Missouri Nursing Home Bond: A Comprehensive Guide
January 14, 2022
This guide provides information for insurance agents to help their customers obtain a Missouri Nursing Home bond
At a Glance:
- Average Cost: Between 1% to 5% 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 Missouri nursing homes that hold residents’ personal funds
- Purpose: To ensure that residents will receive compensation for financial harm if the nursing home wrongfully withholds them of their funds
- Who Regulates Nursing Homes in Missouri: The Missouri Department of Health and Senior Services
The Missouri Omnibus Nursing Home Act requires all nursing homes operating in the state to obtain a license with the Department of Health and Senior Services. The Missouri 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. Additionally, federal statute 483.10 requires all long-term care facilities that hold resident 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 Missouri Nursing Home Bond?
Missouri requires nursing homes that hold resident funds to purchase a surety bond as part of the application process to obtain a Long Term Care Facility 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 Missouri statute 198.096. Specifically, the bond protects residents if the nursing home wrongfully withholds them of their funds. In short, the bond is a type of insurance that protects residents if the nursing home unjustly refuses to give them their money.
How Can an Insurance Agent Obtain a Missouri Nursing Home Surety Bond?
BondExchange makes obtaining a Missouri Nursing Home 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?
Missouri statute 198.096 dictates that the bond amount must be equal to 1½ times the average monthly balance or average total of the monthly balances, rounded to the nearest one thousand dollars, of resident funds held in the previous 12 month period. The Department of Health and Senior Services will determine the bond amount for first-time license applicants based on the facility’s type, size, number of residents, and the experience of comparable facilities.
Is a Credit Check Required for the Missouri Nursing Home Bond?
Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the Missouri 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 Missouri Nursing Home Bond Cost?
The Missouri Nursing Home bond can cost anywhere between 1% 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 $10,000 bond requirement.
$10,000 Nursing Home Bond Cost
|Credit Score||Bond Cost (1 year)|
|600 – 624||$250|
|575 – 599||$300|
|500 – 574||$500|
*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?
Missouri requires all nursing homes that hold residents’ personal funds to purchase and maintain a surety bond. To paraphrase Missouri statute 198.006, and for the purposes of this article, a nursing home is defined as any residential care facility, assisted living facility, intermediate care facility, or skilled nursing facility.
How Do Nursing Homes Apply for a License in Missouri?
Nursing homes in Missouri 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 Missouri Long Term Care Facility Licenses expire annually and must be renewed before the expiration date
Step 1 – Determine the License Classification
Missouri requires nursing homes to obtain specific licenses classifications corresponding to the nature in which their business operates. Below are the different classifications of the Missouri Long Term Care Facility License:
- Residential Care Facility: Provides shelter, care, and protective oversight to 3 or more residents
- Skilled Nursing Facility: Provides board and skilled nursing care, conducted by a registered professional nurse, to three or more residents
- Assisted Living Facility: Provides three or more residents with the following services:
- Provides assistance with any activities required for daily living
- Storage, distribution, or administration of medications
- Supervision of health care under a licensed physician
- Intermediate Care Facility: Provides basic health and nursing care, conducted by a licensed nurse and under the direction of a licensed physician, to three or more residents
For the purposes of this article, all of the above facilities are considered nursing homes.
Step 2 – Purchase a Surety Bond
Nursing homes that hold residents’ personal funds must purchase and maintain a surety bond (see the above section to determine the required bond amount)
Step 3 – Complete the Application
Department of Health and Senior Services
Section for Long-Term Care Regulation
920 Wildwood Drive
P.O. Box 570
Jefferson City, MO 65102
Nursing homes must complete the application in its entirety, and submit the following items:
- Name, address, and social security number of all individuals with primary management or supervisory responsibilities
- Copy of the facility’s deed or rental agreement to occupy the premises
- Statement of financial position
- Forecasted income statement
- Detailed statement explaining how all expenses will be paid
Nursing homes must pay one of the following fees when submitting their application:
- $100 for facilities with 3-24 beds
- $300 for facilities with 25-100 beds
- $600 for facilities with more than 100 beds
How Do Missouri Nursing Homes Renew Their License?
Prior to their license expiration date, the Department of Health and Senior Services will contact the nursing home with instructions on how to renew their license. Nursing homes must submit one of the following documents when renewing their license:
- Relicensure financial information statement
- Title XIX cost report for the operator’s prior fiscal year
- Notarized statement from a bank or saving and loan institution, obtained within the past 30 days, indicating that the applicant is financially sound enough to run a long term care facility
- Copy of the operator’s federal income tax return for the previous fiscal year
All Missouri Long Term Care Facility Licenses expire annually and must be renewed before the expiration date.
What are the Insurance Requirements for Nursing Homes in Missouri?
Missouri does not require nursing homes to obtain any form of liability insurance as a prerequisite to obtaining a business license. Nursing homes that hold residents’ personal funds must purchase and maintain a surety bond (see the above section to determine the required bond amount).
How Do Missouri Nursing Homes File Their Bond?
Nursing homes should mail their completed bond form, including the power of attorney, to the following address:
Attention: Licensure and Certification Unit
Section for Long-Term Care Regulation
Missouri Department of Health and Human Services
920 Wildwood, PO Box 570
Jefferson City, MO 65102-0570
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 is signed
What Can Missouri Nursing Homes Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, nursing homes in Missouri must ensure that they do not wrongfully withhold residents’ funds.
What Other Insurance Products Can Agents Offer Nursing Homes in Missouri?
Missouri 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 Missouri Nursing Home Customers?
Missouri 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.