Resident Patient Trust Funds Bond - Statewide in Texas

Brief Summary

There is no fixed bond amount here. The Resident Fund Surety Bond is sized to the money your nursing facility actually holds for residents, so a small facility with modest trust balances pays premium on a small bond. It is written on HHSC Form 3698 and has to be in place before a new owner's Medicaid contract begins.

Texas nursing facilities certified for Medicaid that hold resident personal funds must secure those funds with a surety bond under 26 TAC 554.405(g). The bond amount equals the average monthly balance of all of the facility's resident trust fund accounts for the 12 months before the bond is issued or renewed. It is written on HHSC Form 3698, Resident Fund Surety Bond, and each facility is bonded separately.

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How to Apply for a Resident Patient Trust Funds Bond:

• Pull the facility's resident trust fund account balances for the last 12 months and calculate the average monthly balance.
• Have the corporate entity name exactly as it appears on the HHSC contract, plus the facility name and vendor number.
• Complete the bond application and provide owner and company financial information for underwriting.
• Pay the premium and receive the executed Form 3698 with Schedule A and the original Power of Attorney attached.
• Confirm current filing instructions with HHSC and submit the bond with original signatures before the contract or renewal date.

Detailed Information About the Texas Resident Patient Trust Funds Bond:

The amount is set by your own trust account balances

Most people shopping for this bond expect a standard figure. There is none. Texas Human Resources Code 32.0321 lets the Texas Health and Human Services Commission require a surety bond from any Medicaid provider that establishes a resident's trust fund account, and it caps the bond at the average of the total average monthly balance of all the provider's resident trust fund accounts for the 12-month period before the bond issuance or renewal date. The HHSC rule at 26 TAC 554.405(g) turns that cap into the requirement: the bond must equal that 12-month average monthly balance.

The balances are specific to one facility. An operator with several nursing homes needs a separate bond for each building, sized to that building's accounts.

Form 3698 asks for more than one number

The bond is written on HHSC Form 3698, Resident Fund Surety Bond. Its Schedule A asks for the maximum trust fund balance for the preceding year and a projected figure for the coming year. Pull your trust fund ledger before you apply so the surety has both figures, and confirm with HHSC which figure it expects in the bond amount if your balances have grown.

Who is protected and what the bond pays for

The bond runs in favor of the residents of the facility and the people who represent them. The condition is that the facility holds residents' funds separately and in trust, administers them on the residents' behalf, and accounts for every dollar when a deposit ends. Under the statute, bond proceeds compensate residents for trust funds that are lost, stolen or otherwise unaccounted for when the facility does not repay the shortfall itself. If an employee causes the loss, the resident, family and legal representative are not obligated to make any payment that would have come out of the trust fund.

The federal rule behind it

The same obligation appears in federal law. 42 CFR 483.10(f)(10)(vi) requires a Medicare or Medicaid facility to purchase a surety bond, or otherwise provide assurance satisfactory to the Secretary, to assure the security of all personal funds of residents deposited with the facility.

Change of ownership

Form 3698 requires the bond effective date to be on or before the date the contract begins when there is new ownership. Under 26 TAC 554.405, the prior owner must also turn over bank balances and individual resident account details to the new owner and get a signed receipt.

Eligibility and Requirements for a Texas Resident Patient Trust Funds Bond:

• Bond amount equal to the average monthly balance of the facility's resident trust fund accounts for the preceding 12 months, per 26 TAC 554.405(g).
• One bond per facility. Balances from other facilities under the same owner are not combined.
• HHSC Form 3698, Resident Fund Surety Bond, with Schedule A completed.
• Original signatures from the surety's attorney in fact and the principal's authorized officer. Copies and faxes are not accepted.
• Original Power of Attorney attached to the bond.
• Bond effective on or before the contract start date for a change of ownership.

Texas Resident Patient Trust Funds Bond FAQs:

Official and Additional Resources for the Texas Resident Patient Trust Funds Bond: