As the financial representatives for their residents, long-term care teams assume the responsibility of managing resident personal funds. When a resident opens a trust fund account, the money is used to cover additional expenses during their stay in the facility. But what is a resident trust fund account, and why is it necessary? Let’s discuss it in more detail.
What is a resident personal trust fund?
A resident personal trust fund is an account funded by a resident or their family who deposit money (Social Security funds, pension checks, and gifts) for the resident to use as necessary. When a facility opens a resident funds account, it is set up as an interest-bearing account separate from the organization’s own operational and financial funds.
Nursing homes and long-term care facilities have no official obligations to manage residents’ funds. Rather, facilities must receive express permission from the residents or their families before opening a trust fund or using any funds.
Once an account is opened, long-term care facilities will use the deposited trust fund money strictly as a petty cash account to pay for miscellaneous expenses, such as haircuts, manicures, or shopping items from an on-site convenience store. When residents want to access their funds, the facility must grant them access within three working days of the request.
If a facility assumes the responsibility of managing resident personal funds, residents still maintain control of their accounts. Therefore, they are within their rights to request financial statements from the facility to approve how the money is spent. Furthermore, facilities must provide a quarterly statement for the trust funds. That statement is to be given to the resident or their family.
Resident trust funds are not compulsory, so only those who choose to have an account will have one opened for them. They must make a minimum deposit of $50 to activate the account. Each resident who opens a trust fund will have access to an organized account that tracks every transaction, including all credit and debit payments that the facility will approve before any transaction is made.
If a resident returns home or dies during care, any outstanding funds will be returned to the resident or their family within 30 days.
What is the purpose of resident trust funds?
The purpose of resident trust funds is to give residents some sense of independence and control over their finances. Regardless of a resident’s mental or physical condition, residents can access their petty cash accounts, thus giving them some financial freedom and the comfort that comes with being able to purchase items and services as they would when living independently.
However, resident trust funds can be susceptible to misuse by unethical employees who abuse vulnerable residents. That is why the regulation of residents’ funds falls under the jurisdiction of the Centers for Medicaid and Medicare Services (CMS) National Standards Group, which ensures that the residents are protected from theft.
Additionally, every Medicare or Medicaid-certified long-term care facility is subject to regular CMS inspections, which include the maintenance of resident trust funds. The results of these inspections are entered into the CMS-managed Nursing Home Compare website, which allows residents and their families to view care comparisons at different facilities across the country.
What Is an RFMS Nursing Homes System and Why Is It Needed?
It is common for nursing homes and long-term care facilities to have a Resident Fund Management System or RFMS nursing homes system in place because of the fact that managing resident personal funds can be tricky.
Facilities often have multiple resident accounts to manage and federal laws by which they must abide, so they need an effective RFMS nursing home system to organize and track residents’ accounts.
Another reason why facilities regularly track resident trust funds is that it is common for long-term care residents to receive Medicaid benefits, which cover a wide range of mandatory and optional services, such as:
- Nursing Facility Services
- Physician Services
- Transportation to Medical Care
- Prescription Drugs
- Therapy Services (clinical, occupational, physical)
- Dental Services
- Optometry services
- Personal Care
If a resident’s expenses exceed their Medicaid eligibility threshold, this can lead to the resident losing their Medicaid benefits entirely. The consequence of losing Medicaid benefits will ultimately change a resident’s payor source from Medicaid to private pay, meaning the resident bears the total cost of services, which can lead to a bad debt expense. In such cases, if the resident cannot pay their outstanding balance, they may be forced to forego the care they need, deplete their savings, damage their credit ratings, or file for bankruptcy.
For this reason, many nursing homes and long-term care facilities have invested in an effective resident funds management system, or RFMS nursing homes system, to ensure that residents’ accounts are correctly managed and tracked. This means that all incoming and outgoing payments will have a paper trail, thus providing financial clarity for residents’ trust fund accounts.
Contact us here if you would like to learn more about our resident trust funds management system.
6 Advantages of Using a Resident Trust Fund Management System
Now that we have a better understanding of resident trust funds, we will discuss the advantages of using an effective resident trust fund management system and how it improves the process of managing resident personal funds.
- Improved Data Organization with Automated Processes
The best resident trust fund management systems are usually a part of a senior care software system. Therefore, long-term care facilities that are looking to upgrade their resident fund management system must first evaluate what automated processes the RFMS nursing homes system has and how they improve managing resident personal funds.
The most effective resident trust fund management systems will have automated processes to organize resident trust fund data, usually collected when a resident completes the CMS Personal Funds Review form.
The relevant financial details gathered will then be inserted into the nursing home software system, which will simplify and speed up several resident trust fund processes, such as:
- Determining interest allocation
- Identifying bank reconciliation
- Allocating petty cash
- Completing IRS 1099-INT forms
- Issuing trust fund statements for residents and family
Having well-organized data allows facility staff to manage resident funds accounts better while giving residents easier access to their funds.
- Effective Management of Resident Personal Funds
Managing resident personal funds can be complicated, especially due to the several types of resident funds that facilities tend to manage, like the following:
- Burial funds
- Savings funds
- A security deposit account
In such cases, when facilities are managing resident personal funds, they need an effective resident funds management system that can process different payor sources, like Medicaid, private insurance, or private pay, all the while keeping track of the extra expenses a resident incurs every month during their stay.
Additionally, when residents or their families transfer money into a resident fund account, they use a range of payment methods, such as checks, electronic transfers, or cash deposits. This means that the RFMS nursing homes software system within the long-term care software system must have advanced financial and accounting capabilities to ensure that the correct deposits are recorded and that the resident receives the funds promptly.
- Advanced Technology To Transfer Funds Between Accounts
As discussed earlier, residents are free to open a personal trust fund account, which results in some choosing to open multiple nursing home resident trust fund accounts. This makes it more complicated for facilities to track, especially if the facility does not have an effective resident fund management system in place.
Well-designed resident fund management systems will have the capacity to transfer funds from one account to another, even for the same resident. Residents or their families can efficiently move funds between their accounts, giving them more convenience and financial freedom.
- Improved Staff Workflow and Efficiency
Modern-day banking should be efficient and effortless, and so should managing resident personal funds. If residents or their families need to deposit or withdraw funds from their fund account, it should be a smooth process requiring a few simple clicks. Some resident trust fund management systems can process these actions within minutes.
Additionally, these systems have other standardized processes for resident fund accounts that can improve staff workflow by:
- Batching deposits and withdrawals from multiple residents’ accounts
- Capturing a resident’s signature electronically for withdrawals
- Printing checks and statements for residents and their families
- Improved Communication and Processes Between Staff
Staff members must be able to connect and communicate with each other to ensure that all billing transactions are accurate. And an effective resident funds management system is designed to integrate different financial modules, such as Accounts Receivables and General Ledger. This allows staff to verify the total balance of residents’ funds with the facility’s internal records, thus ensuring that each transaction is billed correctly.
Furthermore, a resident funds management system provides a safety net for facilities because they have an accurate paper trail of transactions, which is useful should a legal dispute arise. In short, improved communication through automated processes will allow facilities to:
- Integrate billing modules to avoid duplicate data entries
- Process online payments between a resident’s personal account to their resident funds account
- Export transactions to the general ledger
- Provide a snapshot of the resident’s census, demographic, contact data, and reimbursement information
- Accept split receipts from the billing department
- Valuable Reporting and Analytics
A lot of data is accumulated and shared between staff members in a long-term care facility. This means that facilities need an efficient RFMS nursing homes system with advanced tools to capture relevant data and create valuable reports and analytics.
By integrating with different financial modules like Accounts Receivable and Billing, staff can produce reports that assist with the day-to-day operations and the management of nursing home resident trust funds.
The most advanced resident funds management systems will be able to create multiple reports in several areas, allowing staff to manage resident funds better and reduce accounting errors. Some of the most helpful resident fund account reports include:
- Fund history and inactive funds
- Reconciliation worksheets
- Cash drawers
- Transaction history, including check numbers, all transactions, deposits, payments, and withdrawals
- Interest rates
- Resident information
- Paper and electronic 1099-INT forms
- Journal entries by staff
- Fund balances
- Fund statements that display withdrawals, deposits, and each resident’s balance account
Best Practices For Managing Resident Personal Funds
Although there are advantages to residents opening a resident trust fund account—such as residents having the financial freedom to purchase on-site items and services—there are also several disadvantages, such as cases of poorly managing resident personal funds and oversight of finances, failure to insure funds, failure to pay interest on funds, and theft from unethical staff members.
Facilities must, therefore, ensure they comply with the CMS’ regulations while meeting the needs of the residents. Below are several best practices that facilities should adhere to when managing resident personal funds:
- Invest in a reliable resident fund management system that can accurately document each resident’s transactions into a single account.
- Ensure the balance of residents’ funds match the elder care software’s internal records and general ledger accounts.
- Utilize the facility’s nursing home software financial modules that can organize documentation, process statements, create analytics reports, and balance the general ledger.
- Separate the facility’s operating funds from the trust fund accounts to minimize financial and operational risks.
If facilities can follow these best practices, there is no reason why they cannot effectively manage residents’ funds as well as provide a helpful service to their residents.
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