New Mexico Resident Trust Fund Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a New Mexico Resident Trust Fund bond
At a Glance:
- Lowest Cost: 0.75% of the bond amount per year, based on the applicant’s credit
- Bond Amount: Greater than or equal to all resident funds held by the facility at any given time
- Who Needs it: All New Mexico nursing facilities that hold residents’ personal funds
- Purpose: To ensure that residents will receive compensation for financial harm if the nursing facility wrongfully withholds their funds
- Who Regulates Nursing Facilities in New Mexico: The New Mexico Department of Health (DOH) as well as the Human Services Department (HSD)
New Mexico Statute 8.312.2.9 requires all nursing facilities that receive Medicaid payments to enroll as a provider with the New Mexico Human Services Department. The New Mexico legislature enacted the enrollment requirement to ensure that nursing facilities engage in ethical business practices. To ensure that residents’ rights are not violated, nursing facilities that manage resident funds must purchase and maintain a surety bond to be eligible to receive Medicaid payments. 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 New Mexico Resident Trust Fund Bond?
New Mexico requires nursing facilities that manage resident funds to purchase a surety bond before enrolling as a Medicaid provider. The bond ensures that residents will receive compensation for financial harm if the facility fails to abide by the regulations outlined in New Mexico statute 8.312.215. Specifically, the bond protects residents if the nursing facility wrongfully withholds their funds. In short, the bond is a type of insurance that protects residents if the nursing facility acts unethically with their money.
How Can an Insurance Agent Obtain a New Mexico Resident Trust Fund Surety Bond?
BondExchange makes obtaining a New Mexico Resident Trust Fund bond easy. Simply log in to your account and use our keyword search to find the “trust fund” 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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Is a Credit Check Required for the New Mexico Resident Trust Fund Bond?
Surety companies will run a credit check on the owners of the nursing facility to determine eligibility and pricing for the New Mexico Resident Trust Fund 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 New Mexico Resident Trust Fund Bond Cost?
The New Mexico Resident Trust Fund bond can cost anywhere between 0.75% to 7% of the bond amount per year. Insurance companies determine the rate based on several 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 Resident Trust Fund Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|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 New Mexico Resident Trust Fund Bond?
New Mexico requires nursing facilities that hold resident funds and receive Medicaid payments to purchase a surety bond in an amount greater than or equal to all resident funds held at any given time. To paraphrase New Mexico statute 8.312.2.7, a nursing facility is an institution that provides 24-hour nursing care to residents of the facility.
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 Facilities Enroll as a Medicaid Provider in New Mexico?
Nursing facilities in New Mexico must navigate several steps when enrolling as a provider. Below are the general guidelines, but applicants should refer to the enrollment guidelines for details on the process.
Step 1 – Obtain a Business License
Nursing facilities must obtain a license through the DOH prior to enrolling as a Medicaid provider. To obtain a license, nursing facilities must:
- Email a letter of intent to [email protected] notifying the DOH of their intent to apply for licensure
Once the facility’s letter of intent has been approved, the DOH will send them an application packet. All New Mexico Nursing Facility License applications should be mailed to the following address:
Department of Health – DHI/POB
P.O Box 26110
Santa Fe, NM 87502
Nursing facilities must complete the application in its entirety, and submit the facility’s annotated policy and procedure manuals (with a crosswalk to the rules).
Prior to any new construction taking place, the facility must contact the program operations bureau architect at 505-476-9041 and provide them with a copy of the facility’s building plans. The architect will also require the facility’s certificate of occupancy, local fire department inspection, and the New Mexico Environment Department inspection (if applicable). After the facility is constructed, the DOH will conduct a life safety code inspection to ensure the facility is in compliance with all applicable regulations.
After the facility is fully operational and providing its full range of services, a written request must be submitted to the facility’s district DOH office requesting an initial health survey. Once the facility passes the initial health survey, they will be issued their full license.
License Period – All New Mexico Nursing Facility Licenses expire annually and must be renewed before the expiration date
Step 2 – Purchase a Surety Bond
Nursing facilities that hold resident funds must purchase and maintain a surety bond prior to enrolling as a Medicaid provider
Step 3 – Purchase Insurance
Nursing facilities are required to obtain comprehensive liability insurance prior to enrolling as a Medicaid provider. Contact the HSD for information regarding the required limits.
Step 4 – Enroll as a Medicaid Provider
How do New Mexico Nursing Facilities Renew Their License and Provider Enrollment?
Nursing facilities in New Mexico must renew their state license annually. Before the expiration date, the DOH will contact the facility with instructions on how to renew their business license. Additionally, nursing facilities must revalidate their Medicaid provider enrollment at least once every 5 years. The HSD will contact the nursing facility when it is time to revalidate their enrollment and provide them with instructions on how to complete the revalidation process.
What are the Insurance Requirements for Nursing Facilities in New Mexico?
New Mexico requires nursing facilities to obtain comprehensive liability insurance prior to enrolling as a Medicaid provider. Contact the HSD for information regarding the required limits. Additionally, Nursing facilities that hold resident funds must purchase and maintain a surety bond prior to enrolling as a Medicaid provider.
How Do New Mexico Nursing Facilities File Their Bond?
Nursing facilities should mail their completed bond form, including the power of attorney, to the following address:
New Mexico Medicaid Project
P.O. Box 27460
Albuquerque, NM 87125-7460
The surety bond requires signatures from both the surety company that issues the bond and from a representative of the nursing facility. 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 New Mexico Nursing Facilities Do to Avoid Claims Against Their Bonds?
To avoid claims on their bonds, nursing facilities in New Mexico must ensure that they do not wrongfully withhold residents’ personal funds.
What Other Insurance Products Can Agents Offer Nursing Facilities in New Mexico?
New Mexico requires nursing facilities to purchase comprehensive general liability insurance as a prerequisite to enrolling as a Medicaid provider. 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 New Mexico Nursing Facility Customers?
New Mexico conveniently provides a public database to search for active nursing facilities 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.