Colorado Nursing Home Patient Trust Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Colorado Nursing Home Patient Trust Bond
At a Glance:
- Lowest Cost: 0.75% of the bond amount per year based on the applicant’s credit
- Bond Amount: Based on the amount of patient funds held in a trust account (more on this later)
- Who Needs it: Colorado nursing home facilities that hold patient funds in a trust account
- Purpose: To ensure residents will receive compensation for any damages should the nursing home mismanage their funds
- Who Regulates Nursing Homes in Colorado: The Colorado Department of Health and Environment
Background
Colorado statute 8.482.52 requires all nursing home facilities that participate in the state’s Medicaid program to purchase and maintain a surety bond. The Colorado legislature enacted the bonding requirement to be in compliance with federal statute 483.10, which requires states to enact laws specifying a surety bond requirement for nursing homes that hold patient funds in a trust account. Nursing homes who have valid claims made against their bond are required to repay the surety company for all claims, and claims handling, expenses.
What is the Purpose of the Colorado Nursing Home Patient Trust Bond?
Colorado requires nursing homes that participate in the state’s Medicaid program to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that residents will receive compensation for financial harm if the nursing home fails to comply with the regulations set forth in Colorado statute 8.482.52. Specifically, the bond protects residents in the event the nursing home in any way mismanages patient funds. In short, the bond is a type of insurance that protects the public if the nursing home acts unethically with patient funds.
How Can an Insurance Agent Obtain a Colorado Nursing Home Patient Trust Surety Bond?
BondExchange makes obtaining a Colorado Nursing Home Patient Trust surety bond easy. Simply log in to your account and use our keyword search to find the “patient” 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.
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How is the Bond Amount Determined?
Colorado statute 8.482.52 dictates that the bond amount must be equal to the funds held in the trust account. The required bond amount is computed on a quarterly basis.
Is a Credit Check Required for the Colorado Nursing Home Patient Trust Bond?
Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the Colorado Nursing Home Patient Trust 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 Colorado Nursing Home Patient Trust Bond Cost?
The Colorado Nursing Home Patient Trust Bond can cost anywhere between 0.75% to 5% of the bond amount per year. 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 a $20,000 bond requirement.
$20,000 Patient Trust Fund Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 800+ | $150 |
| 625 – 799 | $200 |
| 600 – 624 | $500 |
| 575 – 599 | $600 |
| 500 – 574 | $1,000 |
*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 a Bond?
Colorado statute 8.482.52 requires all nursing homes that participate in the state’s Medicaid program, and hold resident funds in a trust account, to purchase a surety bond in an amount equal to the total number of patient funds held as determined on a quarterly basis. However, state-run facilities are bonded separately and are exempt from this requirement.
How Do Nursing Homes Apply For a License in Colorado?
Nursing homes in Colorado must navigate several steps to secure their licenses. Below are the general guidelines, but applicants should refer to the application flowchart for details on the process.
License Period – All Colorado Nursing Home Licenses are valid for one year from the date of issuance and must be renewed before the expiration date
Step 1 – Submit a Letter of Intent
Applicants for the Colorado Nursing Home License must submit a letter of intent (LOI) to the Department of Health and Environment requesting to obtain a license. Once the applicant submits the LIO, the department will send them an application packet.
Step 2 – Complete the Application
After receiving their application packet, nursing homes must complete it in its entirety and submit it to the address listed therein.
Step 3 – Become Medicaid Certified
Nursing homes seeking to be reimbursed for expenses covered under Medicaid must complete the certification process
Step 4 – Purchase a Surety Bond
Colorado nursing homes that participate in the state’s Medicaid program and hold patient funds in a trust account must purchase and maintain a surety bond in an amount equal to the total number of resident funds held as determined on a quarterly basis
How Do Colorado Nursing Homes Renew Their License?
Prior to the license expiration date, the Department of Health and Environment will contact the nursing home with instructions on how to renew their license. All Colorado Nursing Home Licenses are valid for one year from the date of issuance and must be renewed before the expiration date.
What are the Insurance Requirements for Nursing Homes in Colorado?
Colorado requires nursing homes to obtain professional liability insurance with the following limits:
- $500,000 per occurrence
- $3 million annual aggregate
Additionally, Colorado nursing homes that participate in the state’s Medicaid program and hold patient funds in a trust account must purchase and maintain a surety bond in an amount equal to the total number of resident funds held as determined on a quarterly basis.
How Do Colorado Nursing Homes File Their Bond?
Nursing homes should mail their completed bond form, including the power of attorney, to the following address:
Colorado Department of Public Health and Environment
4300 Cherry Creek Drive South
Denver, CO 80246
The surety bond requires signatures from both the surety company that issues the bond and from an owner/officer of the nursing home. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name and state of incorporation
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Colorado Nursing Homes Do to Avoid Claims Against Their Bonds?
To avoid claims on their bond, nursing homes in Colorado must adhere to the following provisions:
- Hold all patient funds in a trust account
- Do not mismanage patient funds
- Accurately report on all patient
What Other Insurance Products Can Agents Offer Nursing Homes in Colorado?
Colorado requires nursing homes to purchase professional liability insurance as a prerequisite to obtaining a business license. 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 Colorado Nursing Home Customers?
Colorado conveniently provides a public database to search for licensed nursing homes 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.