North Carolina Nursing Home Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a North Carolina Nursing Home 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 funds held by the facility at any given time
- Who Needs it: All North Carolina nursing homes that are enrolled Medicaid providers and hold residents’ funds
- Purpose: To ensure that residents will receive compensation for financial harm if the nursing home mismanages their funds
- Who Regulates Nursing Homes in North Carolina: The North Carolina Division of Medical Assistance
North Carolina statute 108C requires all nursing homes that receive Medicaid payments to enroll as a provider with the Division of Medical Assistance. The North Carolina legislature enacted the enrollment requirement to ensure that eligible nursing homes receive compensation for services that are covered by Medicaid. To ensure residents are not taken advantage of, nursing homes that hold residents’ 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 North Carolina Nursing Home Bond?
North Carolina requires nursing homes 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 nursing home fails to abide by the regulations outlined in federal statute 483.10. Specifically, the bond protects residents if the nursing home in any way mismanages their 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 North Carolina Nursing Home Surety Bond?
BondExchange makes obtaining a North Carolina 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? 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 North Carolina Nursing Home Bond?
Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the North Carolina 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 North Carolina Nursing Home Bond Cost?
The North Carolina Nursing Home 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 Nursing Home Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|625 – 749||$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?
North Carolina DMA: 2B-1 requires all nursing homes that hold residents’ funds to purchase a surety bond prior to enrolling as a Medicaid provider. To paraphrase North Carolina statute 131E-101, a nursing home is any facility that houses residents that require medical and nursing care but are not sick enough to require general hospital care.
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 Enroll as Medicaid Providers in North Carolina?
Nursing homes in North Carolina must navigate several steps when enrolling as Medicaid providers. Below are the general guidelines, but applicants should refer to the enrollment statutes for details on the process.
Step 1 – Obtain a Nursing Home License
Nursing homes must obtain a business license through the NC Division of Health Service Regulation prior to enrolling as a Medicaid provider. To obtain a business license, nursing homes must:
- Obtain a Certificate of Need
- Obtain construction approval
After the nursing home has obtained a certificate of need and construction approval, they should mail their completed license application, including a $470 fee (plus an additional $19 per bed), to the following address:
North Carolina Department of Health and Human Services
Division of Health Service Regulation
Nursing Home Licensure and Certification Section
2711 Mail Service Center
Raleigh, North Carolina 27699-2711
Nursing homes applying for licensure through a change of ownership may be exempt from the Certificate of Need requirements if they do not alter the facility. Nursing homes applying for licensure through a change of ownership have their own specific application that must be mailed to the above address.
License Period – All North Carolina Nursing Home Licenses expire annually and must be renewed before the expiration date
Step 2 – Enroll as a Medicaid Provider
Nursing homes become eligible to enroll as Medicaid providers after obtaining their business licenses. To enroll as Medicaid providers, nursing homes must complete the online application located here. Providers should utilize the information contained on the NC Tracks website for help navigating the enrollment process.
Nursing homes seeking to become certified through the Department of Medicare and Medicaid Services must complete a separate enrollment application online here. Additionally, the certification process requires nursing homes to:
- Obtain a National Provider Identifier (NPI)
- Pass an inspection of their facility
Enrollment Period – All provider enrollments must be revalidated at least once every five years. However, most nursing homes will have to revalidate their enrollment every 3½ years.
Step 3 – Purchase a Surety Bond
Nursing homes that hold residents’ funds and receive Medicaid payments must purchase and maintain a surety bond.
How do North Carolina Nursing Homes Renew Their License and Provider Enrollment?
Prior to the expiration date, the Division of Health Service Regulation will contact the nursing home with instructions on how to renew their business license. All North Carolina Nursing Home Licenses expire annually and must be renewed before the expiration date. Additionally, nursing homes will be sent instructions on how to revalidate their enrollment a minimum of 60 days prior to the expiration date. All provider enrollments must be revalidated at least once every five years. However, most nursing homes will have to revalidate their enrollment every 3½ years.
What are the Insurance Requirements for Nursing Homes in North Carolina?
North Carolina does not require nursing homes to obtain any form of liability insurance as a prerequisite to obtaining a business license or provider enrollment. Nursing homes that manage residents’ funds and receive Medicaid payments must purchase and maintain a surety bond in an amount greater than or equal to the highest daily balance of all resident funds held on deposit. First-time enrollment applicants must use their estimated balance when determining the required bond amount.
How Do North Carolina Nursing Homes File Their Bond?
Nursing homes should mail their completed bond form, including the power of attorney, to the following address:
Division of Medical Assistance Certification Section
701 Barbour Drive
Raleigh, NC 27603
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 is signed
What Can North Carolina Nursing Homes Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, nursing homes in North Carolina must ensure that they:
- Hold all resident funds in a designated trust account
- Administer all resident funds in a lawful manner
- Accurately report on all resident funds
- Refund all resident funds upon the termination of a deposit
What Other Insurance Products Can Agents Offer Nursing Homes in North Carolina?
North Carolina does not require nursing homes to purchase any form of liability insurance as a prerequisite to obtaining a business license or enrolling as a Medicaid provider. 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 North Carolina Nursing Home Customers?
North Carolina 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.