West Virginia Discount Medical Plan Organization Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a West Virginia Discount Medical Plan Organization bond
At a Glance:
- Lowest Cost: $350 per year or $35 per month, based on the applicant’s credit
- Bond Amount: $35,000
- Who Needs it: All discount medical plan organizations (DMPOs) operating in West Virginia
- Purpose: To ensure that consumers will receive compensation for financial harm if the DMPO violates licensing law
- Who Regulates DMPOs in West Virginia: The West Virginia Office of the Insurance Commissioner
Background
West Virginia statute 33-15E-4 requires all DMPOs operating in the state to obtain a license with the Office of the Insurance Commissioner. The West Virginia legislature enacted the licensing laws and regulations to ensure that DMPOs engage in ethical business practices. To provide financial security for the enforcement of the licensing law, DMPOs must purchase and maintain a $35,000 surety bond to be eligible for licensure.
What is the Purpose of the West Virginia Discount Medical Plan Organization Bond?
West Virginia requires DMPOs to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the DMPO fails to abide by the regulations set forth in West Virginia statute 33-15E-6. Specifically, the bond protects West Virginia consumers if the DMPO engages in any acts of fraud or fails to provide any services that have been paid for. In short, the bond is a type of insurance that protects the public if the DMPO violates licensing law.
How Can an Insurance Agent Obtain a West Virginia Discount Medical Plan Organization Surety Bond?
BondExchange makes obtaining a West Virginia Discount Medical Organization bond easy. Simply log in to your account and use our keyword search to find the “discount” 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 West Virginia Discount Medical Plan Organization Bond?
Surety companies will run a credit check on the owners of the DMPO to determine eligibility and pricing for the West Virginia Discount Medical Plan Organization 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 West Virginia Discount Medical Plan Organization Bond Cost?
The West Virginia Discount Medical Plan Organization bond can cost anywhere between $350 to $2,625 per year or $35 to $263 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the bond cost on the $35,000 bond requirement.
$35,000 Discount Medical Plan Organization Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 680+ | $350 | $35 |
| 625 – 679 | $525 | $53 |
| 575 – 624 | $1,313 | $132 |
| 550 – 574 | $1,750 | $175 |
| 500 – 549 | $2,625 | $263 |
Who is Required to Purchase the Bond?
West Virginia requires discount medical plan organizations to purchase a $35,000 surety bond as a prerequisite to obtaining a business license. To paraphrase West Virginia statute 33-15E-3, a discount medical plan organization is an entity that offers members access to discounted medical and/or ancillary services through select providers.
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 West Virginia DMPOs Apply for a License?
DMPOs in West Virginia must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the licensing instructions for details on the process.
License Period – All West Virginia Discount Medical Plan Organization Licenses expire on May 31 of each year and must be renewed before the expiration date
Step 1 – Meet the Net Worth Requirement
West Virginia requires DMPOs to at all times maintain a company net worth (assets – liabilities) of at least $150,000. DMPOs must submit audited business financial statements, certified by an independent CPA, verifying their net worth with their license application.
Step 2 – Establish a Website
All DMPOs must establish a website that, at a minimum, includes a list of all providers the DMPO contracts with
Step 3 – Complete the Application
All West Virginia Discount Medical Plan Organization License applications should be mailed to the following address:
Offices of the Insurance Commissioner
Company Analysis and Examinations Division
P.O. Box 50540
Charleston, WV 25305-0540
DMPOs must complete the application in its entirety, and submit the following items:
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- Certificate of Authority for the organization’s state of incorporation
- Copies of all registration documents and/or licenses required by West Virginia
- Articles of incorporation and company by-laws
- Detailed description of the organization’s proposed marketing methods
- List of the names, addresses, and official positions of all individuals responsible for the company’s conduct. This includes all company officers, directors, and shareholders with a 10% stake or higher
- The number of West Virginia discount medical plan members the organization has
- Company organizational chart
- Biographical affidavits for all company officers, directors, or shareholders with at least a 10% ownership stake
- Description of the organization’s member complaint procedures
DMPOs must pay a $300 fee when submitting their application.
How do West Virginia DMPOs Renew Their Licenses?
DMPOs should mail their completed renewal application, including a $100 fee, to the following address:
Offices of the Insurance Commissioner
Company Analysis and Examinations Division
P.O. Box 50540
Charleston, WV 25305-0540
All West Virginia Discount Medical Plan Organization Licenses expire on May 31 of each year and must be renewed before the expiration date.
What are the Insurance Requirements for DMPOs in West Virginia?
West Virginia does not require DMPOs to purchase any form of liability insurance as a prerequisite to obtaining a business license. DMPOs must purchase and maintain a $35,000 surety bond.
How Do West Virginia Discount Medical Plan Organizations File Their Bonds?
DMPOs should mail their completed bond forms, including the power of attorney, to:
Offices of the Insurance Commissioner
Company Analysis and Examinations Division
P.O. Box 50540
Charleston, WV 25305-0540
The surety bond requires signatures from the surety company that issues the bond, a representative of the DMPO, and a licensed notary. 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
- Date the bond is signed
What Can West Virginia DMPOs Do to Avoid Claims Against Their Bonds?
To avoid claims made against their bonds, DMPOs must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Do not engage in any acts of fraud
- Do not breach any contracts made with consumers
What Other Insurance Products Can Agents Offer DMPOs in West Virginia?
West Virginia does not require DMPOs 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 West Virginia DMPO Customers?
West Virginia conveniently provides a public database to search for active DMPOs 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.