Guides
Which permits a home care agency needs before opening
A home care agency needs a business licence, a state home care licence, liability insurance, workers compensation, payroll accounts and Medicaid billing.
What to take away
- A home care agency usually needs four separate approvalsa general business license, a state home care or home health license, workers compensation and liability insurance, and federal and state payroll accounts. The state license may be called a Home Care Organization license in California or an Article 36 Home Care Agency license in New York.
- The state home care licensing agency sets the license class, the application fee and the survey that follows. California CDSS, New York State Department of Health and Texas HHSC each publish their own fee schedules. Confirm current requirements with that agency, not a competitor's website.
- Caregiver roles carry different credential requirements. A companion, a personal care aide and a home health aide are not interchangeable on a license application. California's Home Care Aide Registry and Texas's Nurse Aide Registry are two examples.
- The Fair Labor Standards Act governs hours worked and overtime for direct-care workers. Read the Labor Department guidance before you set a pay rate.
- Keep every license, certificate and renewal date on one calendar with a named owner. A lapsed license stops billable hours.
This article covers business and licensing structure for a senior home care agency. It is not legal, tax, clinical or employment advice. Licensing, wage-hour, insurance and immigration rules vary by state and by payer, so confirm current requirements with your state home care licensing agency, the U.S. Department of Labor, the IRS, and a qualified attorney or accountant.
The permits and licenses, by name
Most new agencies assume one license covers the business. It does not. Each item below attaches to a different thing: the company, the person, the location or the activity. The table names the permits and the agencies that issue them.
What each permit covers
Permit or licence
- General business licence
- Legal entity trading
- State home care licence
- Care in client's home
- Entity registration
- The LLC or corporation
- Workers compensation
- Caregiver injury on job
- Liability insurance
- Injury or damage claims
- Employer Identification Number
- Federal payroll and tax
- State withholding accounts
- State payroll taxes
- Caregiver credentials
- Worker's right to perform
What it covers
- General business licence
- City or county clerk
- State home care licence
- State licensing agency
- Entity registration
- Secretary of state
- Workers compensation
- Private carrier or state fund
- Liability insurance
- Private carrier
- Employer Identification Number
- IRS
- State withholding accounts
- State revenue agencies
- Caregiver credentials
- State registry or board
Who issues it
- General business licence
- State home care licence
- Entity registration
- Workers compensation
- Liability insurance
- Employer Identification Number
- State withholding accounts
- Caregiver credentials
| Permit or license | What it covers | Who issues it |
|---|---|---|
| General business license | The legal entity trading in the city or county. Fees typically run $50 to $200. | City or county clerk |
| State home care or home health license | The regulated service of providing care in a client's home. Fees and review times vary by state, as the state table below shows. | State home care licensing agency |
| California Home Care Organization (HCO) license | Non-medical home care in California. Requires a background check and a policy manual. | California Department of Social Services (CDSS) |
| New York Article 36 Home Care Agency license | Licensed home care services in New York. Requires a survey and proof of insurance. | New York State Department of Health (NYSDOH) |
| Texas Home Health Agency license | Home health services in Texas. Requires an administrator and a site survey. | Texas Health and Human Services Commission (HHSC) |
| Florida Home Health Agency license | Medicare and Medicaid home health in Florida. Biennial license. | Florida Agency for Health Care Administration (AHCA) |
| Entity registration | The LLC or corporation itself. Filing fees typically $50 to $500. | Secretary of state |
| Workers compensation insurance | Injury to a caregiver on the job. Required before first payroll. | Private carrier or state fund |
| General and professional liability insurance | Injury or damage claims against the agency. Common limits are $1 million per occurrence and $3 million aggregate. | Private carrier |
| Employer Identification Number | Federal payroll and tax filing. Free from the IRS. | IRS |
| State withholding and unemployment accounts | State payroll taxes. No fee to register. | State revenue and workforce agencies |
| Caregiver credentials | The individual worker's right to perform a task. Examples: California Home Care Aide Registry, Texas Nurse Aide Registry. | State registry or certification board |
| Medicare provider enrollment (CMS-855A) | Billing Medicare for home health services. Requires a survey and accreditation. | Medicare Administrative Contractor (MAC) |
| Medicaid provider enrollment | Billing state Medicaid for home care services. | State Medicaid agency |
| NPI (National Provider Identifier) | HIPAA standard transactions. Free from CMS. | CMS |
The state home care license is the one that takes the longest. It usually requires a background check on the administrator, proof of insurance, a written policy manual and a site survey.
Fees and timelines are published by your state agency, so check the current figure there rather than estimating. California CDSS, New York State Department of Health and Texas HHSC each post application packets and fee schedules.
The table below gives typical figures for four states. Treat each one as a range, not a quote. The fee schedule changes, and the license class changes with it.
| State | License | Typical application fee | Typical review time | Renewal cycle |
|---|---|---|---|---|
| California | CDSS Home Care Organization | $2,000 to $5,000 initial, plus an annual fee | 3 to 6 months | Annual |
| New York | Article 36 Home Care Agency | $1,000 to $3,000 | 6 to 12 months | Fixed term set at licensure |
| Texas | HHSC Home Health Agency | $1,000 to $3,000 | 2 to 4 months | Every two years |
| Florida | AHCA Home Health Agency | $1,500 to $3,000 | 2 to 4 months | Every two years |
The packet is much the same in each state: background check, insurance certificate, policy manual, administrator qualifications and a site survey.
Companion, personal care aide and home health aide credentials
A license application asks what services you will provide. That answer sets which caregiver credentials you must verify. State registries list the workers who meet the standard.
Credentials by role
Role
- Companion
- Lightest burden
- Personal care aide
- Training hours, registry
- Home health aide
- Certification, competency evaluation
- Scheduler and recruiter
- Not licensed, privacy rules
- Administrator
- Named, set qualification
Credential burden
- Companion
- Personal care aide
- Home health aide
- Scheduler and recruiter
- Administrator
- Companion.Non-medical company and light household help. Usually the lightest credential burden.
- Personal care aide.Hands-on help with bathing, dressing and mobility. Many states require a training hours certificate and a registry listing. California uses the Home Care Aide Registry.
- Home health aide.May perform tasks delegated by a nurse. Often requires a certification and a competency evaluation. Texas uses the Nurse Aide Registry for some tasks.
- Scheduler and recruiter.Not licensed, but they touch client records and payroll, so they fall under your privacy and wage-hour policies.
- Administrator.Some states require a named administrator with a set qualification, and the license application names that person.
Write the service menu before you apply. If you list personal care on the license, you must be able to staff it and document the training behind every aide you send. A home health license may also require a director of nursing.
Payroll duties that start on day one
Once you employ caregivers, federal wage-hour rules apply. The Labor Department's fact sheet on hours worked for domestic service employment explains which time counts as compensable, including travel between clients and waiting time on duty. The IRS requires an EIN before you run payroll.
The Labor Department's direct care workers page names home health aides, personal care aides, caregivers and companions as direct-care workers and sets out minimum wage and overtime resources.
Classification is not a decision to make alone. If you are unsure whether a worker is an employee or a contractor, ask an employment attorney or your state labor ministry before the first shift. The IRS also publishes worker classification rules.
The core dollar rule is overtime. The Fair Labor Standards Act requires one and a half times the regular rate for hours over 40 in a workweek. Most caregivers on an agency payroll are covered. A 2015 Labor Department rule ended the companionship exemption for third-party employers. Casual babysitting and live-in workers remain the main exceptions.
Travel time follows the same framework. A commute from home to the first client and from the last client back home is generally not paid. Travel between clients during the workday is paid. Waiting time counts when the worker is on duty and cannot use the time freely.
A 24-hour shift has its own rule. Up to eight hours of sleep time can be excluded, but only under a written agreement and only if the worker gets five uninterrupted hours. Any interruption counts as hours worked.
Some states add daily overtime on top. California pays time and a half after eight hours in a day, double time after 12, and premium pay on the seventh consecutive day. Check the state labor office before you publish a pay rate.
Build the pay rate
- Base hourly wagestarting pay
- Payroll taxesemployer share
- Workers compensation premiumper caregiver
- Mileagebetween clients
- Unpaid travelbetween clients
- Non-billable admin timeunbilled hours
Access and premises duties
If your office is open to the public, the Americans with Disabilities Act applies to it. The Justice Department's ADA guide for small businesses covers barrier removal, accessible routes and service practices, and asks the owner to assess what is readily achievable.
This is separate from the home care license. A compliant office does not satisfy a care license, and a care license does not cover a public counter.
The office also needs local approvals. The city or county issues a zoning approval and a certificate of occupancy for the address you put on the license application. Keep those two addresses identical, because the site survey checks them.
The sequence from entity to first billable hour
Work in this order. A step taken out of order usually means a refiling fee.
- Form the entity.File the LLC or corporation with the secretary of state. Typical filing fee $50 to $500.
- Get the EIN.Free from the IRS, and needed before any payroll account.
- Bind insurance.Workers compensation and liability, at the limits the state license requires.
- Apply for the care license.This is the longest step. Background check, policy manual, proof of insurance and a site survey come first.
- Register payroll accounts.State withholding and unemployment, then federal deposits through EFTPS.
- Enroll with payers.Medicare or Medicaid enrollment, if you intend to bill them.
- Bill the first hour.Only after the license is in hand and every caregiver credential is verified.
Common questions
Does a home care agency need a state license in every state?
Most states license home care or home health agencies, but the license class, the application and the survey differ. California, New York and Texas each run separate licensing units. A few states regulate only the home health side.
Can one license cover both personal care and home health?
Usually not. Home health often requires a higher license class, a director of nursing and Medicare certification if you bill the federal program. In Texas, HHSC licenses home health agencies, and personal care may fall under a different category. List only the services you can staff and document.
What happens if a license lapses?
You cannot bill for care delivered under a lapsed license, and insurers may deny claims from that period. Put every renewal date on one calendar with a named owner and a reminder set well ahead. California CDSS and New York NYSDOH both post renewal requirements.
Do I need a license before hiring caregivers?
You need the entity, the EIN and the insurance in place before payroll runs. The care license must be in hand before the first billable hour, so sequence the application early. In most states, payroll registration and the care license are separate tracks.
