Iowa Nursing Home Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain an Iowa Nursing Home bond
At a Glance:
- Lowest Cost: 1% of the bond amount per year based on the applicant’s credit
- Bond Amount: Equal to the number of resident funds held
- Who Needs it: All Iowa nursing homes that are designated as Medicaid facilities and hold the personal funds of residents
- Purpose: To ensure residents will receive compensation for financial harm if the nursing home deprives them of their funds
- Who Regulates Nursing Homes in Iowa: The Iowa Department of Public Health
Background
Iowa statute 135C.6 requires all nursing homes operating in the state to obtain a license with the Department of Public Health. The Iowa legislature enacted the licensing laws and regulations to ensure that nursing homes engage in ethical business practices. To provide financial security for the enforcement of the licensing law, nursing homes that are designated as Medicaid facilities and hold residents’ personal funds must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Iowa Nursing Home Bond?
Iowa requires nursing homes that are designated as Medicaid facilities and hold resident funds to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that residents will receive compensation for financial harm if the nursing home fails to abide by the regulations set forth in Iowa statute 81.13(5). Specifically, the bond protects residents if the nursing home deprives them of their personal funds. In short, the bond is a type of insurance that protects residents if the nursing home acts unethically with their funds.
How Can an Insurance Agent Obtain a Florida Nursing Home Surety Bond?
BondExchange makes obtaining a Florida Nursing Home bond easy. Simply log in to your account and use our keyword search to find the “nursing home” 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.
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.
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How is the Bond Amount Determined?
Iowa statute 81.13(5) dictates that the bond must be in an amount large enough to ensure the security of all resident funds. What this means in practice is that nursing homes will have to purchase a bond in an amount the equals the number of resident funds held.
Is a Credit Check Required for the Iowa Nursing Home Bond?
Surety companies will run a credit check on the owners of the nursing home to determine eligibility and pricing for the Iowa Nursing Home 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 Iowa Nursing Home Bond Cost?
The Iowa Nursing Home Bond can cost anywhere between 1% to 5% of the bond amount per year. 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 a $10,000 bond requirement.
$10,000 Nursing Home Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 625+ | $100 | $10 |
| 600 – 624 | $250 | $25 |
| 575 – 599 | $300 | $30 |
| 500 – 574 | $500 | $50 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Who is Required to Purchase a Bond?
Nursing homes in Iowa that are designated as Medicaid facilities and hold resident funds must purchase and maintain a surety bond. Federal statute 483.10 requires all long-term care facilities that hold patient 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.
To paraphrase Iowa statute 135C.1, a nursing home is an institution that houses three or more individuals, who are not related to the facility’s administrator, who require health care services for a period of 24 hours or longer.
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 Iowa Nursing Homes Apply for a License?
Nursing homes in Iowa must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the licensing statutes for details on the process.
License Period – All Iowa Nursing Home Licenses are valid for one year from the date of issuance and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
Nursing homes that hold resident funds must purchase and maintain a surety bond in an amount equal to the total (or estimated total) number of resident funds held
Step 2 – Obtain a License Through the Department of Inspections and Appeals
Nursing homes must obtain a business license through the Iowa Department of Inspections and Appeals. Nursing homes must contact the department to obtain an application, and the department will walk the nursing home through the application process and answer any questions they may have.
Prior to obtaining their license, nursing homes must obtain a certificate of need, pass a fire safety inspection, and pay an application fee based on the number of beds the facility contains.
Step 3 – Obtain a Medicaid Facility Designation
Nursing homes must apply for a Medicaid facility designation prior to participating in the state’s Medicaid program. To obtain a Medicaid facility designation, nursing homes must mail a completed application to the following address:
Imaging Center 1
Iowa Department of Human Services
417 E Kanesville Blvd
Council Bluffs, IA 51503
For help navigating the application process, nursing homes should utilize the resources located here.
How do Iowa Nursing Homes Renew Their License?
Prior to their license expiration date, nursing homes should contact the Department of Inspections and Appeals to obtain a renewal application. All Iowa Nursing Home Licenses are valid for one year from the date of issuance and must be renewed before the expiration date.
What are the Insurance Requirements for Nursing Homes in Iowa?
Iowa does not require nursing homes to obtain any form of liability insurance as a prerequisite to obtaining a business license. Nursing homes that are designated as Medicaid facilities and hold resident funds must purchase and maintain a surety bond in an amount equal to the total number of resident funds held.
How Do Iowa Nursing Homes File Their Bond?
Nursing homes should mail their completed bond form, including the power of attorney, to the following address:
Imaging Center 1
Iowa Department of Human Services
417 E Kanesville Blvd
Council Bluffs, IA 51503
The surety bond requires signatures from both the surety company that issues the bond and from a representative of the nursing home. 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 and address
- Bond amount
- Date the bond goes into effect
- Date the bond is signed
What Can Iowa Nursing Homes Do to Avoid Claims Against Their Bond?
To avoid claims on their bond, nursing homes in Iowa must ensure that they do not deprive residents of any personal funds that have been deposited with the facility.
What Other Insurance Products Can Agents Offer Nursing Homes in Iowa?
Iowa does not require nursing homes to obtain any form of liability insurance as a prerequisite to obtaining a business license. However, most reputable facilities 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 Iowa Nursing Home Customers?
Iowa conveniently provides a public database to search for active nursing homes with Medicaid facility designations 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.
