Washington Nursing Facility Bond: A Comprehensive Guide

February 28, 2022

Washington Nursing Facility Bond

This guide provides information for insurance agents to help their customers obtain a Washington Nursing Facility bond

At a Glance:

  • Average Cost: Between 1% 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 Washington 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 Washington: The Washington Department of Social and Health Services (DSHS)

Background

Washington statute 388-96-011 requires all nursing facilities that receive Medicaid payments to become certified with the DSHS. The Washington legislature enacted the certification 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 Washington Nursing Facility Bond?

Washington requires each nursing facility that manages resident funds to purchase a surety bond before becoming certified 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 Washington statute 288-96-366. 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.

Washington Nursing Facility Bond Form

Washington Nursing Facility Bond Form

How Can an Insurance Agent Obtain a Washington Nursing Facility Surety Bond?

BondExchange makes obtaining a Washington 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 Washington Nursing Facility Bond?

Surety companies will run a credit check on the owners of the nursing facility to determine eligibility and pricing for the Washington 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 Washington Nursing Facility Bond Cost?

The Washington Nursing Facility bond can cost anywhere between 1% 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 $10,000 bond requirement.

$10,000 Nursing Facility Bond Cost

Credit Score Bond Cost (1 year)
625+ $100
600 – 624 $250
575 – 599 $300
500 – 574 $500

Who is Required to Purchase the Bond?

Washington requires each nursing facility that manages resident funds to purchase a surety bond before becoming certified as a Medicaid provider. To paraphrase Washington statute 74.46.020, a nursing facility is an institution that provides 24-hour nursing care to three or more residents that are unable to properly care for themselves.

How do Washington Nursing Facilities Become Certified Medicaid Providers?

Nursing facilities in Washington must navigate several steps to become certified Medicaid providers. Below are the general guidelines, but applicants should refer to the certification statutes for details on the process.

Step 1 – Purchase a Surety Bond

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

Step 2 – Purchase Insurance

Washington requires nursing facilities to purchase the following types of liability insurance:

    • Commercial general liability insurance or business liability insurance with minimum limits of:
      • $1 million per occurrence
      • $2 million aggregate

And,

    • Professional liability insurance or errors and omissions insurance with the following minimum limits:
      • $1 million per occurrence
      • $2 million aggregate

Step 3 – Apply for a Nursing Home License

Nursing facilities must acquire a nursing home license through the DSHS to be eligible to enroll as a Medicaid provider. To obtain a nursing home license, applicants must:

3.a Apply for a Certificate of Need (CN) from the Washington Department of Health (DOH). The CN application process is as follows:

    • Email a letter of intent to [email protected] notifying the CN program of their intent to apply for a CN. All letters of intent must include the following information:
      • A description of the proposed services
      • The project’s estimated cost
      • An identification of the service area
    • Email a completed application to [email protected]
    • Mail all required fees to the following address:

Department of Health
Certificate of Need Program
Mail Stop 47852
Olympia, WA 98504-7852

3.b Nursing facilities may apply for licensure after obtaining a CN. All Washington Nursing Home License applications should be mailed to the following address:

For FedEx and UPS

ALTSA Finance and Contracts
4450 10th Ave SE (Blake West)
Lacey WA, 98503

For USPS

ALTSA Finance and Contracts
PO Box 45600
Olympia WA, 98504-5600

Nursing facilities must complete the application in its entirety, and submit the following items:

    • Copy of the facility’s business license
    • Copy of a document obtained from the IRS indicating the facility’s EIN
    • Certificate of Registration with the Washington Secretary of State
    • Individuals Affiliated with Applicant Supplemental Information form
    • Background Check Authorization form 
    • Agreement Not to Have Unsupervised Access Form
    • Consent to Release and/or Use Confidential Information forms(s)
    • Organizational Structure / Change of Ownership Chart
    • Copy of the purchase and sale agreement or lease and operating agreement
    • Lease and operating agreement attestation (if applicable)
    • Management company information (if applicable)
    • Individuals Affiliated with Management Company Supplemental Information form (if applicable)
    • Copy of management agreement (if applicable)
    • Compliance, business, and financial history
    • Financial Attestation form
    • Real Property and/or Building Related to Financing and/or Insurance Attestation form
    • Copy of resident agreement
    • Proof of submission of HHS 690
    • Copy of Bill of Sale (if applicable)
    • Letter from the facility’s current owner relinquishing their license (if applicable)
    • Notice to residents (if applicable)
    • A $359 fee per licensed bed

Step 4 – Apply for Medicare and Medicaid Contracts

Washington statute 388-96-011 dictates that nursing facilities must be enrolled as Medicare providers prior to obtaining their Medicare certification. Nursing facilities can apply for both their Medicare and Medicaid contracts by submitting the following documents with their license applications:

Step 5 – Enroll as a Medicaid Provider

Nursing facilities may enroll as Medicaid providers after applying for their nursing home license as well as their Medicare and Medicaid contracts. Nursing facilities can enroll as Medicaid providers electronically through the Washington State Healthcare Authority.

How do Washington Nursing Facilities Renew Their Licenses and Medicaid Enrollments?

The DSHS will send nursing facilities instructions on how to renew their licenses prior to the expiration date. All Washington Nursing Home Licenses are valid for one year and must be renewed before the expiration date. Additionally, the Washington State Health Care Authority 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 Washington?

Washington requires nursing homes to purchase the following types of insurance:

  • Commercial general liability insurance or business liability insurance with minimum limits of:
    • $1 million per occurrence
    • $2 million aggregate

And,

  • Professional liability insurance or errors and omissions insurance with the following minimum limits:
    • $1 million per occurrence
    • $2 million aggregate

Nursing homes that manage resident funds and receive Medicaid payments must purchase and maintain a surety bond in an amount that is greater than or equal to all resident funds held by the facility at any given time.

How Do Washington Nursing Facilities File Their Bond?

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

For FedEx and UPS

ALTSA Finance and Contracts
4450 10th Ave SE (Blake West)
Lacey WA, 98503

For USPS

ALTSA Finance and Contracts
PO Box 45600
Olympia WA, 98504-5600

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
  • Bond amount
  • Date the bond goes into effect
  • Date the bond is signed

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

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

Washington requires nursing facilities to purchase liability insurance. 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 Washington Nursing Facility Customers?

Washington 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.

2022-03-21T17:04:02-04:00