South Carolina Discount Medical Plan Organization Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a South Carolina Discount Medical Plan Organization bond
At a Glance:
- Lowest Cost: $500 per year or $50 per month, based on the applicant’s credit
- Bond Amount: $50,000
- Who Needs it: All discount medical plan organizations (DMPOs) operating in South Carolina
- Purpose: To ensure the public will receive compensation for financial harm if the DMPO violates registration law
- Who Regulates Discount Medical Plan Organizations in South Carolina: The South Carolina Department of Consumer Affairs
Background
South Carolina Statute 37-17-40 requires all DMPOs operating in the state to register with the Department of Consumer Affairs. The South Carolina legislature enacted the registration laws and regulations to ensure that DMPOs engage in ethical business practices. To provide financial security for the enforcement of the registration law, DMPOs must purchase and maintain a $50,000 surety bond to be eligible for registration.
What is the Purpose of the South Carolina Discount Medical Plan Organization Bond?
South Carolina requires DMPOs to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the DMPO fails to abide by the regulations set forth in South Carolina code 37-17-10 et seq. Specifically, the bond protects consumers if the DMPO engages in any acts of fraud or fails to provide services that have been paid for. In short, the bond is a type of insurance that protects the public if the DMPO violates registration law.
How Can an Insurance Agent Obtain a South Carolina Discount Medical Plan Organization Surety Bond?
BondExchange makes obtaining a South Carolina Discount Medical Plan Organization bond easy. Simply log in to your account and use our keyword search to find the “discount” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the South Carolina Discount Medical Plan Organization Bond?
Surety companies will run a credit check on the owners of the DMPO to determine eligibility and pricing for the South Carolina Discount Medical Plan Organization bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the South Carolina Discount Medical Plan Organization Bond Cost?
The South Carolina Discount Medical Plan Organization Bond can cost anywhere between $500 to $3,750 per year or $50 to $375 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the bond cost on the $50,000 bond requirement.
$50,000 Discount Medical Plan Organization Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $500 | $50 |
| 625 – 799 | $750 | $75 |
| 575 – 624 | $1,875 | $188 |
| 550 – 574 | $2,500 | $250 |
| 500 – 549 | $3,750 | $375 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Who is Required to Purchase the Bond?
South Carolina requires all discount medical plan organizations to purchase a surety bond prior to receiving a business registration. To paraphrase South Carolina statute 27-17-20, a discount medical plan organization is a business entity that provides members with discounts to medical or ancillary services through providers that the organization contracts with.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do South Carolina Discount Medical Plan Organizations Apply for a Registration?
DMPOs in South Carolina must navigate several steps to obtain a registration. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – All South Carolina DMPO Registrations expire on January 31 of each year and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
DMPOs must purchase and maintain a $50,000 surety bond
Step 2 – Create a Website
South Carolina requires DMPOs to maintain a website with up-to-date lists of the names and addresses of all providers the organization contracts with
Step 3 – Complete the Application
All South Carolina DMPO Registration applications should be mailed to the following address:
South Carolina Department of Consumer
Affairs Attn: DMPO Licensing and Regulation
P.O. Box 5757
Columbia, SC 29250-5757
DMPOs must complete the application in its entirety, and submit the following items:
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- Statement that generally describes the organization and its personnel
- Company formation documents
- Letter of Good Standing from the applicant’s state of incorporation
- Company organizational chart
- South Carolina Certificate of Authorization
- Copies of all of the organization’s licenses/registrations from other states
- Detailed explanations of the organization’s business history
- List of all names utilized to market the organization’s services
- Detailed descriptions of all health care services the organization offers
- Copies of all contracts between the organization and any third party
- Explanation of the organization’s policies and procedures (only if the organization allows third party marketers to subcontract marketing services to other companies)
- Organizational chart detailing all authorized marketers, sub-marketers, and provide label companies who have relationships with the organization
- All internal and external training materials for marketers and representatives
- Copies of all marketing materials to be used in South Carolina
- Description of the organization’s process for approving marketing materials prepared by third parties
- Copies of all application forms used to sign up consumers
- Copies of all discount cards issued by the organization and any third party
- Copy of the consumer notice detailing the terms under which the discount plan may be returned or canceled
- List of all providers the organization contracts with to provide discounted health care services to South Carolina consumers
- Copies of all contracts used with providers
- Detailed description of the organization’s customer complaint procedures
- Complete list of the organization’s marketers, sub-marketers, and private label brands
- Complete list of the organization’s authorized representatives
- Audited company financial statements that have been attested to by an independent Certified Public Accountant
DMPOS must pay an application fee based on the number of the organization’s authorized representatives, as illustrated in the below table.
| Number of Representatives | Application Fee |
|---|---|
| 0-50 | $500 |
| 51-100 | $750 |
| 101+ | $1,000 |
How do South Carolina Discount Medical Plan Organizations Renew Their Registration?
DMPOs should mail their completed renewal application, including all required documents and fees, to the following address:
South Carolina Department of Consumer
Affairs Attn: DMPO Licensing and Regulation
P.O. Box 5757
Columbia, SC 29250-5757
All South Carolina DMPO Registrations expire on January 31 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for Discount Medical Plan Organizations in South Carolina?
South Carolina does not require DMPOs to obtain any form of liability insurance as a prerequisite to obtaining a business license. DMPOs must purchase and maintain a $50,000 surety bond.
How Do South Carolina Discount Medical Plan Organizations File Their Bond?
DMPOs should mail their completed bond form, including the power of attorney, to the following address:
South Carolina Department of Consumer
Affairs Attn: DMPO Licensing and Regulation
P.O. Box 5757
Columbia, SC 29250-5757
The surety bond requires signatures from both the surety company that issues the bond, a representative of the DMPO, and a licensed notary. The surety company should include the following information on the bond form:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Bond number
- Date the bond goes into effect
What Can South Carolina Discount Medical Plan Organizations Do to Avoid Claims Against Their Bonds?
To avoid claims made against their bonds, DMPOs in South Carolina must follow all registration regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
- Provide all services that have been paid for
What Other Insurance Products Can Agents Offer Discount Medical Plan Organizations in South Carolina?
South Carolina does not require DMPOs to obtain any form of liability insurance as a prerequisite to obtaining a business registration. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for South Carolina Discount Medical Plan Organization Customers?
The South Carolina Secretary of State conveniently provides a public database to search for active businesses in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
