FOR ALL YOUR SURETY BOND NEEDS.
These surety bonds are general for all states.
Patient trust bonds, also known as nursing home bonds, are a type of license and permit surety bond. That’s because purchasing one is a requirement for nursing homes, assisted living facilities, and extended care facilities to get and keep a license. A patient trust bond serves as the facility owner’s guarantee to abide by all state and local regulations regarding the protection of patient funds held in trust. It also ensures that any patient who suffers a financial loss as a result of violating those regulations will be compensated.
Every facility that’s subject to this bonding requirement must purchase a new patient trust bond at every license renewal. Failure to maintain a current bond will result in revocation of the facility’s license to operate.
The owners of nursing homes and other residential care facilities have a fiduciary responsibility to safeguard funds held in trust for their patients. This makes them subject to strict regulations governing trust funds and must purchase and maintain a patient trust bond in the amount (the bond’s “penal sum”) required by the government licensing agency.
The agency will also determine whether the bond has an aggregate limit, which means that no matter how many claims there may be against a patient trust bond, the maximum amount that will be paid out in total is capped at the bond’s penal sum. Bonds without an aggregate limit will pay each claim up to the penal sum, regardless of the number of claims.
The surety bond agreement for a patient trust bond is a legally binding contract between three parties:
In issuing a patient trust bond, the surety is committing to extending sufficient credit to the principal to pay claims against the bond. The most common reasons for claims are misappropriation of patient funds and failure to provide accurate, timely patient account statements as required by law. The surety will investigate each claim to make sure it’s valid and will then pay the claim on behalf of the principal.
However, the surety bears no legal responsibility for paying claims—under the terms of the patient trust bond agreement, that responsibility belongs solely to the principal. Consequently, the principal must reimburse the surety in full for all claims paid on the principal’s behalf. This practice ensures that claimants receive prompt payment and gives the principal some time to repay the surety, which can often be done in manageable installments rather than in one lump sum.
The premium cost for a patient trust bond is a small percentage of the bond’s penal sum. That percentage, the premium rate, is determined largely on the principal’s personal credit score, industry experience, and license history. Certain features of the particular bond will make a patient trust bond more expensive, namely:
Depending on the inclusion of one or more of these features and the principal’s creditworthiness, the premium rate assigned by the surety should be in the range of 1% and 5%.
Request a convenient online quote today! If you need further assistance, call to speak with an experienced professional about the patient trust bond you need to operate a nursing home or other extended care facility.
