Home Health Agencies: How to Calculate Your Payroll Costs (2026)

Managed payroll by headcount for a home health agency

10 employees: $450 a month, $5,400 a year; 25 employees: $1,125 a month, $13,500 a year; 50 employees: $2,250 a month, $27,000 a year; 100 employees: $4,500 a month, $54,000 a year. Every row is $45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum, so the per-employee cost is the same at 10 as at 100. Nothing in the home health agency setup, visit-based aide pay, travel time reimbursement, Medicaid billing vs payroll and live-in caregiver rules, is billed as an add-on.

The employer-side tax that rides on every home health agency wage

At the May 2025 national median for home health and personal care aides, $35,800 a year or about $17 an hour, the employer share of Social Security and Medicare is $2,739 per employee per year and FUTA is $42 after the state credit, before state unemployment at the assigned rate. Those costs are the same whoever runs payroll; the calculator question is only who does the work and who carries the error.

Medicaid waiver payments for care of an eligible individual who lives in the caregiver's own home are excludable from federal income tax under Notice 2014-7, so no income tax is withheld, but an agency that employs the caregiver must still withhold and pay Social Security and Medicare taxes. Excluded amounts go on Form W-2 box 12 with code II rather than box 1.

The in-house line in the calculation

BLS OEWS May 2025: payroll and timekeeping clerks, national median $58,260, mean $59,630. Add roughly 30 percent for benefits and employer taxes, about $75,738, before the software that person runs, and set it against the headcount rows above. Managed payroll stays under that loaded figure until about 140 employees.