Health Facility Patient Trust Fund (Adult Residential / Social Rehab) Bond - Statewide in California
Table of Contents
Brief Summary
If your adult residential facility or social rehabilitation facility holds any client money at all, even a small petty cash balance, California requires a bond. The amount starts at $1,000 and rises with the cash you safeguard each month, so most facilities can post it for a modest annual premium and send the LIC 402 to Community Care Licensing the same week.
California Health and Safety Code 1560 and Title 22, section 80025 require community care licensees who safeguard client cash to file a surety bond with the State of California. For adult residential and social rehabilitation facilities, handling any amount triggers the bond. The amount is tiered, starting at $1,000 for $750 or less per month, and is filed on CDSS form LIC 402 with affidavit LIC 400.
We can help with all California bonds!
How to Apply for a Health Facility Patient Trust Fund (Adult Residential / Social Rehab) Bond:
- Work out the most client cash the facility will safeguard in any month, including holiday and vacation peaks.
- Match that figure to the 22 CCR 80025 schedule to find your bond amount.
- Complete CDSS form LIC 400, the cash resources affidavit.
- Apply for the bond, review the quote and pay the premium.
- Have the surety complete and sign CDSS form LIC 402 naming the State of California.
- Send the original LIC 402 and the LIC 400 to your Community Care Licensing regional office.
Detailed Information About the California Health Facility Patient Trust Fund (Adult Residential / Social Rehab) Bond:
Any amount of client cash triggers the bond
This is the point most adult facility operators get wrong. The $50 per person and $500 per month exemption in Health and Safety Code 1560 applies only to facilities licensed to care for children. The CDSS affidavit LIC 400 says it directly: any amount of money handled for the adult community care facility categories requires a bond. If your adult residential facility or social rehabilitation facility holds spending money, benefit checks or personal funds for residents, you need the bond.
Governmental entities are the one group that 22 CCR 80025 leaves out of the requirement.
How much bond you need
The amount is set by the most cash you safeguard for all clients in a month, under 22 CCR 80025(c):
- $750 or less: $1,000 bond
- $751 to $1,500: $2,000 bond
- $1,501 to $2,500: $3,000 bond
- Each further $1,000, or fraction of it, adds $1,000 to the bond
Plan for your peak month, not your average one. CDSS warns that client balances often run higher before holidays and summer vacations. Before you start holding more money than your current bond covers, you must file a new affidavit and a new bond. Licensing can also demand a larger bond if it finds the current one too small or if a claim has reduced it.
The forms
The licensee files two CDSS Community Care Licensing forms. LIC 400, the Affidavit Regarding Client/Resident Cash Resources, states how much you will handle. LIC 402 is the surety bond itself, naming the State of California as beneficiary. The original bond goes to the regional office. LIC 400 is required with new applications, at license renewal and whenever the department asks to reevaluate your bonding need.
What the bond covers
The surety is liable if the licensee fails to handle client money faithfully and honestly. Any person harmed by that mishandling can sue on the bond for their damages, up to the bond amount. The bond stays in effect as long as the license is valid, and the surety can cancel it only with notice under Code of Civil Procedure 996.030 and 996.320.
Eligibility and Requirements for a California Health Facility Patient Trust Fund (Adult Residential / Social Rehab) Bond:
- A surety company admitted to do business in California.
- Bond amount of at least $1,000, scaled to monthly cash safeguarded under 22 CCR 80025.
- State of California named as beneficiary on CDSS form LIC 402.
- Licensee and facility names and license number matching the CCL file.
- A new affidavit and bond before cash on hand exceeds the current bond amount.
California Health Facility Patient Trust Fund (Adult Residential / Social Rehab) Bond FAQs:
Yes. For adult residential and social rehabilitation facilities, any amount of client money handled requires a bond. The $50 per person and $500 per month exemption applies only to facilities licensed to care for children.
It depends on the most cash you safeguard per month. $750 or less needs a $1,000 bond, $751 to $1,500 needs $2,000, $1,501 to $2,500 needs $3,000, and each further $1,000 or fraction adds $1,000.
File a new LIC 400 affidavit and a larger bond before you start holding more than the current bond covers. Licensing can also require a bigger bond on its own if it finds the amount insufficient.
Any person injured by unfaithful or dishonest handling of client money can bring an action on the bond for their damages, up to the bond amount.
The surety prices it from the bond amount and the owner's credit and financial history. Smaller bonds at the low end of the schedule usually carry a modest premium.
