Raising Your Home Care Rates: How to Tell Clients (Letter Template)
Raise private-pay rates when costs rise, give at least 30 days' written notice (60 in Connecticut), explain the reason in one sentence. Sample letter included.
By Caregiver Scheduling Team ·
Raise rates when your costs rise: a minimum wage increase, a caregiver pay raise, a higher workers’ comp quote. Give clients at least 30 days’ written notice, or more if your service agreement or state requires it, explain the reason in one or two sentences, and keep increases to once a year. Most families accept a modest, explained increase. They leave over surprises, not over $2 an hour.
When should you raise home care rates?
When any input to your bill rate moves, and ideally on a date families already understand. State minimum wage changes are the easiest to explain. On January 1, 2027, fifteen states raise their minimum wage, among them California to $17.40, Washington to $17.73 and Michigan to $15.00, and New York raises its home care aide minimum to $20.00 downstate and $19.00 elsewhere. See caregiver minimum wage increases on January 1, 2027. If your state is on that list, your January letter writes itself.
The market is moving too. The 2025 CareScout Cost of Care Survey puts the national median for non-medical caregiver services at $35 an hour, up 3% from the year before. At that pace, an agency that has held its rate for three years has fallen about 9% behind its market.
How much notice do you have to give?
Whatever your service agreement says. If it says nothing, 30 days is a sensible minimum. At least one state sets a floor in law. Connecticut’s homemaker-companion agency law, CGS 20-679, requires at least 60 days’ advance written notice of any rate change for the same level of service, and a rate change without that notice is not valid against the client. Check your state’s rules in the licensing tool, and write the notice period into your client service agreement so nobody has to look it up later.
| Situation | Notice to give |
|---|---|
| Your agreement is silent | 30 days minimum, 45 is kinder |
| Agreement states a notice period | That period |
| Connecticut homemaker-companion agency client | At least 60 days, in writing |
| Long-term care insurance client | 30 days to the client. Check that the policy’s benefit still covers the new rate |
| Medicaid, VA or waiver client | No letter for hours the program pays. The payer sets the rate |
How much should you raise rates?
Enough to cover the cost increase and restore your margin. Work from the cost, not from a round number.
| Cost change | Cost per billable hour at 17% burden and 8% non-billable time | Bill rate change at 12% margin |
|---|---|---|
| Caregiver raise of $0.50 | $0.63 | About $0.72 |
| Caregiver raise of $1.00 | $1.26 | About $1.44 |
| Workers’ comp up 1 point of payroll | $0.19 on an $18 wage | About $0.22 |
| Software, insurance, rent up $12,000 a year | $0.33 on 36,000 billable hours | About $0.38 |
Run your own numbers in the bill rate calculator, which can switch between today’s minimum wage and January’s, before you pick a figure. A $1.50 increase explained by a $1.00 caregiver raise is easy to defend. A $4 increase with no reason is not.
What should the letter say?
Four things: thanks, the new rate and date, the reason, and reassurance that nothing else changes. Keep it under a page. Here is a sample you can adapt.
Dear Mrs. Alvarez,
Thank you for trusting Maple Home Care with your mother’s care over the past two years. Rosa tells us Tuesday crossword sessions are the highlight of her week.
Starting January 1, 2027, our hourly rate for personal care will change from $34.00 to $35.50. We are raising caregiver pay in January so that experienced caregivers like Rosa stay with us, and this increase covers that cost.
Your schedule, your caregivers and everything else about your service stay exactly the same. You do not need to do anything. If you have any questions, please call me directly at 555-0142.
With thanks,
Dana Whitfield, Owner, Maple Home Care
Send it by mail or email to the responsible party on the client record, keep a copy, and note the date sent. If you want proof of notice, ask them to sign and return a copy.
How do you handle pushback?
Call your five or ten most important clients before the letter lands, so they hear it from you first. For a family on a tight budget, offer to adjust the schedule rather than the rate: fewer hours, or a shift from two short visits to one longer one. Do not negotiate the rate itself. One client at the old rate becomes ten by spring.
Do not grandfather long-term clients silently either. If you want to recognize loyalty, give them a smaller increase with a note that the standard rate applies next year, and put that date on your compliance calendar.
How Caregiver Scheduling handles this
Private-pay invoicing at each client’s own rate is coming soon. Today, verified check-in and check-out times give you a record of the hours behind each invoice. $199/month for up to 10 caregivers or $299/month for up to 50, free for 30 days.
FAQ
How much notice should I give? At least 30 days, or what your service agreement says. Connecticut requires 60 days by statute for homemaker-companion agencies; check your own state’s rules.
How much can I raise rates? Enough to cover the cost change plus your margin. A $1.00 caregiver raise needs about $1.44 on the bill rate at typical costs.
Should I raise caregiver pay at the same time? Yes, and say so in the letter. It is the reason families accept most readily.
This article is general information, not legal advice. Check your state’s consumer notice rules for home care agencies.