What is a Medicaid Bond?

medicaid bondThe Medicaid bond is required to make sure that any business that works with Medicaid will bill appropriately. This bond has been necessary since 1997 when the Secretary of the United States Department of Health set it as a requirement in the Balanced Budget Act. Some businesses that may require this bond include pharmacies, medical equipment sellers, and physician groups.

This is a bond that protects consumers by ensuring that the business they work with is operating in accordance with state laws.


What is the cost of a Medicaid bond?

Each state has its personal specific requirements for the amount of a Medicaid bond. You will be required to pay a premium that is a percentage of that total bond amount. If you have questions about the amount your state requires for a Medicaid bond, you can request a free quote by completing our simple online application. You can also call to speak with one of our licensed bond agents for answers to any questions you have and to get started on the bonding process.


How does a surety bond work?

In a Medicaid bond, as with all surety bonds, there are three key parties. There is an obligee, a principal, and a surety. The obligee is the state, the agency that requires a surety bond to be purchased. The principal is the person or business that is required to obtain the bond. The surety is the company that underwrites the bond, giving a guarantee that the principal will meet the terms set by the bond.

If for any reason the principal fails to meet those terms, the obligee will file a claim against the bond. After an investigation, the surety will make a payment to the complainant, not to exceed the amount of the bond. The principal will then need to repay the amount that was paid out from the bond.

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