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INDEPENDENT AGING > Home Care > Home Care 4

Why do Private Pay Home Care Agencies Charge So Much?

How are their costs determined?

Why am I paying $25 an hour (or more) for my home health aide when I could pay them $12 an hour.

This is a very common, justified question. After reading the information provided below, you may find that the cost of a reputable private pay agency is well worth the extra money.

The average charge for a Home Health Aide in Massachusetts from a professional homecare agency is approximately $20 to $27 an hour.

How is that charge determined?

Hourly Wage: A Certified Home Health Aide’s average starting wage in Massachusetts is $10 – $12/hour. As high as $15/hour for specialty skilled, experienced.

Matching Taxes: On top of the hourly pay, the agency is required to pay payroll taxes. Payroll taxes are the state and federal taxes that you, as an employer, are required to withhold and/or to pay on behalf of your employees. You are required to withhold state and federal income taxes as well as social security and Medicare taxes from your employees’ wages. You are also required to pay a matching amount of social security and Medicare taxes for your employees and to pay State and Federal unemployment tax.

Currently the social security tax rate is 6.2%. You are required to withhold 6.2% of an employee’s wages for social security taxes and to pay a matching amount in social security taxes until the employee reaches the wage base for the year.

The Medicare tax rate is 2.9% for the employee and the employer. You will withhold 1.45% of an employee’s wages and pay a matching amount for Medicare tax. There is no wage base for the Medicare portion of the FICA tax. Both the employer and the employee continue to pay Medicare tax, no matter how much is earned.

The employer also must pay State and Federal Unemployment Taxes (SUTA and FUTA). The FUTA rate is 6.2 %

Liability, Workers’ Comp Insurance: Can cost an employer up to $4.50/hour. Healthcare liability and workers comp is among the most expensive. The cost is determined by payroll audits each year at the agency.

Health Insurance Benefits: Averages $0.75/hour

Other benefits: The agency may have an overhead of 24/7 hourly support services including RN’s on-call as well as their day-time support staff in the office.  There is also a charge for Criminal Background Checks (CORI’s), and additional cost for Bonding the employees.  All of which contributes to the safety of the client.

Summary of Costs:

  • Employee Wages
  • Employee Benefits
  • Agency Matching Taxes
  • Agency Liability and Workers’ Comp Insurance Coverage
  • Bonding Insurance
  • Background Checks
  • Agency Support Staff – 24/7

It is worth the extra money to pay to a professional, credible private pay agency.  The benefits far outweigh the cost.