Surety Bonds Benefit Residents of Assisted Living Facilities

assisted living facilities

Those who extend their hospitality to others through their careers are often revered for their caring nature. Unfortunately, some assisted living facilities have been known to take advantage of their positions by siphoning money away from those they care for. Family members deserve to have peace of mind that their loved one will be cared for properly, and knowing that their finances are handled appropriately can help ease some of the worry. One way family members can do this is by making sure the long-term care provider has a surety bond in place.

Patients and their families should understand how surety bonds work

Because insurance companies frequently underwrite surety bonds, they are often confused as a type of insurance policy. This assumption, however, is inaccurate as surety bonds are a completely separate product. Surety bonds act as risk mitigation tools that protect consumers, not policyholders. For this reason they’re frequently utilized for professions in service industries, especially those related to health care.

Each surety bond that’s issued acts as a legally binding contract among three entities.

  1. The principal is the professional or business that purchases the surety bond to provide a financial guarantee of work performance
  2. The obligee is the entity requiring the bond, which is typically a government agency that regulates the industry to protect consumers
  3. The surety is the agency that issues the surety bond and provides a financial guarantee of the principal’s ability to fulfill duties as outlined by the bond

Once they know the basic functionality of surety bonds, family members can observe the three major ways that surety bonds ensure their loved ones are cared for in a hospitable way.

1) Surety bonds enforce health care industry regulations

Because the nature of surety bonds is to protect consumers from fraud and malpractice, it’s easy to see why they are used so heavily in the health care industry. A number of specific surety bond types exist to ensure that those who need assistance are not taken advantage of by greedy health care professionals.

  • DMEPOS bonds (also known as “Medicare bonds”) are mandatory for manufacturers and suppliers of durable medical equipment, prosthetics, orthotics and supplies to curb instances of medical fraud, malpractice and excessive fees
  • Health care professional bonds guarantee that funds owed to third parties, such as insurance companies, are forwarded properly
  • Patient trust bonds ensure that the facility properly manages its patients’ money

Although surety bonds are meant to ensure health care facilities follow the law, some will still try to cut corners and conduct business in unethical ways. When health care professionals break a bond’s terms, the harmed party can make a claim to recover losses. This could be a client who lost money due to negligence or a government agency that wants to fine the health care facility.

2) Surety bonds keep unqualified health care professionals out of the industry

The strict nature of the surety bond application process aims keep unqualified health care professionals from working in the market. The surety bond process is especially valuable because a neutral third party, the surety, evaluates the applicant before determining whether to issue a bond. Because surety providers want to avoid claims, they set stringent qualifications for their applicants.

Surety providers are hesitant to issue bonds to applicants that have low credit scores, poor work histories or other signs of financial instability. When health care providers or long-term care facilities cannot secure the necessary surety bonds, they will not be licensed to care for patients. In this way unqualified providers cannot access a position through which they could take advantage of those who need special care.

3) Surety bonds provide families with peace of mind

With surety bonds in place, families can rest assured their loved ones’ finances will be handled appropriately. If a problem should arise at some point due to finance mismanagement, surety bonds provide families with a way to recollect the missing funds. So, before deciding on a long-term care plan for a loved one, family members should always verify that the provider is bonded.

The decision to move a loved one to an assisted living facility or nursing home is never an easy one, but it’s easier when their families trust the professionals who work there. When executed in accordance with laws, surety bonds provide this peace of mind.

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About the Author

Danielle Burrow
Danielle Burrow is the Chief Operations Officer at She graduated from the University of Missouri School of Journalism in 2011.