How to Start a Home Health Care Business in 2026: Licensing, Medicare Certification, Staffing and Overtime

Demand for care at home keeps rising: the Bureau of Labor Statistics projects home health and personal care aide jobs to grow 18% between 2025 and 2035, much faster than average. But "home health care business" covers two very different businesses. One sends caregivers to help older and disabled clients with daily life and is regulated mostly by states. The other provides skilled nursing and therapy under a doctor's orders and, to bill Medicare, must meet detailed federal rules. This guide is for anyone in the US starting either in 2026. It explains which one you're starting, state licensing with examples, the Medicare path, staffing rules, overtime and the money, checked against CMS, DOL and state sources in October 2026.

Quick answer

To start a home health care business, first decide between non-medical home care (personal and companion care, licensed or registered by many states) and skilled home health (nursing and therapy, licensed by states and certified by Medicare). Then form an entity, get your state licence before serving clients, hire and train caregivers as employees, insure the business, and plan cash for payroll before payments arrive. Medicare certification adds CMS enrollment, reserve funds and a survey.

• Non-medical: state licence or registration in many states (California HCO, Texas HCSSA, Florida AHCA registration)

• Medicare home health: CMS Conditions of Participation, reserve funds, state or accreditation survey

• Aides in Medicare agencies need 75 hours of training and 12 hours in-service a year

• Agency caregivers are owed minimum wage and overtime; the 2025 DOL proposal to change that isn't final

• Our example agency needs about 750 billed hours a month to break even

Non-medical home care vs Medicare-certified home health

Getting this choice right first saves months, because it decides which agency licenses you, who pays you and how much capital you need.

Non-medical home care (also called personal care, companion care or private duty) helps clients with activities of daily living: bathing, dressing, toileting, meals, light housekeeping, medication reminders, transportation and companionship. Caregivers don't need nursing licences, though many states require training, background checks or registration. Clients usually pay privately, through long-term care insurance, or through Medicaid home and community-based services programs or the Department of Veterans Affairs where your agency is an approved provider. This is the most common starting point for a new owner, because startup cost and regulatory burden are lower.

Skilled home health provides nursing, physical therapy, occupational therapy, speech therapy and home health aide services under a care plan ordered by a physician or allowed practitioner. Agencies that want to bill Medicare must be certified as meeting the Conditions of Participation (CoPs) in 42 CFR Part 484, which cover patient rights, assessments, care planning, quality improvement, infection control, staffing and aide training. Medicare home health is paid per period of care under a national payment system that CMS updates each year through rulemaking, so revenue depends on federal policy as well as your census.

Many owners start with non-medical care, learn recruiting and scheduling, and add skilled services or a separate licensed home health agency later. Others go straight to Medicare certification with a clinical co-founder, usually a registered nurse with home health management experience, because the CoPs require qualified clinical leadership.

The two business models compared

Item	Non-medical home care	Medicare home health
Services	Personal care, companionship, homemaking	Skilled nursing, therapy, aide services
Main regulator	State (health or social services)	State licence plus CMS certification
Who pays	Private pay, LTC insurance, Medicaid waivers, VA	Medicare, Medicaid, Medicare Advantage, private insurance
Clinical staff required	Usually none (caregivers)	RNs, therapists, clinical manager
Capital needed	Lower	Higher, including reserve operating funds
Time to first revenue	Weeks to months after licence	Often a year or more to Medicare billing

Services

Non-medical home care

Personal care, companionship, homemaking

Medicare home health

Skilled nursing, therapy, aide services

Main regulator

Non-medical home care

State (health or social services)

Medicare home health

State licence plus CMS certification

Who pays

Non-medical home care

Private pay, LTC insurance, Medicaid waivers, VA

Medicare home health

Medicare, Medicaid, Medicare Advantage, private insurance

Clinical staff required

Non-medical home care

Usually none (caregivers)

Medicare home health

RNs, therapists, clinical manager

Capital needed

Non-medical home care

Lower

Medicare home health

Higher, including reserve operating funds

Time to first revenue

Non-medical home care

Weeks to months after licence

Medicare home health

Often a year or more to Medicare billing

State licensing: three examples

States regulate home care in very different ways, and the rules change often, so treat these as examples and confirm with your state agency before you spend money.

California licenses non-medical home care agencies as Home Care Organizations (HCOs) under the Home Care Services Consumer Protection Act, in effect since January 2016 and administered by the Department of Social Services' Home Care Services Branch. Caregivers who work for an HCO must be listed on the state's Home Care Aide Registry, which includes a background check. Skilled home health agencies in California are licensed separately by the Department of Public Health.

Texas licenses home care through one framework: the Home and Community Support Services Agency (HCSSA) licence from the Health and Human Services Commission. The rules define categories that include home health services (nursing, therapy and similar health services), certified home health services provided by a Medicare-certified agency, hospice, and personal assistance services, meaning routine ongoing help with activities of daily living. Each place of business needs its own licence, the business must be located in Texas (out-of-state agencies need a Texas parent agency licence), and you can't admit clients or start services until the initial licence is issued. The state reviews owners, controlling persons, the administrator and others before licensing.

Florida splits the market. Agencies providing home health services need a home health agency licence from the Agency for Health Care Administration (AHCA). Businesses that provide only companion or homemaker services, with no home health services, are exempt from that licence but must register with AHCA for $50 per biennium, check the employment history of staff who go into clients' homes, and show their registration number in advertising.

Other states sit between these models. Some license non-medical agencies with an inspection, some only register them, and some don't regulate them at all, which puts more weight on your own screening and training. Pay close attention to the line between personal care and skilled care in your state: medication administration, wound care and injections are nursing tasks in most states, and offering them under a non-medical licence is a common reason for enforcement.

Becoming a Medicare-certified home health agency

Medicare certification is a long, sequential process, and most delays come from doing the steps out of order.

First, get your state home health licence where your state requires one; CMS requires an agency to be licensed under state or local law, or approved as meeting the state's licensing standards. Second, enroll in Medicare through the CMS provider enrollment process (Form CMS-855A or the online PECOS system), which includes disclosure of owners and managing employees.

Third, prove capital. Under 42 CFR 489.28, a new agency must show initial reserve operating funds sufficient to run the agency for its first three months. CMS calculates the amount from the costs of comparable new agencies and your projected visits. The funds must be available when you apply and stay available through the three months after billing privileges are granted, Medicare receivables don't count, and at least at least 50% must be non-borrowed money, with the rest allowed from an unrelated lender's loan or line of credit. Failing this test is a standard reason for denial.

Fourth, pass an initial survey showing you meet the CoPs, conducted either by the state survey agency or by a CMS-approved accrediting organization with a home health program; CMS's list of approved accrediting organizations includes the Accreditation Commission for Health Care (ACHC), the Community Health Accreditation Partner (CHAP) and The Joint Commission. Surveyors review real patient records, so plan to serve patients under other payers or private pay before the survey, and ask your state survey agency and accrediting organizations about current wait times.

Medicare home health certification path

1. 1

   State licence

   Apply to your state health department or equivalent; build policies, clinical leadership and staffing first.

2. 2

   Medicare enrollment

   Submit CMS-855A or apply in PECOS with full ownership and managing employee disclosures.

3. 3

   Prove reserve funds

   Show three months of initial reserve operating funds, at least at least 50% non-borrowed.

4. 4

   Serve initial patients

   Admit patients under private pay or other payers so surveyors can review real records.

5. 5

   Initial survey

   Pass a state survey or an accreditation survey (for example ACHC, CHAP or The Joint Commission).

6. 6

   Provider agreement

   CMS issues the provider agreement and billing privileges; keep reserves for the next three months.

Buying an existing certified agency looks like a shortcut, but the 36-month rule limits it. If an agency changes majority ownership within 36 months of its initial enrollment or its last ownership change, the provider agreement and billing privileges don't pass to the buyer, who must enroll as a new agency and get a new survey. Exceptions include an agency that has filed two consecutive years of full cost reports, internal corporate restructuring, a change in business structure with the same owners, and the death of an owner.

Staffing, training and supervision

Your caregivers are the business, and recruiting is the hardest part of running an agency. The Bureau of Labor Statistics reports a median wage of $17.21 an hour for home health and personal care aides as of May 2025, with around 760,000 openings a year nationally, so you're competing with every other agency, facility and hospital for the same workers.

In a Medicare-certified agency, federal rules set the floor for aides. Home health aides must complete at least 75 hours of classroom and supervised practical training, with at least 16 hours of classroom training before 16 hours of supervised practical training, or pass a competency evaluation. They need 12 hours of in-service training in every 12-month period. When an aide serves a patient who is also receiving skilled services, a registered nurse or other skilled professional must complete a supervisory assessment every 14 days, and each aide must be observed on site once a year.

Non-medical agencies follow state rules, which range from detailed training hours and registry listing to nothing at all. Even where the state is silent, train in safe transfers, infection control, recognizing changes in condition, dementia care and documentation, and check backgrounds; one incident in a client's home can end an agency.

Employ caregivers as W-2 employees. You set their schedules, assign clients and train them, which makes contractor classification hard to defend; our 1099 vs W-2 guide explains the tests. Employment also means payroll taxes and workers' compensation insurance, which is a big cost line because lifting injuries are common in home care.

If you take Medicaid clients, plan for electronic visit verification (EVV). Under the 21st Century Cures Act, states must use EVV for Medicaid personal care services (required from January 1, 2020) and home health care services (from January 1, 2023), which means caregivers check in and out electronically at each visit. Your scheduling software needs to feed your state's EVV system.

Home care rule changes to know

January 2016

California Home Care Services Consumer Protection Act licensing begins

January 1, 2020

Medicaid EVV required for personal care services

January 1, 2023

Medicaid EVV required for home health care services

July 2, 2025

DOL proposes restoring companionship and live-in exemptions for agencies

October 2026

No final DOL rule published; agencies still owe minimum wage and overtime

Overtime and the DOL home care rule

Wage law trips up more home care agencies than any other rule. Before 2015, many agencies treated caregivers as exempt from minimum wage and overtime under the "companionship services" exemption or the live-in worker exemption. The Department of Labor's 2013 rule changed that: third-party employers, such as home care agencies, can't claim either exemption, and the definition of companionship services was narrowed. So agency caregivers must be paid at least the federal minimum wage of $7.25 an hour, or a higher state or local rate, and time and a half for hours over 40 in a workweek. Travel time between clients during the workday is generally hours worked too.

On July 2, 2025, the Department proposed returning to the 1975 regulations, which would again let third-party employers claim the exemptions. The comment period closed on September 2, 2025, and as of October 2026 no final rule has been published in the Federal Register. Until a final rule takes effect, keep paying overtime, and remember that many states have their own overtime laws for domestic workers that would apply regardless.

The cost difference is real. A caregiver paid $18 an hour who works 50 hours in a week earns $720 for the first 40 hours and $270 for the next 10, not $180. Schedule to keep most caregivers at or under 40 hours, price live-in and 24-hour cases to cover overtime, and track hours across all of a caregiver's clients, because overtime is based on total hours for your agency. Our overtime guide walks through the math.

The money: a labelled non-medical agency example

All figures below are illustrative assumptions for a small private-pay non-medical agency, not market data. Check local rates and wages before you set prices.

The agency bills clients $34 an hour. It pays caregivers $18 an hour, and employer payroll taxes, workers' compensation and paid time off add about 15%, so each billed hour costs about $20.70 in direct labor. That leaves $13.30 an hour of gross margin, about 39%. Fixed costs include an office and scheduling manager, insurance, software and EVV, licensing, recruiting, marketing and a small office, totalling $120,000 a year.

Try it — billed hours to break even

Monthly Fixed CostsSelling Price per UnitVariable Cost per Unit

Contribution Margin / Unit₹13.30

Contribution Margin Ratio39.12%

Break-Even Revenue₹3,06,766.92

Break-Even Units9,023

Open the full Break Even Calculator (PDF, save, compare)

At those numbers the agency breaks even at about 9,020 billed hours a year, or roughly 750 a month, before paying the owner. That's only about four or five full-time caregivers' worth of hours, but in practice it's spread across many part-time caregivers and clients. At 1,000 billed hours a month (12,000 a year), gross margin is $159,600 and profit before owner pay is about $39,600. At 1,500 hours a month, it's about $119,400. Overtime, unfilled shifts and client cancellations all cut into the $13.30, which is why scheduling discipline drives profit more than price.

Example agency at a glance

$34

Bill rate per hour

Illustrative

$20.70

Direct labor cost per hour

Wage + 15% burden

39%

Gross margin

Before overhead

~750

Billed hours a month to break even

$120,000 fixed costs

Cash flow is tighter than profit. You pay caregivers weekly or biweekly, while long-term care insurers and Medicaid programs can take weeks to pay. Keep at least two to three payroll cycles in reserve, invoice private-pay clients in advance or on a short cycle, and look at an SBA loan or a line of credit before you need it.

Insurance and compliance basics

Plan for general liability, professional liability, hired and non-owned auto liability (caregivers drive their own cars to visits and often drive clients), workers' compensation, and a fidelity or employee dishonesty bond, which many clients and referral sources ask about because caregivers work unsupervised in people's homes. Our business insurance guide explains each type.

Write policies before you open: client intake and assessment, care plans, caregiver supervision, incident reporting, abuse and neglect reporting, infection control, emergency preparedness, and privacy. Agencies that bill health insurance or Medicare are covered by federal health privacy rules, and even private-pay agencies hold sensitive health information that deserves the same care.

Common mistakes new agencies make

The first is opening before the licence. In Texas, for example, you can't admit a client until the initial HCSSA licence is issued, and advertising unlicensed services can bring penalties in many states. Use the waiting time to recruit, write policies and build referral relationships.

The second is crossing the skilled-care line. A non-medical caregiver who changes dressings, manages injections or sets up medications may be practicing nursing without the licence your agency holds. Write a clear list of allowed tasks for caregivers and train clients' families on it.

The third is treating caregivers as contractors or skipping overtime. Wage claims from one caregiver can expand into a review of every worker's hours. The fourth is underestimating working capital: an agency growing quickly needs more cash, not less, because payroll grows before receivables are collected. The fifth, for Medicare agencies, is weak clinical documentation; surveys and payment reviews turn on whether records support the care billed.

Finally, don't build the business around one referral source or one client. Losing a single 24-hour case can remove a fifth of a new agency's hours overnight. Spread referrals across hospitals' discharge planners, physicians, senior living communities, elder law attorneys and Area Agencies on Aging.

Official links

• CMS — Home health agenciesCertification and surveys
• 42 CFR 484.80 — aide servicesTraining and supervision
• 42 CFR 489.28 — reserve operating fundsCapital requirement for new HHAs
• DOL — direct care workersMinimum wage and overtime rules
• California — Home Care ServicesHCO licence and aide registry
• Medicaid — electronic visit verificationEVV requirements

What to do next

Decide which business you're starting, then read your state's licensing rules in full before you register anything. Form your LLC, price your hours with the break-even calculator, and read how to hire your first employee before your first caregiver starts. If you're aiming for Medicare, line up clinical leadership and capital for reserve funds first.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What's the difference between home care and home health care?

Non-medical home care, often called personal care or companion care, helps clients with bathing, dressing, meals, errands and company. Home health care is skilled medical care ordered by a physician or other practitioner, such as nursing and therapy. Home health agencies that bill Medicare must meet federal Conditions of Participation; non-medical agencies are regulated by states, and some states don't license them at all.

Do you need a license to start a home care business?

It depends on the state and the services. Most states license home health agencies that provide skilled care. Many also license or register non-medical agencies: California requires a Home Care Organization licence, Texas licenses personal assistance services under its HCSSA rules, and Florida requires companion and homemaker providers to register with AHCA for $50 per biennium. Check your state health or social services department.

How long does it take to become Medicare certified?

Often a year or more from opening. A new home health agency needs a state licence where required, Medicare enrollment, proof of initial reserve operating funds, and a successful initial survey by the state or a CMS-approved accrediting organization. Accreditation surveys usually require the agency to already be serving patients, so you operate on private pay or other payers before Medicare billing begins.

Do home care workers get overtime?

Yes, if they work for an agency. Since the Department of Labor's 2013 home care rule, third-party employers such as home care agencies can't claim the companionship or live-in exemptions, so agency caregivers must get at least the minimum wage and overtime for hours over 40 in a workweek. The Department proposed returning to the older rules on July 2, 2025, but that proposal hasn't been finalized.

How much does it cost to start a home care business?

A non-medical agency can open for tens of thousands of dollars, mainly licensing, insurance, software, a small office, recruiting and working capital to meet payroll before clients pay. A Medicare-certified agency costs much more, because federal rules require initial reserve operating funds covering the first three months of projected operating costs, at least at least 50% of which can't be borrowed.

Can I buy an existing Medicare home health agency instead?

You can, but watch the 36-month rule. If a home health agency changes majority ownership within 36 months of its initial enrollment or last ownership change, the Medicare provider agreement and billing privileges don't transfer, and the buyer must enroll as a new agency and pass a new survey, unless an exception applies, such as two consecutive years of full cost reports.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.42 CFR 484.80 — Condition of participation: home health aide services — Code of Federal Regulations (via LII) · accessed 9 October 2026
2. 2.42 CFR 489.28 — Special capitalization requirements for HHAs — Code of Federal Regulations (via LII) · accessed 9 October 2026
3. 3.42 CFR 424.550 — Prohibitions on the sale or transfer of billing privileges — Code of Federal Regulations (via LII) · accessed 9 October 2026
4. 4.Home Health Agencies — certification and compliance — Centers for Medicare & Medicaid Services · accessed 9 October 2026
5. 5.Accreditation — CMS-approved accrediting organizations — Centers for Medicare & Medicaid Services · accessed 9 October 2026
6. 6.Direct care workers — FLSA domestic service rules — U.S. Department of Labor, Wage and Hour Division · accessed 9 October 2026
7. 7.Application of the Fair Labor Standards Act to Domestic Service (proposed rule) — Federal Register · accessed 9 October 2026
8. 8.Home Care Services — California Department of Social Services · accessed 9 October 2026
9. 9.26 TAC 558.2 — HCSSA definitions — Texas Administrative Code (via LII) · accessed 9 October 2026
10. 10.26 TAC 558.11 — HCSSA licensing criteria — Texas Administrative Code (via LII) · accessed 9 October 2026
11. 11.Florida Statutes 400.509 — Registration of companion and homemaker service providers — Florida Legislature · accessed 9 October 2026
12. 12.Electronic Visit Verification (EVV) — Medicaid.gov (CMS) · accessed 9 October 2026
13. 13.Home Health and Personal Care Aides — Occupational Outlook Handbook — U.S. Bureau of Labor Statistics · accessed 9 October 2026