S.D. Codified Laws § 58-18B-20
A small employer carrier shall issue health benefit plans to any small employer that applies for a plan and agrees to make the required premium payments and to satisfy the other reasonable provisions of the health benefit plan not inconsistent with this chapter. If, on the first day of the plan year, a small employer plan has fewer than two participants who are current employees, the carrier is not required to issue a policy to the small employer. A small employer carrier may apply reasonable criteria in determining whether to accept a small employer into a particular class of business if:
The provisions of this section do not apply to a class of business into which the small employer carrier is no longer enrolling new small businesses. If the director determines that all carriers in the small employer market have met the two percent threshold, the threshold shall, upon order of the director, be expanded an additional two percent. The threshold shall be expanded in additional two percent increments if all small employer carriers meet the previous threshold. No small employer carrier is required to issue coverage to any small employer if the small employers who are at high-risk constitute two percent of that carrier's earned premium on an annual basis from small employer health benefit plans. The director may promulgate rules pursuant to chapter 1-26 to determine which policies may be used to determine the two percent threshold, the procedures involved, and the applicable time frames. In making that determination, the director shall develop a method designed to limit the number of high risk groups to which any one carrier may be required to issue coverage.
SDCL 58-18B-20