71-1430 describes, and no annual report was located. Saying so is more useful than an assumption in either direction, because both readings are available to anyone reading the statute alone — the text is unrepealed, and a body the statute made operational in 1995 may or may not be active today.
One place the program’s operational status is written into another duty is worth noting. Section 38-71-1360(A)(5) makes the small-employer availability duty in subsection (A) effective 180 days after the Director approves the basic and standard plans, provided that if the reinsurance program is not yet operative on that date, the paragraph takes effect on the date the program begins operation.
The South Carolina program an employer can actually join
If the reinsurance program is the wrong door, there is a right one, and it is a genuinely different mechanism. S.C. Code § 38-71-1345, added by 2008 Act No. 180 effective February 19, 2008, authorizes a health group cooperative — defined at § 38-71-1330(9) as a private purchasing cooperative composed of small employers formed under the article.
The statutory shape, from § 38-71-1345(A) and (B):
- A cooperative may be formed only for the purpose of obtaining insurance.
- It must meet statutory minimum size requirements stated in terms of participating employers or eligible employees.
- It must establish membership requirements, and may not exclude a small employer that otherwise meets them on the basis of claim experience or a health status-related factor as defined in § 38-71-840.
- It must let eligible employees and their dependents choose among the plans offered through the cooperative, and must offer coverage under all of those plans to all eligible employees of member employers and their dependents.
- It does not assume risk or form self-insurance plans among its members unless it complies with Chapter 41 of Title 38.
- It must be organized as a nonprofit corporation under the South Carolina Nonprofit Corporations Act, and must register with the Department before offering any plan and annually thereafter.
Two further provisions shape what an employer is agreeing to. First, the commitment: participation is voluntary, but § 38-71-1345(A)(2) requires an employer electing to participate to commit to purchasing coverage through the cooperative for five years, unless allowed to terminate because of a financial hardship affecting the employer under rules adopted by the Director. That is the fact to weigh before signing, and it is the reason a cooperative is not a year-to-year shopping decision.
Second, rating follows structure. Under § 38-71-1345(A)(7), a plan offered through a cooperative that rates each member small employer separately is subject to the laws governing small employer health insurance, while a plan that rates the entire group as a whole charges each insured person a community rate within the cooperative, adjusted for case characteristics as permitted by § 38-71-940 and for plan selection, and is subject to the laws governing group accident and health insurance. Group size for cooperatives is addressed at § 38-71-1340(C), which sets the applicable size at two to fifty and permits a cooperative to attempt to obtain coverage for groups with fewer than two eligible employees, subject to the medical underwriting requirements and policies of the small employer insurer.
One more boundary: under § 38-71-1345(C), a small employer insurer may not form or be a member of a health group cooperative, though an insurer may associate with a sponsoring entity such as a business association or chamber of commerce to help that entity form one.
Why the distinction is worth holding onto
Both mechanisms live in the same article of the same chapter, and both have names that sound like something a small business could sign up for. Only one of them is. The reinsurance program is a relationship between insurers, their regulator, and each other; the statute denies it the power to issue a plan, gives the election to the insurer, and holds the employer’s premium to the ordinary rating rules regardless. The cooperative is the one with a door, a registration, a membership standard, and a commitment term.
An employer who knows which is which will not spend a meeting asking to be put into a program that is legally incapable of taking them.
The bottom line
The Small Employer Insurer Reinsurance Program is a mechanism between insurers and the Department, and statute denies it the power to issue plans to groups or individuals at all. The South Carolina program an employer can actually join is the health group cooperative — and it carries a five-year purchasing commitment.
Frequently asked questions
Can a South Carolina small employer join the Small Employer Insurer Reinsurance Program?
No, and the statute says so in structural terms rather than as an eligibility rule. S.C. Code § 38-71-1410(G) grants the program the general powers of an insurer or health maintenance organization licensed in the state except the power to issue health insurance plans directly to either groups or individuals. There is no application, no membership, and no employer election. The decision the statute does create, at § 38-71-1380(A)(1), belongs to the insurer, which notifies the Director whether it intends to operate as a risk-assuming insurer or a reinsuring insurer. An employer is not a party to that notification.
If our group were reinsured through the program, would our premium be different?
The statute addresses this directly. S.C. Code § 38-71-1410(J) provides that if a health insurance plan for a small employer is entirely or partially reinsured with the program, the premium charged to the small employer for any rating period must meet the premium rate requirements set out in § 38-71-910 and following. In other words, the ordinary South Carolina small-group rating rules govern the employer’s premium the same way whether or not the group has been ceded. Cession is a transaction between the insurer and the program.
Is the program operating today?
That was not established. S.C. Code § 38-71-1410 is on the books and the South Carolina Code is current through the 2025 Session of the General Assembly. What is not affirmed here is whether the board is presently seated, whether a plan of operation is in force, and whether any insurer currently cedes risk to the program. A search of the Department of Insurance site for the program returned no annual report of the kind § 38-71-1430 contemplates. This page reports the statute and declines to assert its present operating status in either direction.
What is the difference between a risk-assuming insurer and a reinsuring insurer?
It is the insurer’s election between carrying small-employer risk itself and ceding part of it. Under S.C. Code § 38-71-1390, a small employer insurer may elect to become a risk-assuming insurer on application to and approval by the Director, whose review considers the insurer’s financial condition, its history of assuming and managing risk, its ability to manage small-employer risk without the program’s protection, and its commitment to fairly market to all small employers. Under § 38-71-1400, an insurer may instead elect to become a reinsuring insurer and operate under that section and § 38-71-1410. Section 38-71-1380(A)(2) makes the decision binding for a five-year period, except that the initial decision is binding for two years, with the Director able to permit a modification for good cause shown.
Is there a South Carolina program a small employer can join?
Yes — the health group cooperative at S.C. Code § 38-71-1345, which is a different instrument entirely. A cooperative of small employers may be formed only for the purpose of obtaining insurance, must be organized as a nonprofit corporation and registered with the Department, must meet statutory minimum size requirements stated in terms of participating employers or eligible employees, and may not exclude an otherwise qualifying small employer on the basis of claim experience or a health status-related factor. Participation is voluntary, but § 38-71-1345(A)(2) requires an employer that elects to participate to commit to purchasing coverage through the cooperative for five years, unless released because of a financial hardship under rules adopted by the Director.
About the author
Nate Jones, CPCU, is the founder of Wexford Insurance and Wexford Health Insurance, an independent agency placing small-business group benefits in 9 states. Wexford Health Insurance separates the South Carolina statutes that regulate an employer’s insurer from the ones an employer can actually act on, including the Small Employer Insurer Reinsurance Program. Start with the Wexford Health Insurance quote form.