Texas Subscription Program Bond: A Comprehensive Guide

This guide provides information for insurance agents to help their customers obtain a Texas Subscription Program bond

At a Glance:

• Lowest Cost: 1% of the bond amount per year, based on the applicant’s credit
• Bond Amount: Equal to the total amount of subscriber funds to be collected
• Who Needs it: All Texas emergency medical services (EMS) providers that offer subscription programs
• Purpose: To ensure that subscribers will receive compensation for financial harm if the EMS provider cannot provide services that have been paid for
• Who Regulates EMS Providers in Texas: The Texas Department of State Health Services

Background

Texas statute 773.011 requires all EMS providers to purchase and maintain a surety bond prior to establishing a subscription program. The Texas legislature enacted the bonding requirement to offer protection to the program’s subscribers. Additionally, EMS providers are required to obtain a business license through the Department of State Health Services, as outlined in Texas statute 773.041, and must have their subscription program approved by every county it will be offered in.

What is the Purpose of the Texas Subscription Program Bond?

The bond ensures that the program’s subscribers will receive compensation for financial harm if the EMS provider becomes insolvent. Specifically, the bond protects subscribers if the provider ceases to operate and fails to issue refunds for coverage that was paid but not earned. In short, the bond is a type of insurance that protects the subscribers of the EMS program if the provider ceases operations and does not issue refunds.

How Can an Insurance Agent Obtain a Texas Subscription Program Surety Bond?

BondExchange makes obtaining a Texas Subscription Program bond easy. Simply log in to your account and use our keyword search to find the “subscription program” 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 Texas Subscription Program Bond?

Surety companies will run a credit check on the owners of the EMS provider to determine eligibility and pricing for the Texas Subscription Program 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 Texas Subscription Program Bond Cost?

The Texas Subscription Program bond can cost anywhere between 1% to 12.5% 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. BondExchange also offers monthly pay-as-you-go options for these bonds. The chart below offers a quick reference for the bond cost on a $10,000 bond requirement.

$10,000 Subscription Program Bond Cost

Who is Required to Purchase the Texas Subscription Program Bond?

Texas requires all emergency medical services providers that offer subscription prgrams to purchase and maintain a surety bond. To paraphrase Texas statute 773.003, an emergency medical services provider is an individual or business that uses emergency medical services vehicles, equipment, and trained personnel to provide individuals with immediate medical care.

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 EMS Providers Apply for a License in Texas?

EMS providers in Texas must navigate several steps to obtain their licenses. Below are the general guidelines, but applicants should refer to the application checklist for details on the process.

License Period – All Texas EMS Provider Licenses are valid for two years from the date of issuance and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

EMS providers that offer subscription programs must purchase and maintain a surety bond with a limit that is equal to the total amount of subscriber funds to be collected. Additionally, EMS providers that participate in the state’s Medicaid program must purchase and maintain a $50,000 surety bond.

Step 2 – Obtain Local Approval

EMS providers must obtain approval from each municipality/county they plan to conduct business in. If the provider plans to offer subscription programs, then the municipality/county must state their approval for these programs as well. Providers are required to submit proof of approval with their license application.

Step 3 – Purchase Insurance

Texas requires EMS providers to purchase the following types of insurance and submit proof of coverage with their license application.

• • Motor vehicle liability insurance for all EMS vehicles
  • Professional liability insurance with a minimum limit of $500,000 per occurrence
  • Air ambulance and/or rotar wing aircraft insurance (if applicable)

Step 4 – Obtain a Letter of Credit

Initial license applicants must obtain a $100,000 letter of credit, from a federally insured bank or savings institution, and submit it with their license application

Step 5 – Complete the Application

EMS providers should mail their completed license application, attached to the required Cover letter, to the following address:

Texas Department of State Health Services (DSHS)
Cash Receipts Branch – MC 2003
PO Box 149347
Austin, Texas 78714-9347

EMS providers must complete the application in its entirety, and submit the following items:

• • EMS provider declaration form
  • Station location list
  • EMS personnel form
  • EMS vehicle form
  • Copy of all national accreditations (if applicable)
  • Medical director form
  • Documentation pertaining to the provider’s subscription program (if applicable)
  • Copy of the lease agreement or proof of ownership of the provider’s physical location
  • Staffing plan
  • Quality assessment and improvement plan
  • Mutual aid and inter-local agreements (if applicable)
  • Treatment and transport protocols
  • Equipment, supplies, and medications list
  • List of all EMS equipment owners
  • $500 application fee plus an additional $180 per vehicle to be operated
  • Documents pertaining to the provider’s use of a rotar wing and/or fixed wing air ambulance (if applicable)

All documents, except for the cover letter, must be in PDF format and stored on a USB flash drive. The flash drive must be secured to the cover letter when submitted. Providers that are staffed with at least 75% volunteer personnel, have no more than 5 full-time staff members, and hold an IRS 501(c)(3) tax classification are exempt from paying the application fee.

Step 6 – Pass Inspection

After receiving the license application, the Department of State Health Services will assign an EMS specialist to inspect the provider’s facility. During the inspection, the EMS specialist will review the following items:

• • The provider’s standard operating policies and procedures
  • Sample patient care report

How do Texas EMS Providers Renew Their License?

EMS providers can renew their business licenses online here. All Texas EMS Provider Licenses are valid for two years from the date of issuance and must be renewed before the expiration date.

What are the Insurance Requirements for EMS Providers in Texas?

Texas requires EMS providers to purchase the following types of insurance:

• Motor vehicle liability insurance for all EMS vehicles
• Professional liability insurance with a minimum limit of $500,000 per occurrence
• Air ambulance and/or rotar wing aircraft insurance (if applicable)

Provider’s that offer subscription programs must purchase a surety bond with a limit that is equal to the total amount of subscriber funds to be collected. Additionally, EMS providers that participate in the state’s Medicaid program must purchase and maintain a $50,000 surety bond.

How Do Texas EMS Providers File Their Subscription Program Bond?

EMS providers should mail their completed bond form, including the power of attorney, to the following address:

Texas Department of State Health Services
1100 West 49th Street
Austin, TX 78756

The surety bond requires signatures from both the surety company that issues the bond and from a  representative of the EMS provider. The surety company should include the following information on the bond form:

• Legal name, address, mailing address, and phone number of the entity/individual(s) buying the bond
• Surety company’s name
• Bond amount
• Date the bond is signed
• Date the bond goes into effect

What Can Texas EMS Providers Do to Avoid Claims Against Their Bond?

To avoid claims made against their bonds, EMS providers in Texas must ensure that they

• Provide all services that have been paid for
• Issue refunds for all coverage that was paid for but not provided

What Other Insurance Products Can Agents Offer EMS Providers in Texas?

Texas requires EMS providers to purchase liability insurance as a prerequisite to obtaining a business license. 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 Texas EMS Provider Customers?

Texas conveniently provides a public database to search for active EMS providers 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.