To start a private home care business, you work through a predictable licensing path: form a legal entity, obtain federal tax and provider numbers, secure the insurance and bonds your state requires, assemble a policies and procedures manual, apply for a state home care license, and separately enroll with Medicare or Medicaid if you plan to bill those programs. From entity formation to an approved license usually takes three to six months. Each state writes its own rules, but the sequence below is the one that works in every state, and skipping steps is the fastest way to a denial.
Form the Business Entity and Get Your Federal Numbers
Most home care agencies form as an LLC or corporation so the business, not the owner, carries contract and liability exposure. You file formation documents with your state’s Secretary of State, pay the filing fee, and receive confirmation that the entity exists.
Once the entity is on the books, apply to the IRS for an Employer Identification Number using Form SS-4. The online application returns a number immediately, and you can also apply by fax or mail.1Internal Revenue Service. Instructions for Form SS-4 (Rev. December 2025) The EIN is what you’ll use for tax filings, payroll, and a business bank account.
If you intend to bill any insurer, Medicare, or Medicaid, you also need a National Provider Identifier. You apply through the National Plan and Provider Enumeration System and choose a Type 1 (individual) or Type 2 (organization) NPI based on your structure.2Centers for Medicare & Medicaid Services. How to Apply A purely private-pay, non-medical agency can skip the NPI, but getting one early keeps your billing options open.
Line Up Insurance and Bonding Before You Apply
State licensing agencies will not process your application without proof of coverage. The standard package has three policies plus, in many states, a bond.
- Professional liability insurance covers claims that your agency’s care harmed a client. Most states require at least $1 million per occurrence, and $1 million/$3 million policies (per occurrence/aggregate) are common.
- General liability insurance covers third-party bodily injury and property damage unrelated to care, such as a caregiver damaging a client’s home.
- Workers’ compensation is required in nearly every state once you have employees, and premiums track your payroll and risk classification.
Many states also require a surety bond. If you participate in Medicaid, the bond must be at least $50,000 or 15 percent of annual Medicaid payments, whichever is greater.3Medicaid.gov. Surety Bonds for HHAs Some states impose their own bond requirement on every licensed home care agency, with amounts anywhere from $25,000 to $500,000 depending on the state and the size of the operation.
A fidelity bond is a separate product that reimburses clients when an employee steals from or defrauds them. Some states require it as a licensing condition, and clients often expect it even where it isn’t mandated.
Build the Documentation the Licensing Reviewer Will Read
State reviewers treat your policies and procedures manual as evidence that you’ve thought through the situations your caregivers will face. The application packet typically asks you to submit this manual along with your corporate documents and insurance certificates. Build it before you apply, not after.
At a minimum, the manual needs to cover:
- Client rights and a documented grievance process, including how complaints are received, investigated, and resolved, with timelines for each step.
- Infection control and emergency preparedness procedures.
- HIPAA privacy and security safeguards. Any agency that transmits health information electronically is a covered entity and must have written policies for how staff access, store, and transmit protected health information, and what to do when something goes wrong.4Health & Human Services (HHS). HIPAA for Professionals
- Template service agreements and care plans. The service agreement is the business contract covering scope, rates, payment terms, cancellation, and dispute resolution. The care plan is the clinical document recording each client’s needs, the tasks caregivers will perform, limitations, and the review schedule.
- Standardized forms for incident reports, employee evaluations, and visit logs.
State health departments often publish templates. You’ll usually need to adapt them to your service area, operating hours, and client population.
Apply for the State License
With the entity formed, insurance in place, and your manual assembled, you submit the application. Most states use an online portal; a few still accept paper. The application asks for your formation documents, proof of insurance, policies and procedures manual, officer and director information, and evidence of any required bonds.
Application fees range widely. Some states charge nothing for a non-medical home care license. Others charge several thousand dollars, particularly for medical home health agencies or multi-year licenses. Check your state health department’s current fee schedule, and expect it to be non-refundable.
After you submit, plan on a review of roughly 60 to 120 days. Analysts verify that your documents meet state administrative codes and health standards, and most states schedule an on-site inspection of your office during this window. The inspector confirms that the physical location meets safety standards, that filing systems are secure, and that policy manuals and blank forms are accessible to staff. Some states also check signage and office setup.
Passing the inspection produces either a provisional or full license. A provisional license may carry conditions, like a follow-up inspection within 90 days. A full license lets you start serving clients immediately. Renewal typically comes up every one to three years, with a fee and renewed compliance verification each cycle.
Medicare and Medicaid Certification Is a Separate Process
A state license lets you operate. It does not let you bill Medicare or Medicaid. If you want to serve clients covered by those programs, you enroll separately with the federal government, and the process has its own application, fee, and survey on top of what you’ve already done.
The Medicare enrollment path has four steps. You confirm your NPI. Your authorized official completes the enrollment application through the Provider Enrollment, Chain, and Ownership System (PECOS). You pay the Medicare application fee, which is $750 for 2026.5Federal Register. Provider Enrollment Application Fee Amount for Calendar Year 2026 Your application then goes to a state survey agency for a compliance review against federal Conditions of Participation.6Centers for Medicare & Medicaid Services. Become an Institutional Provider
The Conditions of Participation for home health agencies are detailed federal standards covering patient rights, care planning, quality assessment, and clinical record-keeping.7eCFR. 42 CFR Part 484 – Home Health Services They require, among other things, that patients participate in developing their care plans, that the agency run a functioning quality improvement program, and that there be clear policies for transferring or discharging patients. These standards are generally more demanding than state licensing requirements. Agencies that obtain accreditation from a CMS-approved accreditation organization can skip the state survey agency review, though accreditation is voluntary and carries its own costs. Medicare enrollment must be revalidated every five years, with the application fee due again at revalidation.
If you provide Medicaid-funded personal care services, federal law also requires you to use an Electronic Visit Verification system. Section 12006 of the 21st Century Cures Act mandates electronic tracking of every in-home visit, and states that fail to comply face federal Medicaid funding reductions of up to one percentage point.8Medicaid.gov. Electronic Visit Verification Some states supply an EVV vendor at no cost; others let you pick your own as long as it captures the required data elements.
Classify and Screen Your Workforce Correctly
Worker classification and screening are where new agencies get into the most trouble. Both are routinely audited.
W-2 or 1099
The IRS looks at three categories of evidence: behavioral control (do you dictate how, when, and where the work is done?), financial control (do you set pay, provide supplies, and reimburse expenses?), and the nature of the relationship (is the work a core part of your business, and is it ongoing?).9Internal Revenue Service. Independent Contractor (Self-Employed) or Employee? For most home care agencies, caregivers are employees: you assign them to clients, set schedules, train them on your protocols, and require them to follow your care plans. Misclassifying employees as contractors exposes you to back taxes, penalties, and interest from the IRS, plus liability under state wage and unemployment laws.
Minimum Wage, Overtime, and Travel Time
The Fair Labor Standards Act has a “companionship services” exemption from minimum wage and overtime, but it does not apply to third-party employers like staffing agencies and home care companies.10Office of the Law Revision Counsel. 29 USC 213 – Exemptions Your caregivers must receive at least federal minimum wage for all hours worked and overtime at time-and-a-half for hours over 40 in a workweek.11U.S. Department of Labor. Fact Sheet 79A – Companionship Services Under the Fair Labor Standards Act (FLSA)
Travel time between clients is compensable. The commute from home to the first client and from the last client back home is not work time, but all travel between job sites during the day is.12U.S. Department of Labor. Travel Time Unpaid inter-client travel is a leading source of wage claims against home care agencies.
Background Checks and OIG Exclusion Screening
Every caregiver must pass a criminal background check before working with clients. Most states require fingerprint-based checks that search state and FBI databases, typically costing $20 to $40 per applicant.
Separately, federal law requires you to verify that every employee and contractor has not been excluded from federal healthcare programs. The Office of Inspector General maintains the List of Excluded Individuals and Entities, and hiring someone on that list exposes you to civil penalties of up to $10,000 for each item or service the excluded individual furnishes, plus an assessment of up to three times the amount claimed.13U.S. Department of Health and Human Services, Office of Inspector General. The Effect of Exclusion From Participation in Federal Health Care Programs The underlying statute mandates exclusion for anyone convicted of healthcare fraud, patient abuse, or felony controlled substance offenses, among other triggers.14Office of the Law Revision Counsel. 42 US Code 1320a-7 – Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs Check the LEIE before every hire and recheck your roster on a schedule. OIG recommends routine screening without specifying a frequency; many compliance programs run monthly.15U.S. Department of Health and Human Services, Office of Inspector General. Exclusions
Credentials, I-9, Training, and Health Screening
For caregivers holding titles like Certified Nursing Assistant or Home Health Aide, verify through the applicable state registry that credentials are active before they begin working, keep copies in the personnel file, and track expiration dates.
Complete Form I-9 for every employee. The employee fills out Section 1 on or before day one, and you must complete Section 2 within three business days of their start date, or on day one if the job will last fewer than three days. Retain completed forms for three years after the hire date or one year after employment ends, whichever is later.16U.S. Citizenship and Immigration Services. Employment Eligibility Verification (I-9)
Most states mandate initial and ongoing training on topics such as infection control, emergency procedures, client rights, and care for clients with Alzheimer’s or other dementias, along with CPR certification. Document every session, with date, topic, duration, and trainer, in each caregiver’s file. Most states also require tuberculosis testing before a caregiver begins client contact, and some require annual re-screening.
After You’re Licensed
States conduct periodic inspections, many of them unannounced. Inspectors review personnel files, verify that background checks and credential verifications are current, examine client care plans, and check that your policies manual reflects actual practice. Renewal generally requires updated proof of insurance, a renewal fee, confirmation that your administrator and key personnel still meet qualification standards, and evidence that you’ve corrected any prior deficiencies. Lapsed insurance, missed training hours, or neglected OIG screening can trigger corrective action plans, fines, or revocation. Building compliance into daily operations from day one is the only approach that holds up over time.