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Run the Payroll Fee Auditor →Blog · Payroll Management · Home Health
Home Health Agencies: Payroll Compliance Guide (2026)
Payroll compliance for home health agencies rests on the federal rules that reach this industry specifically, 4 of which are cited on this page, plus the deposit and filing duties every employer carries. BEG runs home health agency payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
The rules that reach home health agencies specifically
Travel between clients during the workday is hours worked and the agency must pay for it; ordinary travel from home to the first client and home from the last is not. In the fact sheet example, the 30 minutes an aide spends driving from one client's home to the next is paid time.
Since January 1, 2015, home care agencies and other third-party employers cannot claim the companionship services exemption and must pay minimum wage and overtime after 40 hours even when the worker is jointly employed by the household. The exemption itself covers fellowship and protection only, with care limited to 20 percent of hours per consumer per workweek and no medically related tasks.
A live-in domestic worker is one who resides on the premises permanently or for extended periods, meaning 5 days a week or 120 hours or more. Since January 1, 2015, agencies may not claim the live-in overtime exemption and must pay overtime after 40 hours; workers on 24-hour shifts who do not reside on the premises are not live-in workers.
An employer may exclude up to 8 hours of sleep time from paid hours on certain shifts, but any interruption for a call to duty must be paid, and if the worker cannot get at least 5 hours of sleep the entire night is paid. An aide who must stay in the home and be available is engaged to wait and is working.
The duties every employer carries
Federal income tax withholding, Social Security and Medicare, FUTA, deposits on the monthly or semiweekly schedule the lookback period sets, quarterly Form 941, annual W-2s and, for home health agencies paying contractors, 1099-NEC at the $2,000 threshold in force for tax years after 2025. A late deposit starts at a 2 percent failure-to-deposit penalty and climbs to 15 percent.
Section 12006(a) of the 21st Century Cures Act requires states to use electronic visit verification for all Medicaid personal care services that require an in-home visit since January 1, 2020 and for home health services since January 1, 2023. States that fail to comply face federal matching reductions of up to 1 percent.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Travel between clients during the workday is hours worked and the agency must pay for it; ordinary travel from home to the first client and home from the last is not. In the fact sheet example, the 30 minutes an aide spends driving from one client's home to the next is paid time. [DOL Fact Sheet #79D]
- Since January 1, 2015, home care agencies and other third-party employers cannot claim the companionship services exemption and must pay minimum wage and overtime after 40 hours even when the worker is jointly employed by the household. The exemption itself covers fellowship and protection only, with care limited to 20 percent of hours per consumer per workweek and no medically related tasks. [DOL Fact Sheet #79A]
- A live-in domestic worker is one who resides on the premises permanently or for extended periods, meaning 5 days a week or 120 hours or more. Since January 1, 2015, agencies may not claim the live-in overtime exemption and must pay overtime after 40 hours; workers on 24-hour shifts who do not reside on the premises are not live-in workers. [DOL Fact Sheet #79B]
- An employer may exclude up to 8 hours of sleep time from paid hours on certain shifts, but any interruption for a call to duty must be paid, and if the worker cannot get at least 5 hours of sleep the entire night is paid. An aide who must stay in the home and be available is engaged to wait and is working. [DOL Fact Sheet #79D]
- Section 12006(a) of the 21st Century Cures Act requires states to use electronic visit verification for all Medicaid personal care services that require an in-home visit since January 1, 2020 and for home health services since January 1, 2023. States that fail to comply face federal matching reductions of up to 1 percent. [CMS Medicaid.gov Electronic Visit Verification]
Read the full guide to the payroll compliance library, and the rest of the home health agency payroll library.
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Frequently Asked Questions
Home health agency compliance: DOL Fact Sheet #79D
Travel between clients during the workday is hours worked and the agency must pay for it; ordinary travel from home to the first client and home from the last is not. In the fact sheet example, the 30 minutes an aide spends driving from one client's home to the next is paid time.
Home health agency compliance: DOL Fact Sheet #79A
Since January 1, 2015, home care agencies and other third-party employers cannot claim the companionship services exemption and must pay minimum wage and overtime after 40 hours even when the worker is jointly employed by the household. The exemption itself covers fellowship and protection only, with care limited to 20 percent of hours per consumer per workweek and no medically related tasks.
Home health agency compliance: DOL Fact Sheet #79B
A live-in domestic worker is one who resides on the premises permanently or for extended periods, meaning 5 days a week or 120 hours or more. Since January 1, 2015, agencies may not claim the live-in overtime exemption and must pay overtime after 40 hours; workers on 24-hour shifts who do not reside on the premises are not live-in workers.
What does managed payroll cost for a home health agency?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Visit-based aide pay, travel time reimbursement and Medicaid billing vs payroll are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Home Health Agencies. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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