Assurance of Financial Security

The last regulation in the residents’ rights section pertaining to resident trust funds includes F570. In this regulation, the Centers for Medicare and Medicaid Services (CMS) requires nursing homes who have a resident trust fund to provide financial security for those funds in the event someone misappropriates those funds. Compliance with this requirement is generally in the form of a surety bond, but can also be other methods as long as the nursing home is able to provide documentation of financial security. The amount of the surety bond must be at least the amount of funds that are deposited within the resident trust fund. For example, if you have a balance of $9,000 total, the surety bond would not be compliant if the value was only $5,000.

The interpretive guidance provides a couple key compliance tips:

• The nursing home cannot self-insure the funds.
• Funds deposited in a bank account that is protected by the Federal Deposit Insurance Corporation (FDIC) does not fulfill the financial security requirement.
• The nursing home cannot be listed as the beneficiary – it must be the residents or the state.
• If a multi-site provider has one policy, there must be separate declaration pages for each location that accepts resident funds.
• Refundable deposit fees must be included in the financial assurance compliance.

During survey, the surveyors will generally ask providers to show documentation of the surety bond which can be fulfilled by providing a copy of the declaration page from your bond. This regulation is rarely cited, but instances of deficiency generally related to the value of the surety bond not being adequate to cover the entirety of deposited funds.