Home / Industries / How Much Does It Cost to Start a Home Health Agency in 2026?

How Much Does It Cost to Start a Home Health Agency in 2026?

Reviewed by Muhammad Tayyab Shabbir · Last updated 12 October 2026

The hard regulatory costs are small: a $750 CMS application fee plus a state license fee ranging from $25 in Illinois to $5,049 in Los Angeles County. The real cost is payroll for the months you cannot bill. On our own build-up from the line items on this page, not a surveyed figure, that puts total cash between roughly $258,000 and $520,000, and that build-up still excludes the federal reserve-funds requirement, which is a formula, not a flat sum. Two facts override all of it: CMS closed Medicare enrollment to new home health agencies nationwide on 13 May 2026, and California's own moratorium, in force since 29 June 2026, allows a new home health license only under an unmet-need exception, so treat the $5,049 top of that fee range as a published schedule, not an open door.

Verify before you commit capital. Fees, moratoria and licensure rules change without notice. Confirm every figure here with CMS, your Medicare Administrative Contractor (MAC) and your state licensing agency before spending money. Where a figure below is our own estimate rather than a sourced fact, it says so in the sentence.

Can you even open a Medicare-certified home health agency right now?

Not as a new agency. On 15 May 2026 CMS published Announcement of Nationwide Temporary Moratoria on Enrollment of Home Health Agencies (CMS-6101-N, 91 FR 27954), imposing a six-month nationwide moratorium effective 13 May 2026: "no new HHAs or HHA branches or practice locations will be enrolled into Medicare unless the HHA's enrollment application was received by the applicable Medicare contractor prior to this notice's effective date." It covers every state and territory; applications received before that date are not caught (42 CFR 424.570(a)(1)(iv)).

• The change-of-ownership workaround is closed too, unless an exception applies. Under 42 CFR 424.550(b)(1), when an HHA is sold in a change in majority ownership within 36 months after its initial enrollment, or after its most recent change in majority ownership, the buyer must enroll as a new HHA, and CMS confirms the moratorium blocks that, because it counts as an initial enrollment. Paragraph (b)(2) lists exceptions, among them two consecutive years of full cost reports since enrollment or the last such change.
• Branches are blocked, not just new agencies, and the $750 fee is refunded if an application is denied because of the moratorium (42 CFR 424.514(d)(2)(v)(C)).

A moratorium runs six months and may be extended in six-month increments (42 CFR 424.570(b)). The first six months, counted from 13 May 2026, end in mid November 2026. As of 11 October 2026 we found no Federal Register notice extending or lifting the moratorium; the same paragraph says CMS will publish one there when it extends a moratorium, so check in November. CMS did not extend the moratorium to Medicaid or CHIP, but it did not close the door either: the notice leaves that decision to each State. A state-level Medicaid home health moratorium could therefore land at any time. Check your state's Medicaid agency before you buy into a Medicaid-dependent census. Acquiring an established agency outside the 36-month window is now the main route in.

What does it cost at a glance?

Read this table against the moratorium. No new agency can enroll in Medicare today, and California issues a new home health license only under an exception (see SB 164 below). These are the current published schedules: what you would pay if and when these doors reopen, not a live shopping list. The middle column is California's statewide fee shown for contrast, not a national typical: Illinois and California are the only two states whose current fee schedules we could source.

On accreditation fees: ACHC, CHAP and the Joint Commission all hold CMS deeming authority for home health, and none publishes a fee schedule. We could not verify the ranges quoted elsewhere and have not repeated them. Budget this line from written quotes.

So what is the headline range built from?

The table above is a list of prices, not a total. The $258,000-$520,000 range in the opening paragraph is our own arithmetic on the sourced line items above: a build-up, not a surveyed figure and not a benchmark. Here it is in full so you can disagree with it.

Three salaries at BLS May 2025 mean wages for NAICS 621600 total $115,670 + $93,580 + $47,770 = $257,020 a year, or about $21,418 a month, before payroll taxes, benefits, or a single visiting clinician. The only genuinely uncertain input is how many months you carry that team before Medicare cash arrives, and that number is our own planning assumption, described in the timeline section below.

Two things fall out of that table. First, the license fee is under 1.2 percent of the total in every column: comparing fees is close to irrelevant, and the ramp length is the whole game. Second, this build-up is deliberately incomplete. It excludes, because we could not price any of them from a primary source:

• employer payroll taxes and benefits on top of the mean wages;
• visiting clinicians paid per visit during the ramp;
• office rent, EMR and billing software, insurance and marketing;
• the accreditation survey;
• the 42 CFR 489.28 initial reserve operating funds, which must be held in addition to all of the above and which no one can compute for you without a figure from your MAC.

Treat $258,000-$520,000 as a floor on the payroll-and-fees component, not as the cost of starting an agency. Anyone quoting a single all-in number without those five lines priced is guessing.

What actually drives the cost?

Not equipment. This is a payroll business run from leased office space, and the driver is the gap between paying clinicians and being paid by Medicare. CMS's State Operations Manual §2008B requires an applicant to have "provided skilled home health services to a minimum of 10 patients before a survey is conducted. At least 7 of the 10 required patients should be receiving care from the HHA at the time of the initial Medicare survey." You hire nurses, admit ten real patients and deliver real care before the survey that eventually lets you bill. Section 2202.10 of the same chapter adds that the ten are "not necessarily Medicare patients".

Payment mechanics widen the gap. Split percentage payments are not made to HHAs certified on or after 1 January 2019: a new agency receives a single payment for a 30-day period of care after the final claim is submitted. That rule sits at 42 CFR 484.205(g)(2)(ii), whose paragraph is captioned for periods through 31 December 2020; the operative paragraph for periods today is (g)(4), so cite both. Either way, there is no money up front. A Notice of Admission must be filed within five calendar days of the start of care (484.205(j)(1)); miss it and payment drops 1/30th per day, with non-covered days your liability and unbillable to the patient (484.205(j)(3)).

The unbillable ramp, not fees or software, is your largest cost.

How do you calculate the capitalization requirement?

There is no flat reserve figure. 42 CFR 489.28 sets a formula. You must hold "initial reserve operating funds" from application submission through the three months after billing privileges are conveyed, excluding Medicare receivables. Under 489.28(b), sufficiency is the greater of: your projected visits for the first three months × the actual average cost per visit of three or more similarly situated first-year HHAs selected by CMS; or that same cost per visit × 22.5 percent (one fourth of 90 percent) of the comparison agencies' average visits.

Worksheet: (a) project three months of visits by discipline; (b) ask your MAC for the comparison cost per visit it will apply: CMS derives it from cost reports under 489.28(c), and we could not obtain a current published national figure, so do not guess; (c) multiply; (d) check against your own three-month operating budget and fund the higher figure.

At least 50 percent must be non-borrowed owner capital, certified by the officer who signs the cost report; the remainder may be borrowed or drawn on a line of credit from an unrelated lender, which requires a letter of credit (489.28(d)-(f)). CMS may deny billing privileges for failing the test, and revoke them if you fail to maintain the funds for three months after they are granted (489.28(g)).

What does the pathway cost, step by step?

1. State license. Fees as in the table above, though in California CDPH issues a new HHA license during its moratorium only under an exception (see SB 164 below). Whether your state licenses home health separately from Medicare certification, and on what schedule, varies: we could not source a reliable current state-by-state list and are not going to invent one, so confirm it with your own state licensing agency.
2. CMS-855A plus the $750 CY2026 application fee, which CMS says can be paid online through PECOS. Its enrollment guide (MLN9658742, December 2025) says "Medicare Administrative Contractors (MACs) will process applications only with the proper application fee payment or an approved hardship exception". Proof of reserve funds goes in here: bank statements plus an officer attestation. The fee is refunded if the application is denied because of the moratorium (42 CFR 424.514(d)(2)(v)(C)).
3. Live census of ten patients, seven active at survey, then the initial survey by the state agency or a deemed accreditor.
4. CCN and billing privileges: only now can you submit claims.

Some states add a certificate of need or their own moratorium. California's SB 164 (Chapter 27, Statutes of 2026) added Health and Safety Code §1728.9: unless it grants an exception under §1728.95 on a written finding of unmet need, CDPH "shall not issue a new license to operate a home health agency or add a branch office to an existing license" until no later than 90 days after the effective date of revised regulations. CDPH's All Facilities Letter 26-28 (27 August 2026) dates the moratorium from 29 June 2026 and says new applicants "should begin by submitting an exception request". Ask CDPH when the moratorium actually lifts rather than working from a date. The same bill added §1728.75(b): "The department shall not approve a change of ownership of a licensed home health agency within five years of the date a license was initially issued to the licensee." Subdivision (c) allows an exception in extenuating circumstances, so assume the bar applies unless CDPH tells you in writing that it does not. We could not verify a reliable list of which CON programs cover home health, so call the state agency.

How long does it take?

We could not find published processing-time data for state home health licensure in any state, and we are not going to publish a range we cannot source. Ask your licensing agency, in writing, for its current processing time before you build a timeline around it.

What we can tell you is our own experience: in the engagements we run, founders need twelve to twenty-four months of payroll before meaningful Medicare cash arrives. That is the firm's own planning assumption from client work, not a surveyed statistic, and not published by any agency. It drives the ramp row in the build-up table above, and it is the number to argue with if you think our range is wrong. Building a ten-patient census takes months on its own, because you are marketing without a Medicare number.

How do people finance it?

The provisions below are quoted from SBA SOP 50 10 8.1, effective 1 October 2026, which replaced SOP 50 10 8 (effective 1 June 2025). We checked each one against the current file on 11 October 2026. SBA posts the SOP at sba.gov/document/sop-50-10-lender-development-company-loan-programs. Check the current edition on that page before you rely on any of this.

SBA 7(a) is the right instrument. What this business actually consumes is working capital, and the SOP lists it among the uses of proceeds that are for 7(a) only: "Working capital to finance everyday operations and short-term operational needs" (Section A, Chapter 3, Eligible Uses of Proceeds). A search of the SOP for the words home health on 11 October 2026 returned nothing, and no entry in its Types of Ineligible Businesses (Section A, Chapter 1) names home health agencies, though non-profit businesses are ineligible. That is our reading of the list, not an eligibility determination, which the SOP has the lender complete and document. The maximum loan amount for any one Standard 7(a) loan is $5,000,000 (Section B, Chapter 1).

Expect a 10 percent equity injection. For Standard 7(a) loans, and in the same words for 7(a) Small loans, SOP 50 10 8.1 (Section B, Chapters 1 and 2) treats a business as a start-up "if it has been in operation (i.e., generating revenue from intended operations) for 1 year or less" and says "All 7(a) loans made to a Start-Up Business require a 10% equity injection based on the project cost", with total project costs meaning "all costs required to become operational, regardless of the source of funds, except for lines of credit and 504 loans". For SBA Express loans the SOP leaves that question to the business judgment of the lender. Buying an agency is a change of ownership, which Appendix 15 of the SOP covers for all 7(a) loans. For an Initial Acquisition, the default category, the minimum is also 10 percent of total project cost, and "the required equity injection cannot be reduced or eliminated"; for a Business Expansion or an Owner Buyout the Appendix also prints 10 percent but lets the lender reduce or eliminate it on conditions. Seller debt counts toward the injection only if it is subordinated to the lender and "on full standby (no payments of principal or interest for the term of the 7(a) loan)", and seller debt, other standby debt and non-controlling minority equity investments, "whether individually or in the aggregate, may provide no more than half of the required Equity Injection": the rest has to come from the sources Appendix 15 lists as unlimited, such as cash that is not borrowed. That cap catches people structuring change-of-ownership deals, which is the route this page otherwise recommends. Our SBA equity injection requirements and SBA business acquisition loan requirements pages set out both rules in full.

The SOP's license condition depends on the 7(a) delivery method. Under Licenses, SOP 50 10 8.1 (Section B, Chapter 6, Loan Closing and Disbursement) says: "The Lender must obtain evidence from the Borrower of all licenses required to operate the business within no more than 90 days after final disbursement of the loan." It adds that the loan "may not be sold into the secondary market until all required licenses are obtained". For SBA Express, Export Express and 7(a) Small loans, the same paragraph has its own heading, under which the lender "must meet all other required conditions before loan disbursement", and those conditions "include requirements identified in the loan write-up, such as standby agreements, appraisals or evaluations, business licenses, and cash/equity injections". Ask your lender which delivery method your loan is under and what its write-up requires on licenses before it disburses.

SBA 504 is the wrong tool. SOP 50 10 8.1 says the 504 program "can be used to finance fixed assets for eligible small businesses" (Section C, Chapter 1, Purpose of the 504 Loan Program), and working capital is on the list the SOP heads for 7(a) only. An HHA that leases ordinary office space has no building or other long-term fixed asset for a 504 loan to finance. The Limited or Special Purpose Property label does not change that. Appendix 3 of the SOP defines it as a "limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built", and in the 504 chapter it raises the borrower's minimum contribution on a project; it does not create one. No fixed-asset project, no 504 case. On conventional bank debt we have no published statistic to offer: in the engagements we run, conventional bank lenders have not funded a de novo agency with no receivables and no CCN: that is our own experience, not a lending-market figure.

What do the operating economics look like?

For CY2026 the national standardized 30-day period payment rate is $2,038.22 (CMS Transmittal R13488CP, Table 1). Below the LUPA threshold you are paid per visit instead: $176.96 for a skilled nursing visit (same transmittal, Table 3). Against that, an RN costs a mean of $93,580 a year. Margin comes from visits per clinician per day and from avoiding LUPAs; you cannot price your way out of a fixed federal rate. Both are calendar year 2026 rates; the 2027 rates were still a proposal (91 FR 41216) on 11 October 2026.

What makes these projects fail?

• Underfunding the unbillable period, budgeting fees and forgetting a year or more of payroll.
• Spending the reserve, which CMS may treat as grounds to revoke billing privileges.
• Late Notices of Admission, which shave 1/30th per day off periods you have already staffed.
• Kickbacks and bribes. Six of the 12 enforcement cases CMS lists in the moratorium notice involve kickbacks, bribes or financial benefits given for referrals, patient information or a doctor's approval.

Is this actually viable for you?

Often, no. Four honest tests; the thresholds in them are our opinion, not anyone's rule.

Can you enroll at all? For a de novo Medicare HHA today, no. If your plan needs Medicare revenue inside a year, it does not work.

Do you have twelve to twenty-four months of payroll, our own planning assumption, not a published figure, plus an untouchable reserve? On our build-up above that is $258,000-$520,000 of payroll and fees, before the 489.28 reserve and before everything the build-up excludes. In our view, this is the firm's judgment, not a regulatory threshold, if your total available capital is under $250,000 you should not start a de novo Medicare-certified agency. Private-pay non-medical home care that does not enroll in Medicare sits outside the Medicare enrollment rules on this page (its state licensing is a separate question): do not conflate the two.

Do you have clinical leadership committed in writing? 42 CFR 484.105 requires a governing body, an administrator (or a pre-designated person) available during all operating hours, and a clinical manager, also available during all operating hours, to oversee all patient care services.

Do you have referral relationships already? Not a marketing plan: discharge planners who know you. Without them, the ten-patient census that gates your survey is where the project stalls.

If the answers are no, the better route is almost always acquiring an established, compliant agency outside the 36-month window: a change of ownership, which a 7(a) loan may fund on the conditions in Appendix 15 of SOP 50 10 8.1, and one that sidesteps the moratorium and the ramp. In California, check §1728.75(b) first.

Frequently asked questions

Do I need a $50,000 surety bond for Medicare home health?

The bond rules are still in the CFR, but their compliance dates were removed in 1998. A final rule of 31 July 1998 (63 FR 41170, amending 42 CFR 489.67 and 441.16) "removes the submission compliance dates that specify when participating HHAs must submit a surety bond in both the Medicare and Medicaid programs". HHS-OIG reported in 2012 (OEI-03-12-00070) that the Medicare requirement "remains unimplemented after nearly 15 years." We found no evidence CMS has implemented it since. Ask your MAC, and ask your state Medicaid agency whether it requires a bond. Both rules now set $50,000, or more if CMS or the Medicaid agency specifies (489.65(g), 441.16(g)(7)): face value, not premium.

Can I buy an existing agency instead?

You can, and while the moratorium runs it is the main route in. Check 42 CFR 424.550(b)(1) first: if your purchase is a change in majority ownership within 36 months after the agency's initial enrollment or its most recent change in majority ownership, and no (b)(2) exception applies, the provider agreement and billing privileges do not convey to you. In California, Health and Safety Code §1728.75(b) adds a separate five-year bar on CDPH approving a change of ownership after initial licensure, subject to the §1728.75(c) extenuating-circumstances exception.

Does the moratorium affect existing agencies?

Their expansion and their sale. CMS states that enrolled HHAs may continue furnishing services if they remain compliant, but cannot add branches as new practice locations, and an agency sold in a non-exempt change in majority ownership cannot re-enroll while the moratorium runs. There is no judicial review of a moratorium decision under section 1866(j)(7)(B) of the Act; any appeal is limited to whether it applies to you.

What a lender will ask you for

The 7(a) lenders we work with on this vertical ask for substantially the same file: this is our own experience of what they request, not an SBA requirement list: a three-year monthly model with a visit-level revenue build at current CMS rates; a documented 42 CFR 489.28 reserve calculation using your MAC's comparison figure; evidence of the 10 percent equity injection and, on a purchase, any seller note shown as subordinated, on full standby and within the half-of-injection cap; signed commitments from your administrator and clinical manager; a named referral pipeline; and how you bridge the unbillable ramp.

Business Plan Firm is the US practice of Avvale, a London consultancy. We have written $1B+ in funding documents for 500+ businesses across 30+ countries, including Shark Tank and Dragons' Den clients. If you want that file built properly, including an honest answer on whether to wait out the moratorium or buy instead, we can go through it together.

Book a free 30-minute call

Written by Muhammad Tayyab Shabbir, UCL, published textbook author. Last reviewed 11 October 2026, when the sourced figures and rules were checked against CMS, the Federal Register, the Code of Federal Regulations, the Bureau of Labor Statistics, named state agencies and SBA SOP 50 10 8.1, effective 1 October 2026. Figures labeled as our own build-up, our own planning assumption, our own experience or our view are exactly that, and are not sourced. Confirm current requirements with CMS, your MAC and your state licensing agency before committing capital.

Related cost guides