January Bill Rate Update Checklist for Home Care Agencies

January 1 is when most of a home care agency’s costs move at once: fifteen states raise their minimum wage, New York raises its home care aide minimum, and payroll tax settings roll over. Work through these nine steps before then. The one with a hard deadline comes first in time: private-pay clients need notice of a rate change before it takes effect, so a January 1 increase needs letters out by early December, or by November 2 in Connecticut.

1. Find your new wage floor

Your floor is the highest of the federal, state and local minimums, plus any home care minimum your state sets. The federal minimum stays at $7.25. For state rates, see caregiver minimum wage increases on January 1, 2027. In New York, home care aides have their own minimum, $20.00 or $19.00 depending on region; see New York home care aide minimum wage 2027. Check the city or county too: Denver’s minimum goes to $19.84, for example.

2. Update pay rates in payroll

The new minimum applies to hours worked from January 1. If a pay period runs across New Year’s Day, hours before it are paid at the old rate and hours from it at the new rate. Update every caregiver below the new floor, and update your offer letters and job ads so new hires don’t start at last year’s rate.

3. Decide what happens to the rest of the pay scale

A higher floor squeezes the gap between a new hire and a caregiver with three years of service. Decide whether to move the whole scale, and budget for it. Raising only the bottom step is the cheapest option until experienced caregivers notice. Whatever you choose, put it in the bill rate in step 6, not just the minimum.

4. Recheck overtime

Overtime is time-and-a-half of the regular rate, so it rises with the wage. Two rule changes matter for 2027:

• Federal rule. The U.S. Department of Labor proposed on July 2, 2025 to let agencies use the companionship and live-in exemptions again, and has told its investigators not to enforce the current rule against agencies that claim them while it decides. No final rule had been published when we checked on October 28, 2026; the federal regulatory agenda targets November 2026. Your state’s law may still require overtime either way; see overtime rules by state.
• Oregon. SB 1518 brings caregivers employed by home care and companionship agencies under Oregon’s minimum wage and overtime law from January 1, 2027.

5. Update payroll tax settings

Wage bases and rates reset on January 1:

Few caregivers earn near the Social Security wage base, so that change mostly affects owners and office staff. FUTA is more likely to surprise you: in a credit-reduction state, the 0.6% is higher. For 2025 that was California, where employers paid 1.8%, or $126 per employee. The U.S. Department of Labor announces the 2026 list in November. Workers’ comp premiums are charged on payroll, so they rise with wages without any change in your rate.

6. Rerun your bill rate

Each dollar of wage costs more than a dollar to bill. At a 17% payroll burden, 8% paid non-billable time and a 12% margin, every $1.00 of wage needs about $1.44 on the bill rate. Put your own numbers in the bill rate calculator: pick your state and switch between today’s minimum wage and the January 1 rate to see both bill rates. The home care rates calculator does the same starting from your state’s median caregiver wage.

7. Check what your payers will pay

Medicaid rates don’t rise because the minimum wage does. Each state sets them in its fee schedule or managed care contracts, on its own timeline. Find your state’s rate on its home care rates page and compare it with the break-even rate from step 6. Do the same for VA community care rates and for long-term care insurance clients, whose policy pays a fixed daily or hourly benefit. If a payer’s rate is below your new break-even, you need to know before January, not after.

8. Give private-pay clients notice

Send rate letters before the new rate starts. Your service agreement may set the notice period; if it doesn’t, 30 days is a sensible minimum, which for January 1 means by December 2. Connecticut’s homemaker-companion agency law, CGS 20-679, requires at least 60 days’ written notice of a rate change, so a January 1 increase there needs letters out by November 2. For what to say, see raising your home care rates: how to tell clients.

9. Replace posters and update your calendar

Replace your minimum wage poster with the 2027 version from your state labor department. Arizona and Ohio, for example, have already published theirs. Then put next year’s dates on your compliance calendar: most indexed states announce their next rate between August and October.

How Caregiver Scheduling helps

Timesheets, private-pay invoicing at each client’s own rate and QuickBooks export are coming soon. Today, GPS check-in gives you a verified record of the hours worked. $199/month for up to 10 caregivers or $299/month for up to 50, free for 30 days.

FAQ

When should I send rate increase letters for January 1? By December 2 for 30 days’ notice, or by November 2 in Connecticut, where homemaker-companion agencies must give 60 days. Use the longer of your agreement’s notice period and your state’s.

Do I have to raise pay for caregivers already above the new minimum? No, not by law. But the gap between new and experienced caregivers shrinks, and that drives turnover. Decide on purpose rather than by default.

Does the minimum wage increase apply to hours worked on December 31? No. It applies to hours worked from January 1, even if the pay period started in December.

Figures checked against primary sources on October 28, 2026. This is general information, not tax or legal advice.