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Illinois Long Term Care Facility Bond: A Comprehensive Guide

January 5, 2022

Illinois Long Term Care Facility Bond

This guide provides information for insurance agents to help their customers obtain an Illinois Long Term Care Facility bond

At a Glance:

  • Average Cost: Between 0.75% to 5% of the bond amount per year based on the applicant’s credit
  • Bond Amount: Equal to the maximum amount of resident funds held by the facility at any point during the previous calendar year
  • Who Needs it: All Illinois nursing homes that hold the personal funds of residents
  • Purpose: To ensure residents will receive compensation for financial harm if the nursing home mishandles their funds
  • Who Regulates Long Term Care Facilities in Illinois: The Illinois Department of Public Health

Background

The Illinois Nursing Home Care Act requires all nursing homes operating in the state to obtain a license with the Department of Public Health. The Illinois legislature enacted the licensing laws and regulations to ensure that nursing homes engage in ethical business practices. To provide financial security for the enforcement of the licensing law, nursing homes that hold residents’ personal funds must purchase and maintain a surety bond to be eligible for licensure.

What is the Purpose of the Illinois Long Term Care Facility Bond?

Illinois requires nursing homes that hold resident funds 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 abide by the regulations set forth in section 2-201 (5) of the Illinois Nursing Home Care Act. Specifically, the bond protects residents if the nursing home deprives them of or in any way mishandles their personal funds held by the facility. In short, the bond is a type of insurance that protects residents if the nursing home acts unethically with their funds.

Illinois Long Term Care Facility Bond Form

Illinois Long Term Care Facility Bond Form

How Can an Insurance Agent Obtain an Illinois Long Term Care Facility Surety Bond?

BondExchange makes obtaining an Illinois Long Term Care Facility bond easy. Simply log in to your account and use our keyword search to find the “care facility” 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?

The Illinois Nursing Home Care Act dictates that the bond amount must be in an amount that is equal to the maximum amount of resident funds held by the facility at any point during the previous calendar year, or the estimated maximum dollar amount of resident funds held by the facility at any point in the 12 month period after the bond is executed, whichever is greater.

Is a Credit Check Required for the Illinois Long Term Care Facility Bond?

Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the Illinois Long Term Care Facility 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 Illinois Long Term Care Facility Bond Cost?

The Illinois Long Term Care Facility 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 Long Term Care Facility 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?

Illinois requires all nursing homes the hold residents’ personal funds to purchase a surety bond. The Illinois Nursing Home Care Act defines a long term care facility (nursing home) as an institution that offers personal, sheltered, or nursing care to 3 or more individuals that are not related to the facility’s administrator.

Exemptions to this definition include:

  • Facilities operated by a government agency
  • Hospitals and sanitariums
  • Facilities for child care
  • Community living facilities
  • Community residential alternatives
  • Nursing homes or sanatoriums that solely rely on treatment through religious means
  • Community integrated living arrangements
  • Supportive residences
  • Supportive living facilities
  • Assisted living or shared housing establishments
  • Alzheimer’s diseases management centers
  • Facilities licensed under the ID/DD Community Care Act
  • Facilities licensed under the Specialized Mental Health Rehabilitation Act
  • Facilities licensed under the MC/DD Act
  • Medical foster homes

How Do Illinois Nursing Homes Apply for a License?

Nursing homes in Illinois must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the licensing statutes for details on the process.

License Period – Most Illinois Nursing Home Licenses are valid for one year from the date of issuance. However, the Department of Public Health may issue licenses for terms ranging from 6 months to 18 months if they so choose.

Step 1 – Purchase a Surety Bond

Nursing homes the hold resident funds must purchase and maintain a surety bond in an amount equal to the maximum amount of resident funds held by the facility at any point during the previous calendar year, or the estimated maximum dollar amount of resident funds held by the facility at any point in the 12 month period after the bond is executed, whichever is greater.

Step 2 – Complete the Application

All Illinois Long Term Care Facility (nursing home) License applications should be mailed, along with a $1,990 application fee, to the following address:

525-535 West Jefferson Street
Springfield, IL  62761
217-782-4977

Applicants seeking to construct or renovate a nursing home facility must submit a separate application that includes all project plans and pass an on-site inspection conducted by the Department of Public Health.

How do Illinois Nursing Homes Renew Their License?

Prior to the license expiration date, the Department of Public Health will contact the nursing home with instructions on how to renew their license. Most Illinois Nursing Home Licenses are valid for one year from the date of issuance. However, the Department of Public Health may issue licenses for terms ranging from 6 months to 18 months if they so choose.

What are the Insurance Requirements for Nursing Homes in Illinois?

Illinois does not require nursing homes to obtain any form of liability insurance as a prerequisite to obtaining a business license. Nursing homes the hold resident funds must purchase and maintain a surety bond in an amount equal to the maximum amount of resident funds held by the facility at any point during the previous calendar year, or the estimated maximum dollar amount of resident funds held by the facility at any point in the 12 month period after the bond is executed, whichever is greater.

How Do Illinois Nursing Homes File Their Bond?

Nursing homes should mail their completed bond form, including the power of attorney, to the following address:

525-535 West Jefferson Street
Springfield, IL  62761
217-782-4977

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 and address of entity/individual(s) buying the bond
  • Surety company’s name and address
  • Bond amount
  • Date the bond goes into effect
  • Date the bond is signed
  • The maximum amount of resident funds held in the preceding 12 month period
  • The estimated maximum amount of resident funds that will be held in the next 12 months

What Can Illinois Nursing Homes Do to Avoid Claims Against Their Bond?

To avoid claims on their bond, nursing homes in Illinois must ensure that they adhere to the following provisions:

  • Do not mishandle resident funds held by the facility
  • Accurately report on all resident funds held by the facility

What Other Insurance Products Can Agents Offer Nursing Homes in Illinois?

Illinois does not require nursing homes to obtain any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable facilities will seek to obtain this insurance anyway. 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 Illinois Nursing Home Customers?

Illinois 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.

2022-01-21T11:13:02-05:00