Patient Trust Fund Bonds: Protecting Residents' Cash

A patient trust fund is an optional interest-bearing account set up by a care facility or nursing home so residents can safely access their cash while staying at the facility. Unfortunately, patient trust funds can run the risk of poor management and oversight, failure to properly insure funds or pay interest, and outright theft.

Surety bonds can be put in place to help safeguard funds. For facilities managing residents' funds above $100 ($50 for Medicare residents), patient or resident trust fund bonds are required in many states. Funds must be deposited separately in interest-bearing accounts, following state-specific regulations.

What Do Patient Trust Fund Bonds Guarantee?

Patient trust fund bonds guarantee that the principal will hold separately and in trust all patients’ funds deposited with the care facility. The care facility will administer the funds on behalf of its patients as per legal requirements and individualized accounting for each resident.

Bond Amount and Bond Form

Merchants Bonding Company is a market for patient trust fund bonds and most states accept Merchants' general form.

Bond amounts vary. Each state sets its own bond amount regulations.

Appointed insurance agents can find individual bond requirements by signing in to the Hub, Merchants' intuitive and efficient bonding website. Use our Find an Agent tool to locate an experienced insurance agent near you.

Merchants' Underwriting Process

Underwriting requirements for resident trust fund bonds is dependent upon the bond amount. Bonds up to $100,000 can be instantly issued on the Merchants Bonding Company Hub™. Larger resident trust fund bonds often require a signed application, personal and business financial statements, and a credit check.

How do I get a Surety Bond?

Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.

What is a Surety Bond?

A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.


All information provided is subject to change.