3 min read
2025-01-18
FDIC default coverage stops at $250K. Most practices have more than that. Here's how to get to $10M without juggling banks.
You probably think your practice is FDIC-insured. You're partly right. The default coverage is $250,000 per depositor, per bank. Everything above the line is at risk if your bank fails.
Here's how FDIC actually works for medical practices. And how to get to $10M without juggling banks.
The Default: $250K, and That's It
The FDIC insures the first $250,000 in deposits per depositor, per bank, per ownership category. If your PC has $400K in operating cash at one bank, $150K of it is uninsured.
Most practices learn this the wrong way. They hear about a regional bank failure on the news, then check what they have parked.
Why $250K Isn't Enough
At any scale past a solo practice, $250K is small. Real numbers:
A two-provider primary care office: $80K-$150K float
A 5-location DSO: $1M-$3M operating cash
A 10-PC multi-state group: $5M-$15M across entities
If your group has more than $250K in working capital at one bank, you have an FDIC problem.
How to Get Past $250K
Three ways, in increasing order of effort:
Spread cash across multiple banks. Annoying. Multiplies logins.
Use multiple ownership categories. Complicated. Requires legal setup.
Use a sweep network like IntraFi Cash Service. The right answer.
Most practices land on option 1 by accident. They never make it to option 3 because their bank doesn't offer it.
What a Sweep Network Actually Does
Your bank partners with a network of other FDIC-insured banks. Your deposits get split into $250K slices across that network. Each slice sits at a different bank, fully insured.
You see one account. The network spreads the cash. You get FDIC coverage up to $10M per entity, sometimes more.
This isn't exotic. It's been around since 2003. Healthcare-native banks like Lemma offer it as standard.
What "Uninsured" Actually Means
If your bank fails and you have $400K parked there, the FDIC pays out $250K. The other $150K becomes a claim against the failed bank's assets. You may get most of it back. You may get pennies. You may wait two years.
For a medical practice, that's not theoretical. SVB failed in March 2023. Practices with operating accounts there froze for days. Some didn't get their money back in time to make payroll.
A Common Setup That's Quietly Risky
Plenty of practices look fine on paper and aren't. A few patterns we see:
$2M sitting in one operating account because "we like our banker"
A 5-PC group with all entities at the same regional bank, no sweeps
A capital reserve held in a CD that earns 1.2% and is also single-bank exposed
A windfall (sale proceeds, capital call) parked for weeks before deployment
None of these are reckless. They're all standard. They're also all uninsured the moment they cross $250K.
Quick Math for Your Practice
Run this in 30 seconds:
Total operating cash across all entities
Subtract $250,000 per entity per bank
The remainder is uninsured
If that number is more than zero, ask your bank about sweep network coverage today.
FDIC isn't free insurance. It's a default that stops at $250K. Anything above that line is on you to cover.
FAQ
Common questions