Managed Payroll vs. Hiring In-House for Home Health Agencies

Home health agency payroll carries FLSA compliance risks that most agencies underestimate. The most common and most expensive is the failure to compensate aides and nurses for travel time between client visits. Under federal law, this inter-client travel is work time, and it must be included in hours worked for overtime purposes. Agencies that omit it from time calculations face back pay liability that can stretch years into the past.

Add to that the complexity of EVV data reconciliation, multi-state payroll for agencies operating across multiple states, and Medicaid reimbursement documentation requirements, and the case for professional payroll management becomes straightforward. This comparison covers the real numbers on what in-house payroll management costs versus a fully managed service.

The Real Cost Comparison

Estimates based on a 40-person home health agency with aides, LPNs, and RNs. In-house salary reflects national median for payroll specialists with healthcare payroll experience.

What Makes Home Health Payroll Different

Three payroll issues create most of the compliance exposure for home health and home care agencies, and they are all interconnected.

Inter-client travel time as compensable work time. When a home health aide finishes a morning visit with one client and drives to an afternoon visit with another client, that drive time is work time under the FLSA. It must be counted toward total hours worked for the week, included in the overtime calculation, and paid at no less than the applicable minimum wage. The DOL has been aggressive in enforcing this requirement in the home care industry, and agencies that have not been tracking inter-client travel correctly often face multi-year back pay liability when audited. Common errors include tracking only visit hours, not including travel in the overtime calculation, or paying a flat mileage reimbursement that does not also cover the wage for the travel time.

EVV reconciliation and Medicaid compliance. The 21st Century Cures Act requires states to implement Electronic Visit Verification for most Medicaid-funded home care services. EVV records create a timestamp of when each visit started and ended. When these records do not match payroll records for the same visits, Medicaid auditors flag the discrepancy. Agencies that process payroll without reconciling EVV data create audit exposure on both the billing and payroll sides simultaneously.

Multi-state workforce management. Home health agencies that operate in more than one state must register as an employer in each state where aides work, withhold state income tax at the correct rate, and comply with state-specific wage payment laws. Some states have their own overtime rules that are more expansive than the FLSA, and some have mandatory sick leave requirements that interact with how paid time off is tracked in payroll. BEG manages all of this as part of the standard engagement.

How BEG Manages Home Health Agency Payroll

BEG operates as your fully managed payroll department. We run every pay cycle, handle all tax filings, and manage compliance updates as federal and state requirements evolve. We work inside your existing payroll system, so there is no migration and no disruption to your scheduling or EVV workflows.

During onboarding, we review your current travel time policy and how it is reflected in your payroll system, confirm your EVV reconciliation process, and audit your state tax registrations. We then configure payroll to track travel time correctly and reconcile it with your EVV data before the first managed run.

Pricing is $25 per employee per month in your existing system or $45 per employee per month in our isolved account. For a 40-person agency, that is $1,000 to $1,800 per month, all-inclusive, compared to $62,400 to $90,000 annually for a qualified in-house payroll specialist. Most agencies are live within 3 to 5 business days of contract signing.

Frequently Asked Questions