One approved method to demonstrate the minimum funds for liability coverage is to deposit funds in which form?

• A. Deposit in trust or escrow of cash, bank CDs, or United States Treasury obligations
• B. A bank letter of credit or insurance company bond
• C. A personal loan from a private creditor
• D. Cash in a personal checking account

Answer: (A)

Minimum liability coverage funds must be set aside in a way that guarantees they won’t be spent on other things and can be quickly drawn on to satisfy a claim. The approved method is to place the funds in a trust or escrow, with the assets consisting of cash, bank certificates of deposit, or U.S. Treasury securities, held by a neutral trustee or escrow agent. This arrangement keeps the money separate from the practitioner’s personal assets and ensures it remains readily accessible for patients’ claims. Depositing money in a personal checking account does not provide the required separation or guarantee, and while other forms of guarantees exist in different contexts, the rule described here emphasizes the trust/escrow arrangement as the approved method.