Florida Leased Nursing Home Bond: A Comprehensive Guide
January 3, 2022
This guide provides information for insurance agents to help their customers obtain a Florida Leased Nursing Home bond
At a Glance:
- Average Cost: Between 0.75% to 7% of the bond amount per year based on the applicant’s credit
- Bond Amount: Determined on a case by case basis (more on this later)
- Who Needs it: All Florida leased nursing homes
- Purpose: To ensure the public will receive compensation for financial harm if the facility’s previous owners were overpaid for Medicaid services
- Who Regulates Nursing Homes in Florida: The Florida Agency for Health Care Administration
Florida statute 400.062 requires all nursing homes operating in the state to obtain a license with the Agency for Health Care Administration. The Florida legislature enacted the licensing requirement to ensure that nursing homes engage in ethical business practices. To provide financial security for the enforcement of the licensing law, nursing homes that are being leased must purchase and maintain a surety bond to be eligible for licensure. Business owners leasing a nursing home will most often need to submit a change of ownership license application, as the facility will already have been licensed by the previous owners.
What is the Purpose of the Florida Leased Nursing Home Bond?
Florida requires nursing homes that are being leased to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the nursing home fails to abide by the regulations set forth in Florida statute 400.162. Specifically, the bond protects the public if the nursing home fails to repay Medicaid overpayments received by the facility’s previous owners. In short, the bond is a type of insurance that protects the public if the Florida Medicaid Agency overpaid the facility’s previous owners. When determining if an overpayment was made, the Medicaid agency will examine:
- Medicaid rate changes or adjustments
- Any depreciation recapture
- Any recapture of fair rental system value indexing
- Audits completed by the agency
How Can an Insurance Agent Obtain a Florida Leased Nursing Home Surety Bond?
BondExchange makes obtaining a Florida Leased Nursing Home surety bond easy. Simply log in to your account and use our keyword search to find the “nursing home” bond in our database. Don’t have a login? Enroll 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.
How is the Bond Amount Determined?
Florida statute 400.179 dictates the bond amount must be equal to the total of 3 months of Medicaid payments made to the facility using the previous 12 month average of payments made.
Is a Credit Check Required for the Florida Leased Nursing Home Bond?
Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the Florida Leased Nursing Home 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 Florida Leased Nursing Home Bond Cost?
The Florida Leased Nursing Home Bond can cost anywhere between 0.75% to 7% 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 Leased Nursing Home Bond Cost
|Credit Score||Bond Cost (1 year)|
|625 – 719||$200|
|600 – 624||$500|
|575 – 599||$600|
|550 – 574||$1,000|
|500 – 549||$1,400|
*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?
Florida statute 400.179 requires all business owners that are seeking to lease an already built nursing home facility must purchase and maintain a surety bond to be eligible for licensure.
Florida wants to ensure that the public does not suffer a financial loss if the state Medicaid agency overpaid the nursing home’s previous owners. However, the Medicaid agency is usually unable to determine whether or not the facility was underpaid unless a comprehensive field audit is performed. These audits are generally only conducted after the facility has transferred ownership. Therefore, Florida requires the new facility owners to be bonded to protect themselves from liability for Medicaid overpayments that are discovered during the auditing process.
How Do Florida Nursing Homes Apply for a License?
Nursing homes in Florida must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the application checklist for details on the process.
License applicants attempting to lease an already built nursing home must apply for a change of ownership license. To apply for a change of ownership license, applicants simply need to follow the instructions contained in the application form.
License Period – All Florida Nursing Home Licenses are valid for 2 years and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Applicants seeking to lease an already built nursing home facility must purchase and maintain a surety bond in an amount equal to the total of 3 months of Medicaid payments made to the facility using the previous 12 month average of payments made
Step 2 – Purchase Insurance
All nursing homes must obtain both general and professional liability insurance and submit proof of insurance with their license application. There is no explicitly stated required coverage amount. However, nursing homes should contact the Agency for Health Care Administration to determine the amount of coverage that is right for them.
Step 3 – Pass Inspection
License applicants must have their facility inspected by their local fire department and submit proof that they passed the inspection with their application
Step 4 – Complete the Application
All Florida Nursing Home License applications should be mailed to the following address:
Agency for Health Care Administration
Long Term Care Unit
2727 Mahan Dr., MS 33
Tallahassee, FL 32308
Nursing homes must complete the application in its entirety, and submit the following items:
- Change of ownership documents signed and dated by all parties
- Proof the facility meets all local zoning requirements
- Proof of property occupancy (lease, mortgage, etc.)
- Fire safety inspection report
- Copies of all civil verdicts or judgments against the applicant in the prior ten years relating to medical negligence, violation of resident’s rights, or wrongful death
- Plan for quality assurance and for conducting risk management
- Financial ability to operate
- Application addendum
- Required disclosures for applications taken by Medicare, Medicaid, or CLIA (if applicable)
- Approved repayment plan (if applicable)
Nursing homes will need to pay an application fee based on the number of beds they contain. The required application fee can be determined on the application checklist.
How Do Florida Nursing Homes Renew Their License?
Nursing homes in Florida can renew their license online here. All Florida Nursing Home Licenses are valid for 2 years and must be renewed before the expiration date.
What are the Insurance Requirements for Nursing Homes in Florida?
Florida requires all nursing homes to obtain general and professional liability insurance (limits not specified). Business owners seeking to lease an already built nursing home facility must purchase and maintain a surety bond in an amount equal to the total of 3 months of Medicaid payments made to the facility using the previous 12 month average of payments made.
How Do Florida Nursing Homes File Their Bond?
Nursing homes should mail their completed bond form, including the power of attorney, to the following address:
Agency for Health Care Administration
Long Term Care Unit
2727 Mahan Dr., MS 33
Tallahassee, FL 32308
The surety bond requires signatures from both the surety company that issues the bond and from a representative of the nursing home. 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 and state of incorporation
- Bond amount
- Date the bond goes into effect
- Premium paid on the bond
- Date the bond is signed
- Witness signatures for both the principal and surety company
What Can Florida Nursing Homes Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, nursing homes in Florida must ensure that they refund to the state’s Medicaid Agency all overpayments.
What Other Insurance Products Can Agents Offer Nursing Homes in Florida?
Florida requires nursing homes to obtain both general and 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 Florida Nursing Home Customers?
Florida conveniently provides a public database to search for active 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.
What Other Surety Bonds are Required for Florida Nursing Homes?
Nursing homes in Florida that hold resident funds or property in a trust account must purchase and maintain a Nursing Home Patient Trust bond in an amount equal to twice the average monthly balance of funds in the resident trust fund during the prior year or $5,000, whichever is greater.