Patient Trust Funds or Resident Trust Funds are bank accounts for nursing facilities that hold funds on behalf of residents. These accounts are often interest bearing. They are held in the name of the care facility, but the money and interest in the account belongs to the resident.
The resident, or their appointed person, retains control of the funds in the account. The nursing facility does not. While residents are not required to use these trust accounts, they must be offered the opportunity. Generally, these funds must be dispersed to the person or estate within 30 days of a resident’s leaving or death.
Nursing facilities must keep detailed records of all transactions for these accounts. Facilities should also put safeguards in place against theft, embezzlement or other dishonest acts with a resident’s funds. Frequent audits of these accounts should take place.
A Patient Trust Fund Bond is a surety bond that provides financial protection against the theft or misuse of nursing home, skilled nursing or other facility’s resident trust fund. While each state has their own requirements, the bond generally guarantees that the facility will manage, account for and disperse funds according as agreed and according to the law, keep accurate records, hold funds in a separate account, and act as a fiduciary in many cases.
The nursing facility is the principal on the bond. The principal pays a third-party bond company called the surety for the Patient Trust Fund Bond. In exchange for payment and an agreement to indemnify the bond company for losses, the surety gives a financial guarantee to the state, who is called the obligee.
The bond provides a financial guarantee that the facility will manage the patient trust fund according to law and act responsibly with the money and reporting. If the facility does not, the resident, their family, estate or the state can make a claim against the bond. The surety company will investigate the claim and pay the claim if it is valid. The surety can then seek to be reimbursed by the nursing facility.
The bond benefits the public and the state. Surety bond companies are rated for liquidity and financial strength. Being able to collect from a surety is generally faster and easier than trying to collect from the facility. Secondly, because of the indemnity provision, the facility has a strong incentive to not have a loss. Surety bond companies have corporate legal teams with the capacity to seek reimbursement.
Patient Trust Bonds cost around 1% for most applicants. For example, a $20,000 Patient Trust Bond will cost the average facility $200 per year. However, strong companies can qualify for better rates, while companies with credit or financial challenges may pay higher rates. The bond premium will be due annually every year that the bond remains in place.
The amount required for a Resident Trust Bond varies by state. Medicare ECFR Title 42 states:
“The facility must purchase a surety bond, or otherwise provide assurance satisfactory to the Secretary, to assure the security of all personal funds of residents deposited with the facility.”
Texas, for example, requires the bond to be:
“No less than the maximum dollar amount of all resident funds accepted and managed by the Principal at any time during the one-year period preceding the date of execution of this bond, or the estimated maximum dollar amount of all such resident funds to be accepted and managed by the Principal at any time during the one-year period following the date of execution of this bond, whichever is greater.”
On the other hand, Florida requires the facility to post a bond in the amount of twice the monthly patient trust fund balance for the prior year or $5,000, whichever is greater.
In general, most states require the bond to cover the entire dollar amount of the residents’ funds.
Many patient trust fund bonds can be purchased online instantly. Depending on the amount, a credit check may not even be required. Certain amounts will require a personal credit check of the primary owner. You can always contact the bond experts at Axcess Surety for assistance anytime. You can click on the menu below to find your state and instantly purchase many resident trust fund bonds instantly.
The cancellation period of a patient trust fund bond also varies by state. Some states allow cancellation by giving thirty days notice. Alabama requires six months notice in order to cancel the bond.
Many care facilities will also need other surety bonds in addition to Patient Trust Fund Bonds. Examples include Medicare ACO Bonds, License Bonds, Tax Bonds and more. Visit our Healthcare Page for other surety solutions.
The best strategy for minimizing claims on Trust Fund Bonds and ensuring the best terms available is to have sound risk management policies in place. This will also give patients comfort that their money is safe. One claim can do a great deal of damage to a care facility’s reputation and future business.
Make sure to frequently audit these accounts and make them available to patients and their families. This is their money.
By law, these funds should be in a separate account from the nursing facility’s account. Keep them at separate banks if necessary.
The funds are supposed to be held in interest bearing accounts. Make sure the bank is paying interest and not charging junk fees.
Provide residents with statements and ask them or their families to review them for discrepancies.
Limit the employees who can access the accounts and make sure there are procedures in place to prevent theft. Encourage employees to share if they feel something is not right.
Patient Trust Fund Bonds are required for care facilities handling patient and resident funds. These bonds provide valuable protection, but claims should be avoided. Care facilities can learn more about surety bonds by visiting our Complete Guide. We love to educate and talk surety, so contact our experts anytime for all your questions and surety needs.
Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.
