Louisiana Nursing Home Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Louisiana Nursing Home bond
At a Glance:
- Lowest Cost: 0.75% 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 Louisiana nursing homes that are Medicare/Medicaid providers and hold residents’ personal funds
- Purpose: To ensure residents will receive compensation for financial harm if the nursing home mishandles their personal funds
- Who Regulates Nursing Homes in Louisiana: The Louisiana Department of Health and Hospitals
Background
Louisiana Statute 9703 requires all nursing homes operating in the state to obtain a license with the Department of Health and Hospitals. The Louisiana 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 are Medicare/Medicaid providers and who hold residents’ personal funds must purchase and maintain a surety bond, to be eligible for licensure. Additionally, federal statute 483.10 requires all long-term care facilities that hold patient funds in a trust account to purchase a surety bond or other similar form of security. However, the federal regulation leaves the implementation and enforcement of this requirement to individual states.
What is the Purpose of the Louisiana Nursing Home Bond?
Louisiana requires nursing homes that are Medicare/Medicaid providers and that hold resident funds 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 Louisiana statute 9779. Specifically, the bond protects residents if the nursing home in any way mismanages their personal funds. In short, the bond is a type of insurance that protects residents if the nursing home acts unethically with their money.
How Can an Insurance Agent Obtain a Louisiana Nursing Home Surety Bond?
BondExchange makes obtaining a Louisiana 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? 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.
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.
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How is the Bond Amount Determined?
The bond amount must be equal to the maximum dollar amount of all resident funds held by the nursing home at any point during the previous year or the estimated maximum amount of funds that will be held in the next year, whichever is greater.
Is a Credit Check Required for the Louisiana Nursing Home Bond?
Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the Louisiana 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 Louisiana Nursing Home Bond Cost?
The Louisiana 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 Nursing Home Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $150 | $15 |
| 625 – 719 | $200 | $20 |
| 600 – 624 | $500 | $50 |
| 575 – 599 | $600 | $60 |
| 550 – 574 | $1,000 | $100 |
| 500 – 549 | $1,400 | $140 |
*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 the Bond?
Louisiana statute 9779, as well as federal statute 483.10, requires all nursing homes that are Medicaid/Medicare providers and hold resident funds to purchase and maintain a surety bond. To paraphrase Louisiana statute 9701, a nursing home is any facility that houses two or residents, who are not related by blood or marriage to the facility’s administrator, and provides maintenance, personal care, or nursing services to individuals that are unable to independently care for themselves.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Nursing Homes Apply for a License in Louisiana?
Nursing homes in Louisiana must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the application form for details on the process.
License Period – All Louisiana Nursing Home Licenses expire annually and must be renewed before the expiration date
Step 1 – Complete the Application
All Louisiana Nursing Home License applications should be mailed to the following address:
Health Standards Section
P.O. Box 3767
Baton Rouge, LA 70821-3767
Nursing homes must complete the application in its entirety, submit the application addendum, and pay the following fees:
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- $600 application fee
- $5 fee per room or unit
Step 2 – Purchase a Surety Bond
Nursing homes that are Medicaid/Medicare providers and hold residents’ personal funds must purchase and maintain a surety bond
Step 3 – Became a Medicaid Provider
Nursing homes that want to be reimbursed by Medicaid for covered expenses must enroll as Medicaid providers. The enrollment process can be completed here.
How Do Louisiana Nursing Homes Renew Their License?
Nursing homes should mail their completed renewal applications, including all applicable fees, to the following address:
Health Standards Section
P.O. Box 3767
Baton Rouge, LA 70821-3767
All Louisiana Nursing Home Licenses expire annually and must be renewed before the expiration date.
What are the Insurance Requirements for Nursing Homes in Louisiana?
Louisiana does not require nursing homes to obtain any form of liability insurance as a prerequisite to obtaining a business license. Nursing homes that are Medicaid/Medicare providers and hold residents’ personal funds must purchase and maintain a surety bond in an amount equal to the maximum dollar amount of all resident funds held by the nursing home at any point during the previous year or the estimated maximum amount of funds that will be held in the next year, whichever is greater.
How Do Louisiana Nursing Homes File Their Bond?
Nursing homes should mail their completed bond form, including the power of attorney, to the following address:
Health Standards Section
P.O. Box 3767
Baton Rouge, LA 70821-3767
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
- Maximum number of resident funds held in the past year
- Estimated maxim amount of resident funds that will be held in the next year
What Can Louisiana Nursing Homes Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, nursing homes in Louisiana must ensure that they:
- Hold all resident funds in a designated trust account
- Make accurate reports on all resident funds
- Do not in any way mishandle resident funds
- Refund all remaining funds upon the termination of an account
What Other Insurance Products Can Agents Offer Nursing Homes in Louisiana?
Louisiana does not require nursing homes to purchase any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable businesses 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 Louisiana Nursing Home Customers?
Louisiana 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.