Virginia Resident Trust Fund Bond: A Comprehensive Guide

February 23, 2022

Virginia Resident Trust Fund Bond

This guide provides information for insurance agents to help their customers obtain a Virginia Resident Trust Fund 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: Greater than or equal to all resident funds held by the facility at any given time
  • Who Needs it: All Virginia nursing facilities that manage residents’ funds and receive Medicaid payments
  • Purpose: To ensure that residents will receive compensation for financial harm if the nursing facility acts unethically with their money
  • Who Regulates Nursing Facilities in Virginia: The Virginia Department of Health and the Department of Medical Assistance Services

Background

12VAC30-10-520 requires all nursing facilities that receive Medicaid payments to enroll as a provider with the Department of Medical Assitance Services. The Virginia 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 that manage 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 Virginia Resident Trust Fund Bond?

Virginia requires nursing facilities that manage resident funds to purchase a surety bond before obtaining a Medicaid provider enrollment. The bond ensures that residents will receive compensation for financial harm if the nursing facility fails to abide by the regulations outlined in 12VAC5-371-160. 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 nursing facilities act unethically with their money.

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Virginia Resident Trust Fund Bond Form

How Can an Insurance Agent Obtain a Virginia Resident Trust Fund Surety Bond?

BondExchange makes obtaining a Virginia 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? 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 Virginia 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 Virginia 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 Virginia Resident Trust Fund Bond Cost?

The Virginia Resident Trust Fund 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 Resident Trust Fund Bond Cost

Credit Score Bond Cost (1 year)
800+ $150
625 – 799 $200
600 – 624 $500
575 – 599 $600
500 – 574 $1,000

Who is Required to Purchase the Virginia Resident Trust Fund Bond?

12VAC5-371-160 requires all Virginia nursing facilities that manage resident funds to purchase a surety bond prior to enrolling with the Department of Medical Assistance Services as a Medicaid provider. To paraphrase Virginia statute 32.1-123, a nursing facility is an institution that provides nursing and other health-related services to two or more unrelated residents on a continuing basis.

How Do Virginia Nursing Facilities Enroll as Medicaid Providers?

Nursing facilities in Virginia must navigate several steps to secure their Medicaid provider enrollment. Below are the general guidelines, but applicants should refer to the provider manual for details on the process.

Step 1 – Apply for a Business License

Nursing facilities must acquire a business license through the Virginia Department of Health to be eligible to enroll as a Medicaid provider. To obtain a business license, nursing facilities must:

1.a Apply for a Certificate of Public Need (COPN), authorizing the construction, expansion, or renovation of the facility, by sending a letter of intent to the following address:

State Health Commissioner
Virginia Department of Health
109 Governor Street, 13th Floor
Richmond, VA 23219

The letter of intent should notify the State Health Commissioner of the nursing facility’s intent to apply for a COPN. Sample letters of intent can be found here. The Department of Health is obligated to send the nursing facility a COPN application within 7 days of receiving the letter of intent, as well as instructions on how to navigate the application process. Additionally, the application forms can be found here. Nursing facilities must pay an application fee equaling 1% of the proposed expenditure for the project. The fee must be at least $1,000 but may not exceed $20,000.

1.b Nursing facilities may apply for licensure after obtaining a COPN. All Virginia Nursing Facility license applications should be mailed to the following address:

Virginia Department of Health
Office of Licensure and Certification
9960 Mayland Drive, Suite 401
Henrico, Virginia 23233

All application forms can be found here. Nursing facilities must complete the application in its entirety, and pay a licensing fee based on the facility’s total number of licensed beds, as referenced below:

Credit Score Bond Cost (1 year)
1 – 50 $75
51 – 333 $1.5 per bed
334+ $500

License period – All Virginia Nursing Facility Licenses expire on December 31 of each year and must be renewed before the expiration date

Step 2 – Purchase a Surety Bond

Nursing facilities must purchase and maintain a surety bond in an amount that is greater than or equal to all resident funds to be held by the facility at any given time

Step 3 – Complete the Enrollment Application

All nursing facility Medicaid provider enrollment applications should be completed online here. First-time applicants must create an account with the Department of Medical Assistance Services prior to submitting their application.

Enrollment Period – Nursing facilities must revalidate their provider enrollment at least once every 5 years

How do Virginia Nursing Facilities Renew Their Licenses and Provider Enrollments?

The Department of Health will send nursing facilities instructions on how to renew their licenses prior to the expiration date. All Virginia Nursing Facility Licenses expire on December 31 of each year and must be renewed before the expiration date. Additionally, the Department of Medical Assistance Services will provide nursing facilities with instructions on how to revalidate their provider enrollments. Nursing facilities must revalidate their provider enrollment at least once every 5 years.

What are the Insurance Requirements for Nursing Facilities in Virginia?

Virginia does not currently require nursing facilities to purchase any form of liability insurance. Nursing facilities must purchase and maintain a surety bond in an amount that is greater than or equal to all resident funds to be held by the facility at any given time.

How Do Virginia Nursing Facilities File Their Bond?

Nursing facilities should mail their completed bond form, including the power of attorney, to the following address:

Department of Medical Assistance Services
600 East Broad Street
Richmond, Virginia 23219

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 and state of incorporation
  • Bond amount
  • Date the bond is signed

What Can Virginia Nursing Facilities Do to Avoid Claims Against Their Bonds?

To avoid claims on their bonds, nursing facilities in Virginia 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 Virginia?

Virginia 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. 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 Virginia Nursing Facility Customers?

Virginia 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.

2022-02-25T09:20:29-05:00