Rhode Island Discount Medical Plan Organization Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Rhode Island Discount Medical Plan Organization bond
At a Glance:
- Lowest Cost: $500 per year or $50 per month, based on the applicant’s credit
- Bond Amount: $50,000
- Who Needs it: All discount medical plan organizations (DMPOs) operating in Rhode Island
- Purpose: To ensure the public will receive compensation for financial harm if the DMPO violates registration law
- Who Regulates Discount Medical Plan Organizations in Rhode Island: The Rhode Island Office of the Health Insurance Commissioner
Background
Rhode Island Statute 27-74-5 requires all DMPOs operating in the state to register with the Office of the Health Insurance Commissioner. The Rhode Island legislature enacted the registration laws and regulations to ensure that DMPOs engage in ethical business practices. To provide financial security for the enforcement of the registration law, DMPOs must purchase and maintain a $50,000 surety bond to be eligible for registration.
What is the Purpose of the Rhode Island Discount Medical Plan Organization Bond?
Rhode Island requires DMPOs to purchase a surety bond as part of the application process to obtain a business registration. The bond ensures that the public will receive compensation for financial harm if the DMPO fails to abide by the regulations set forth in Rhode Island code 27-74-6. Specifically, the bond protects consumers if the DMPO fails to refund payments if their registration is revoked. In short, the bond is a type of insurance that protects the public if the DMPO violates registration law.
How Can an Insurance Agent Obtain a Rhode Island Discount Medical Plan Organization Bond?
BondExchange makes obtaining a Rhode Island Discount Medical Plan 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.
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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Is a Credit Check Required for the Rhode Island 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 Rhode Island 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 Rhode Island Discount Medical Plan Organization Bond Cost?
The Rhode Island Discount Medical Plan Organization Bond can cost anywhere between $500 to $2,500 per year or $50 to $250 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 $50,000 bond requirement.
$20,000 Patient Trust Fund Bond Cost
| Credit Score | Bond Cost (1 year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $500 | $50 |
| 625 – 799 | $750 | $75 |
| 575 – 624 | $1,875 | $188 |
| 450 – 574 | $2,500 | $250 |
*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 the Bond?
Rhode Island requires all DMPOs operating in the state to purchase a surety bond as a prerequisite to obtaining a business registration. To paraphrase Rhode Island statute 27-74-3, a discount medical plan organization is a business entity that provides members with discounts to medical or ancillary services through providers that the organization contracts with.
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 Rhode Island Discount Medical Plan Organizations Apply for a Registration?
DMPOs in Rhode Island must navigate several steps to obtain a registration. Below are the general guidelines, but applicants should refer to the application form for details on the process.
Registration Period – All Rhode Island DMPO Registrations are valid for two years and must be renewed before the expiration date
Step 1 – Purchase a Surety Bond
DMPOs must purchase and maintain a $50,000 surety bond to be eligible for registration
Step 2 – Purchase Insurance
Rhode Island requires DMPOs to purchase both errors & omissions insurance as well as directors & officers insurance and submit proof of this insurance with their registration application
Step 3 – Complete the Application
All Rhode Island DMPO Registration applications should be mailed to the following address:
Office of the Health Insurance Commissioner
1511 Pontiac Ave., Bldg. 69-1
Cranston, Rhode Island 02920
DMPOs must complete the application in its entirety and submit the following items:
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- Company formation documents
- Audited company financial statements or unaudited financial statements accompanied by the company’s signed federal tax return for the most recent year
- The names, addresses, and phone numbers of the organization’s officers, directors, and board members
- List of all contractual agreements made with other DMPOs
- $250 application fee
How do Rhode Island Discount Medical Plan Organizations Renew Their Registration?
DMPOs should mail their completed renewal application, including a $250 fee, to the following address:
Office of the Health Insurance Commissioner
1511 Pontiac Ave., Bldg. 69-1
Cranston, Rhode Island 02920
All Rhode Island DMPO Registrations are valid for two years and must be renewed before the expiration date.
What are the Insurance Requirements for Discount Medical Plan Organizations in Rhode Island?
Rhode Island requires DMPOs to purchase errors & omissions insurance as well as directors & officers insurance. DMPOs must purchase and maintain a $50,000 surety bond.
How Do Rhode Island Discount Medical Plan Organizations File Their Bond?
DMPOs should mail their completed bond form, including the power of attorney, to the following address:
Office of the Health Insurance Commissioner
1511 Pontiac Ave., Bldg. 69-1
Cranston, Rhode Island 02920
The surety bond requires signatures from both the surety company that issues the bond and from a representative of the DMPO. 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
- Bond number
- Premium paid on the bond
- Date the bond goes into effect
- Date the bond is signed
What Can Rhode Island Discount Medical Plan Organizations Do to Avoid Claims Against Their Bonds?
Rhode Island statute 27-74-6 grants the Health Insurance Commissioner the authority to define what constitutes a valid claim against a DMPO bond at his/her own discretion. However, the statute explicitly states that DMPOs that have their registrations revoked and do not refund members for all costs/fees are liable to have claims made against their bonds.
What Other Insurance Products Can Agents Offer Discount Medical Plan Organizations in Rhode Island?
Rhode Island requires DMPOs to obtain both errors & omissions insurance as well as directors & officers insurance as a prerequisite to obtaining a business registration. 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 Rhode Island Discount Medical Plan Organization Customers?
The Rhode Island Secretary of State conveniently provides a public database to search for active businesses 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.
