Pharmacy Benefit Manager (PBM) Surety Bonds
If your company operates as a pharmacy benefit manager, a growing number of states now require you to post a surety bond before they will issue or renew your PBM license. These are not small bonds. Several states set the amount at $1,000,000, and the requirements vary quite a bit from one state to the next. We can help you get bonded quickly and correctly in any state that requires it. Surety Bond Authority has been writing surety bonds since 1971, and we work with the carriers that handle large, financially underwritten bonds like these.
If you already know which state you need a PBM bond in and want to get moving, call us at 800-333-7800 or request a free quote online. We write PBM bonds nationwide.
What Is a PBM Surety Bond?
A PBM surety bond is a financial guarantee that a pharmacy benefit manager will meet its legal and financial obligations under state law. Like any surety bond, it involves three parties. Your company is the principal. The state, usually the Department of Insurance, is the obligee. The surety is the company that issues the bond and stands behind your obligations. If your company fails to do what the law requires, a harmed party can file a claim, the surety pays the valid claim up to the bond amount, and your company repays the surety. The bond protects others, not the PBM.
Because the bond is required as a condition of holding a PBM license, it is a type of license and permit bond. That said, the larger PBM bonds behave more like high-limit financial-guarantee bonds than a routine license bond, which matters for how they are underwritten. More on that below.
Who the Bond Protects, and Why States Require It
PBMs sit between health plans and pharmacies. They set reimbursement rates, run maximum allowable cost (MAC) lists, process claims, and are responsible for paying pharmacies accurately and on time. When a PBM underpays, delays payment, mishandles a MAC appeal, or otherwise falls short, the pharmacies at the end of that chain can be left absorbing the loss. The PBM bond exists so those parties have a real source of recovery.
The bond primarily protects three groups:
- Pharmacies, especially independents, that depend on accurate and timely reimbursement from the PBM.
- Health plans and covered members, whose funds flow through the PBM and who are protected against mismanagement.
- The state, which uses the bond to make sure a licensed PBM actually complies with the statute, including prompt-pay, transparency, and reporting requirements.
This is why the requirement has spread so quickly. The recent wave of state PBM reform laws was aimed largely at protecting pharmacies from being squeezed, and a surety bond is a direct, enforceable way to back that up. In several states the bond also functions as a financial-responsibility test: it forces a PBM to prove it has real capital behind it before the state allows it to operate.
How Much Does a PBM Bond Cost?
Start by separating two numbers. The bond amount is the total coverage the state requires, and it ranges from around $50,000 up to $1,000,000 depending on the state and, in some states, on your volume. The premium is what you actually pay, and it is a fraction of the bond amount.
Because these are large bonds that guarantee real payment obligations, they are underwritten more carefully than a small license bond. Expect the surety to review your company's financial statements, and be prepared for the possibility of collateral on the larger amounts, particularly the $1,000,000 bonds. Strong financials help you qualify at the best rate. We work with multiple top-rated carriers and will shop your bond to find the most competitive terms available for your situation, so the best next step is to call us at 800-333-7800 for a quote. Premiums are paid annually, and the bond stays in force as long as your license does.
States That Require a PBM Surety Bond
The list below reflects the states we have verified as requiring a PBM surety bond (or, in a couple of cases, a bond as a way to satisfy a financial-responsibility requirement). Requirements in this area have changed fast over the last two years and continue to evolve, so treat this as a current snapshot and call us to confirm the exact requirement for your situation. For the broader regulatory picture, the National Academy for State Health Policy tracks PBM legislation across every state.
- Arkansas — $1,000,000. Required by the Arkansas Insurance Department. The bond can be reduced in cases of documented financial hardship relative to the size of the company's Arkansas business.
- Connecticut — $25,000 to $1,000,000. The Connecticut Insurance Department sets the amount based on the PBM's Connecticut claims volume, calculated as a percentage of one month of claims within that range. See our Connecticut PBM bond page for details.
- Georgia — $100,000. Required by the Georgia Office of Commissioner of Insurance and Safety Fire. The bond is held in favor of the Commissioner and can be canceled only on 30 days' written notice. See our Georgia PBM bond page for details.
- Iowa — $50,000 to $1,000,000. Iowa requires PBMs to hold a third-party administrator (TPA) certificate through the Iowa Insurance Division, and the TPA bond applies. The amount is tied to the funds the administrator handles. See our Iowa PBM bond page for details.
- Kentucky — at least $1,000,000. The Kentucky Department of Insurance requires financial responsibility of at least $1,000,000, which a PBM can satisfy with a surety bond or an equivalent insurance certificate.
- Oklahoma — $50,000 to $1,000,000. The Oklahoma Insurance Department sets the amount on a tiered scale based on the number of Oklahoma covered lives, with the top tier at $1,000,000. See our Oklahoma PBM bond page for details.
- West Virginia — $1,000,000. The West Virginia Offices of the Insurance Commissioner require continuous financial responsibility of $1,000,000, which can be met with cash or a surety bond from a West Virginia-authorized surety. See our West Virginia PBM bond page for details.
- Wisconsin — amount set by the state. Wisconsin licenses PBMs as administrators and requires a performance (surety) bond, with the amount set by the Office of the Commissioner of Insurance based on the applicant. See our Wisconsin PBM bond page for details.
- North Dakota — $1,000,000 (financial responsibility). The North Dakota Insurance Department requires $1,000,000 in evidence of financial responsibility rather than a straight bond mandate, and a surety bond can be one acceptable way to meet it.
A few important distinctions. Most other states now license or register PBMs but do not require a surety bond to do so. And a couple of states require a different kind of bond entirely: Texas and Massachusetts call for a fidelity bond, which covers employee dishonesty, rather than a surety bond that guarantees the company's obligations. Several states are also brand new to PBM licensing, with programs coming online in the near future, so the list of bond states is likely to grow. If you do not see your state here, call us and we will tell you exactly what it requires today.
How to Get Your PBM Bond
- Tell us the state and the amount. Let us know which state's PBM license you are pursuing and the bond amount that state requires. If you are not sure, we will confirm it.
- Submit an application and financials. Because these are large bonds, the surety will review company financial statements. Having recent statements ready speeds things up.
- Underwriting review. We shop your bond across our carriers and come back with terms. On the larger amounts, we will let you know upfront if collateral is involved so there are no surprises.
- Issue and file. Once you approve the terms and pay the premium, we issue the bond and get it to you in the form the state requires so you can complete your license.
Frequently Asked Questions About PBM Bonds
What is a pharmacy benefit manager bond?
It is a surety bond a state requires a PBM to post as a condition of licensure. It guarantees the PBM will meet its legal and financial obligations, including paying pharmacies correctly and complying with the state's PBM law. If the PBM fails, harmed parties can claim against the bond.
Which states require a PBM surety bond?
As of 2026, we have verified PBM surety bond or financial-responsibility requirements in Arkansas, Connecticut, Georgia, Iowa, Kentucky, Oklahoma, West Virginia, Wisconsin, and North Dakota. Most other states license PBMs without a bond, and this area is changing quickly, so call us to confirm your state.
How much does a PBM bond cost?
The bond amount is set by the state and ranges from about $50,000 to $1,000,000. Your premium is a fraction of that amount and depends on the bond size and your company's financials. Call us at 800-333-7800 for a quote specific to your situation.
Why are PBM bonds so large?
Because they guarantee real payment obligations to pharmacies and health plans, several states set the amount at $1,000,000 and treat the bond as proof that the PBM has the financial strength to operate. That is also why these bonds are underwritten on financials and may require collateral.
Is a PBM bond the same as a fidelity bond?
No. A surety bond guarantees the PBM's obligations to outside parties and the state. A fidelity bond covers losses from employee dishonesty. A few states, such as Texas and Massachusetts, require a fidelity bond rather than a surety bond, so it is important to know which one your state is asking for.
How do I get a PBM bond?
Call us at 800-333-7800 or request a free quote online. Tell us your state and the required amount, have your company financials ready, and we will handle the rest.
Get Your PBM Bond Today
PBM licensing deadlines do not wait, and a $1,000,000 financial-guarantee bond is not something you want to leave to the last minute. Surety Bond Authority has been writing surety bonds since 1971, we work with every major carrier that handles bonds this size, and we will move as fast as your paperwork allows. Call us at 800-333-7800 or contact us for a free quote, and we will get you bonded in whatever state you need.