What is a nursing facility patient trust bond?
Nursing facility patient trust bonds (also known as nursing home bonds) are legally binding agreements between three parties: nursing facilities, the government entity responsible for regulating nursing facility activity in the local jurisdiction, and a surety company.
The government agency is the Obligee and establishes the obligations that the care facility (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the care facility.
Nursing facility patient trust bonds are broken into two types of surety bonds: nursing facility bonds and patient trust bonds.
Nursing facility bonds are required for nursing facilities to receive their license and guarantee that the facility will adhere to all licensing regulations. Patient trust bonds are used to help protect trust fund assets for patients receiving care in a nursing home.
Why do you need a patient trust bond?
Patient trust bonds are required in most states as part of the licensing process to operate a nursing home, long-term care facility, or health care facility that handles patient trust fund assets. The surety bond helps ensure that patient trust funds are protected and managed in an ethical manner. When the surety company issues the bond, they provide the government agency a guarantee that the patients of a licensed nursing facility will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the nursing facility license.
If the nursing facility fails to meet the obligations set out by the government agency, the surety will pay out any damages up to the bond amount. The nursing facility is liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
How much does a patient trust bond cost?
Patient trust surety bond costs vary depending on the total bond amount and the premium rate. The government agency sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.
Premium rates for patient trust bonds typically range between 1% and 5% of the total bond amount. The surety company performs a credit check for most patient trust bonds with bond amounts over $50,000. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a nursing home bond. EZ Surety is still able to offer competitive rates to individuals with low credit scores or other financial issues.
For example, EZ Surety has issued patient trust bonds in the State of Vermont for premiums as low as $100.