South Carolina Nursing Facility Bond: A Comprehensive Guide
February 10, 2022
This guide provides information for insurance agents to help their customers obtain a South Carolina Nursing 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 average balance of resident funds held by the facility in the previous year
- Who Needs it: All South Carolina nursing facilities that receive Medicaid reimbursements
- Purpose: To ensure that residents will receive compensation for financial harm if the nursing facility mismanages their funds
- Who Regulates Nursing Facilities in South Carolina: The South Carolina Department of Health and Human Services
South Carolina requires all nursing facilities that receive Medicaid payments to enroll as a provider with the Department of Health and Human Services. The South Carolina legislature enacted the enrollment requirement to ensure that eligible nursing facilities receive compensation for services that are covered by Medicaid. To ensure residents are not taken advantage of, nursing facilities 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 South Carolina Nursing Facility Bond?
South Carolina requires nursing facilities that hold 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 facility fails to abide by the regulations outlined in federal statute 483.10. Specifically, the bond protects residents if the nursing facility in any way mismanages 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 South Carolina Nursing Facility Bond?
BondExchange makes obtaining a South Carolina Nursing Facility bond easy. Simply log in to your account and use our keyword search to find the “nursing” 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.
Is a Credit Check Required for the South Carolina Nursing Facility Bond?
Surety companies will run a credit check on the owners of the nursing facility to determine eligibility and pricing for the South Carolina Nursing 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 South Carolina Nursing Facility Bond Cost?
The South Carolina bond can cost anywhere between 0.75% to 5% 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 Facility Bond Cost
|Credit Score||Bond Cost (1 year)|
|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 the Bond?
South Carolina requires all nursing facilities that manage resident funds and accept Medicaid payments to purchase a surety bond before enrolling as a Medicaid provider. To paraphrase South Carolina statute 61-17.100.101, a nursing facility is an institution that provides 24-hour intermediate or skilled nursing care to two or more unrelated individuals that need care but do not require hospitalization.
How Do Nursing Facilities Enroll as Medicaid Providers in South Carolina?
Nursing facilities in South Carolina must navigate several steps when enrolling as Medicaid providers. Below are the general guidelines, but applicants should refer to the enrollment guidelines for details on the process.
Step 1 – Obtain a Certificate of Need
South Carolina requires nursing facilities to obtain a business license with the Department of Health and Environmental Control (DHEC) prior to enrolling as a Medicaid provider. However, nursing facilities must first acquire a Certificate of Need (CON), authorizing the construction, expansion, or renovation of the facility, prior to applying for a business license. To apply for a CON, nursing facilities must:
1.a Send a written correspondence to the CON program requesting verification the facility needs a CON as well as all required application materials. The correspondence should be mailed to the following address:
S.C. DHEC Health Regulation
2600 Bull Street
Columbia, SC 29201
1.b Publish a notice, in the legal section of the local newspaper where the facility is located, informing the public of their intent to apply for a CON. The notice must run for three consecutive days, be published at least 20 days prior to the submission of the CON application, and include a description of the scope and nature of the project as well as its estimated capital cost.
1.c Mail two copies of their completed application, including all required attachments, to the following address:
S.C. DHEC Health Regulation
2600 Bull Street
Columbia, SC 29201
*Important Note: On January 25, 2022, the South Carolina Senate voted to repeal the state’s Certificate of Need program. This article will be updated as necessary if the repeal is signed into law.
Step 2 – Apply for a Business License
Bureau of Health Facilities Licensing
2600 Bull Street
Columbia, SC 29201
Nursing facilities must complete the application in its entirety, and submit a $20 fee per bed or $400, whichever is greater.
Step 3 – Pass the Survey
The DHEC will conduct an on-site survey of the facility’s location to determine if it is eligible to receive Medicaid reimbursements and is in compliance with all state and federal regulations
Step 4 – Purchase a Surety Bond
All nursing facilities that hold resident funds must purchase and maintain a surety bond in an amount equal to the average balance of resident funds held by the facility in the previous year. First-time applicants should use the estimated average balance of resident funds held in the upcoming year when determining their required bond amount.
Step 5 – Enroll as a Medicaid Provider
Nursing facilities are eligible to apply for their provider enrollment after obtaining a business license and passing the on-site survey. All South Carolina Medicaid provider enrollment applications can be completed online here. Nursing facilities must pay a $631 fee when submitting their application.
How do South Carolina Nursing Facilities Renew Their Licenses and Provider Enrollments?
The DHEC will send the nursing facility instructions on how to renew their license prior to its expiration date. Additionally, the Department of Human Services will send the facility instructions on how to revalidate their Medicaid enrollment before it expires.
What are the Insurance Requirements for Nursing Facilities in South Carolina?
South Carolina does not require nursing facilities to obtain any form of liability insurance as a prerequisite to obtaining a business license or provider enrollment. Nursing facilities that manage residents’ funds and receive Medicaid payments must purchase and maintain a surety bond in an amount equal to the average balance of resident funds held by the facility in the previous year.
How Do South Carolina Nursing Facilities File Their Bond?
The obligee on the bond is the facility’s residents, so nursing facilities may not be required to file their bond with any government agency. However, the Department of Human Services may require the facility to submit proof of coverage prior to issuing a provider enrollment. 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 of entity/individual(s) buying the bond
- Surety company’s name
- Name of the nursing facility
- Bond amount
- Date the bond is signed
What Can South Carolina Nursing Facilities Do to Avoid Claims Against Their Bonds?
To avoid claims on their bond, nursing facilities in South 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 Facilities in South Carolina?
South Carolina does not require nursing facilities to purchase any form of liability insurance as a prerequisite to obtaining a business license or 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 South Carolina Nursing Facility Customers?
South Carolina 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.