Responsibilities on Assisted Living Communities
for Holding Resident Funds
By: The Alliance Insurance Group
Washington statutes and administrative rules seem to place an obligation on senior care “licensees”, including Assisted Living Communities, and management companies, which elect to hold funds on behalf of a resident. Recently the state cited an Assisted Living Licensee for violating the rules discussed below, which is why we raise it for your awareness and review.
When read together the rules and statutes appear to require an Assisted Living Facility and Skilled Facility to manage the resident’s personal funds, by holding, safeguarding, managing and accounting for the funds deposited with the facility as follows:
(a) The facility must deposit a resident's personal funds in excess of one hundred dollars in an interest-bearing account or accounts that is separate from any of the facility's operating accounts, and that credits all interest earned on residents' funds to that account. In pooled accounts, there must be a separate accounting for each resident's share.
(b) The facility must maintain a resident's personal funds that do not exceed one hundred dollars in a
noninterest-bearing account, interest-bearing account, or petty cash fund.
The facility must also establish and maintain a system that assures a full and complete and separate accounting of each resident's personal funds entrusted to the facility on the resident's behalf. The following rules apply:
(a) The system must preclude any commingling of resident funds with facility funds or with the funds of any person other than another resident.
(b) The individual financial record must be available on request to the resident or his or her legal representative.
(c) Upon the death of a resident with a personal fund deposited with the facility the facility must convey within forty-five days the resident's funds, and a final accounting of those funds, to the individual or probate jurisdiction administering the resident's estate; but in the case of a resident who received long-term care services paid for by the state, the funds and accounting shall be sent to the state of Washington, department of social and health services, office of financial recovery. The department shall establish a release procedure for use for burial expenses. See: RCW 70.129.040Protection of resident's funds — Financial affairs rights.
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State administrative rules implementing this statute require that the facility licensee do the following:WAC 388-78A-2730 Licensee's responsibilities
The licensee must:
Ensure any party responsible for holding or managing residents' personal funds is bonded or obtains insurance in sufficient amounts to specifically cover losses of resident funds; and provides proof of bond or insurance to the department.
WAC 388-78A-3170 Circumstances resulting in enforcement remedies.
(1) The department is authorized to impose enforcement remedies described in WAC 388-78A-3160 if any person described in subsection (2) of this section is found by the department to have:
(i) Failed to exercise fiscal accountability and responsibility involving a resident, the department, public agencies, or the business community; or to have insufficient financial resources or unencumbered income to sustain the operation of the boarding home;
Management Companies distinct from the “licensee” must do the same pursuant to WAC 388-78A-2595.
As a practical matter the facility should be treating funds in excess of $100 a little more carefully, placed in interest bearing accounts, than those of less than $100.00. However, the accounting of the funds regardless of amount is on the licensee. Further, the requirement set out in 388-78A- 2730 places the duty on the licensee to provide a “bond or other insurance” on any resident funds. Said another way, the administrative rule does not care if the resident funds are over or under $100, they must be separately accounted for and bonded or insured for any loss, and these duties fall to the licensee.
As a result, it would seem wise for Assisted Living and Skilled Community licensees to intentionally do one of two things: 1. Not hold any resident funds thereby avoiding the requirements altogether and the related enforcement and penalties; or 2. If they elect to hold such funds as a courtesy to the resident, they must develop a policy consistent with these requirements. As part of that policy someone should be on point to manage these accounts accordingly. And, appropriate bonds need to be in place to cover the value of the funds being held. The policy might consider if this service is indeed to remain as a courtesy or at a price.
Likewise, any contractual delegation to a management company by the licensee should also cover these same duties. And, if you are an Adult Family Home you not only have these duties but they also extend to any deposits or pre paid fees paid by a resident and held by the Adult Family Home. See: HB 1277 section III (2011) as it modified RCW 70.129.040.
As a licensee, intentionally consider the issues and implications from holding resident funds, there is a responsibility for doing so. You may want to check with your local counsel should you have questions. The Alliance Insurance Group provides the bonds and insurance coverage for this exposure.
Alliance Insurance Group
941 Oak Street, Eugene, OR 97401
Phone: (541) 687-4799 * Fax: (541) 687-4718