South Dakota Nursing Home Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a South Dakota 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 South Dakota nursing homes that manage resident funds of over $50 per resident per month or over $500 for all residents per month
- Purpose: To ensure that residents will receive compensation for financial harm if the nursing home deprives them of their funds
- Who Regulates Nursing Homes in South Dakota: The South Dakota Department of Health
Background
South Dakota Statute 34-12-2 requires all nursing homes operating in the state to obtain a license with the Department of Health. The South Dakota 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 manage large amounts of resident 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 South Dakota Nursing Home Bond?
South Dakota requires nursing homes that manage large amounts of resident funds to purchase a surety bond as a prerequisite to obtaining a business license. The bond ensures that residents will receive compensation for financial harm if the facility fails to abide by the regulations outlined in South Dakota Code Chapter 34-12. Specifically, the bond protects residents if the nursing home in any way deprives them of 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 South Dakota Nursing Home Bond?
BondExchange makes obtaining a South Dakota Nursing Home 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? 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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How is the Bond Amount Determined?
South Dakota statute 34-12-15.5 dictates that the bond must be in an amount that is representative of the total amount of resident funds the facility holds per month, as referenced in the below table.
Table 1
| Total Resident Funds Held | Bond Amount |
|---|---|
| $750 or less | $1,000 |
| $751 – $1,500 | $2,000 |
| $1,501 – $2,500 | $3,000 |
Every further increase of $1,000 (or fraction thereof) requires the bond amount to increase by $1,000.
Is a Credit Check Required for the South Dakota Nursing Home Bond?
Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the South Dakota 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 South Dakota Nursing Home Bond Cost?
The South Dakota Nursing Home 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 Home Bond Cost
Table 2
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $150 | $15 |
| 625 – 799 | $200 | $20 |
| 600 – 624 | $500 | $50 |
| 575 – 599 | $600 | $60 |
| 500 – 574 | $1,000 | $100 |
*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 Dakota requires all nursing homes that manage resident funds of over $50 per resident per month or over $500 for all residents per month to purchase a surety bond prior to obtaining a business license.
To paraphrase South Dakota statute 31-12-1.1, a nursing home is a facility that provides 24-hour nursing care, under the direction of a physician, to residents that do not need to be admitted to a hospital.
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 South Dakota?
Nursing homes in South Dakota must navigate several steps to obtain a business license. Below are the general guidelines, but applicants should refer to the application guidelines for details on the process.
Step 1 – Purchase a Surety Bond
Nursing facilities that manage resident funds must purchase and maintain a surety bond (limits outlined in Table 1)
Step 2 – Submit an Information Request
South Dakota requires all nursing homes to mail a written request for information on how to license their facility to the following address:
Chris Qualm, Administrator
Office of Health Care Facilities Licensure & Certification
600 East Capitol Avenue
Pierre, SD 57501-1700
Once the request is received, the Department of Health will establish a file for the nursing home’s facility, determine the facility’s eligibility for licensure, and mail out all application forms.
Additionally, the Department of Health will conduct an on-site survey of the nursing home’s facility to assess its compliance with all zoning, building, and safety regulations. The department will also examine the facility’s eligibility to receive federal funding through Medicaid reimbursements during the survey.
Step 3 – Complete the Application
All South Dakota Nursing Home License applications should be mailed to the following address:
South Dakota Department of Health
Office of Health Care Facilities Licensure & Certification
615 East 4th Street
Pierre, SD 57501-1700
Nursing homes must complete the application in its entirety, and submit the following items:
-
- The facility’s current accreditation reports
- Names, addresses, professions, and positions of all of the facility’s governing board members
- List of all department heads, managers, and consultants including their licenses and certifications (if applicable)
- Company organizational chart
- Complete list of all services offered
Nursing homes must pay an application fee that is based on the number of beds the facility holds, as referenced in the below table:
Table 3
| Number of Beds | Application Fee |
|---|---|
| 1 – 50 | $600 |
| 51 – 100 | $900 |
| 101 – 150 | $1,200 |
| 151+ | $1,500 |
Nursing homes will be eligible to enroll as Medicaid providers after passing their on-site survey and obtaining a business license. Nursing homes can complete their enrollment here.
How do South Dakota Nursing Homes Renew Their License?
The Department of Health will send the nursing home instructions on how to renew their license prior to its expiration date.
What are the Insurance Requirements for Nursing Homes in South Dakota?
South Dakota does not require nursing homes to obtain any form of liability insurance as a prerequisite to obtaining a business license. Nursing homes that hold large sums of resident funds must purchase and maintain a surety bond (limits outlined in Table 1).
How Do South Dakota Nursing Homes File Their Bonds?
Nursing homes should mail their completed bond form, including the power of attorney, to the following address:
Chris Qualm, Administrator
Office of Health Care Facilities Licensure & Certification
600 East Capitol Avenue
Pierre, SD 57501-1700
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 state of incorporation
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can South Dakota Nursing Homes Do to Avoid Claims Against Their Bonds?
To avoid claims on their bond, nursing homes in South Dakota must ensure that they do not wrongfully deprive residents of their personal funds.
What Other Insurance Products Can Agents Offer Nursing Homes in South Dakota?
South Dakota 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 South Dakota Nursing Home Customers?
South Dakota 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.