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Army Veteran Owned | Expert Surety Bonds Since 2004
Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
If your Alabama nursing facility holds even one resident's personal funds, Alabama Medicaid expects a surety bond standing behind that money. This is a small bond with a straightforward application, and it is one of the items a Medicaid reviewer or a state surveyor will ask to see. Getting it in place costs an annual premium rather than tying up facility cash, and most facilities are quoted the same day.
Alabama Medicaid requires any nursing facility that accepts a resident's delegation to manage personal funds to purchase a surety bond guaranteeing the security of all resident funds entrusted to the facility, under Alabama Medicaid Administrative Code Rule 560-X-22-.25 and Rule 560-X-10-.14. The rules set no fixed dollar figure, so the bond is sized to cover the resident money the facility actually holds, and the Alabama Medicaid Agency is the obligee.
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This is the part most facilities get wrong. Nothing in the Alabama Medicaid rules names a dollar figure for this bond. Rule 560-X-22-.25(3) says only that the facility must purchase a surety bond to guarantee the security of all personal funds of residents entrusted to the institution, and Rule 560-X-10-.14 repeats the requirement for every nursing facility in the Long Term Care program. The bond therefore has to be large enough to cover the total resident funds the facility holds at any one time, including the interest bearing account and any petty cash fund. A facility that grows its resident census or starts holding larger balances should check that the bond still covers the money on deposit. Confirm the figure the Alabama Medicaid Agency expects for your facility before the bond is written.
The requirement is triggered the moment a facility accepts a resident's delegation to manage personal affairs. Rule 560-X-22-.25(2) describes the typical cases: a resident whose Social Security or other benefit check is paid to the facility, a resident whose funds come through the Department of Human Resources, and a resident whose family deposits spending money with the facility. If the facility holds none of this money and every resident manages his or her own funds, there is nothing for the bond to cover, but in practice nearly every Medicaid certified nursing facility holds some resident money and needs the bond.
The Alabama rule mirrors the federal condition of participation at 42 CFR 483.10(f)(10)(iv), which requires every Medicare and Medicaid certified facility to purchase a surety bond, or otherwise provide assurance satisfactory to the Secretary, to secure resident funds. One bond generally satisfies both the state and federal requirement, but it must be written in favor of the Alabama Medicaid Agency to satisfy the state rule.
The bond is a resident protection instrument. It pays if the facility loses, misapplies or fails to return resident money. The handling rules the bond stands behind come from the same two rules. Resident funds over $50 must be kept in an interest bearing account separate from any facility operating account, with interest credited to each resident. Smaller balances may sit in a non interest bearing account or petty cash fund. The facility must keep a general patient fund account ledger and an individual subsidiary ledger card for each resident, present checks to the resident for endorsement before deposit, give each resident a copy of the ledger card at least once every three months, and never use a resident's personal funds to supplement payment for nursing care or for any item Medicaid or Medicare already pays for. On discharge or death the remaining balance and a final accounting must go out within 30 days, on death to the person named on the Administrator of Estate Designation Form.
Intermediate care facilities for individuals with intellectual disabilities have the same bond requirement under Rule 560-X-42-.22, written as a separate rule. The resident fund records are part of the accounting records Medicaid may audit under Rule 560-X-10-.18, and the surety bond is normally requested alongside them.
The Alabama rules do not set a dollar figure. Rule 560-X-22-.25 requires a bond that guarantees the security of all resident personal funds entrusted to the facility, so the amount must at least equal the total resident money the facility holds. Confirm the figure with the Alabama Medicaid Agency before the bond is issued, and increase it if balances grow.
Usually one bond covers both. The federal rule at 42 CFR 483.10(f)(10)(iv) and the Alabama rule require the same thing, a surety bond securing resident funds. Make sure the bond names the Alabama Medicaid Agency as obligee so it satisfies the state rule.
The requirement applies once the facility accepts a resident's delegation to manage personal funds, such as receiving a benefit check or holding family deposits. A facility that truly holds no resident money has nothing to bond, but reviewers expect a Medicaid certified facility to have the bond in place, and it is far easier to carry it than to explain its absence.
It pays when the facility loses, misapplies or fails to return resident money. That includes commingling resident funds with operating funds, using a resident's funds to supplement nursing care payment, or failing to return the balance within 30 days of discharge or death.
Premium is a percentage of the bond amount set by the surety after reviewing the owner's or administrator's credit and the facility's history. Because the bond amount tracks the resident funds held, a facility with modest balances pays a modest premium.
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