Compliance
Medicaid 80/20 Rule: How to Calculate Your Compensation Ratio
Step-by-step math for the Medicaid HCBS 80/20 rule at 42 CFR 441.302(k): what counts as compensation, what is excluded, a worked example, and what to do if you are below 80%.
Does your agency meet the Medicaid 80/20 rule?
Enter your Medicaid payments for the covered services and what you spend on direct care worker compensation. The calculator shows your ratio and any gap to 80%.
Last reviewed October 17, 2026
How is the 80/20 ratio calculated?
Divide direct care worker compensation for homemaker, home health aide and personal care services by the Medicaid payments you received for those same services. The result must be at least 80%. This calculator uses total payments; the rule lets you take training, travel and PPE costs out of the payments first, which raises your ratio.
What if my ratio is below 80%?
The gap figure shows how much more compensation would bring you to 80% at today's revenue. Agencies usually close it with wage increases, benefits, or by moving administrative costs that were charged to these services back to overhead. Start tracking compensation by service line now so your first report isn't a surprise.
How Caregiver Scheduling handles this
Timesheets from verified visits and QuickBooks export are coming soon, so the wages you report for direct care workers will tie back to the hours they actually worked. See what’s coming for timesheets and payroll.
Sources
Frequently asked questions
States must comply by July 9, 2030, six years after the rule took effect. Reporting on the share of payments spent on compensation starts earlier, so agencies should start tracking now.
Homemaker, home health aide and personal care services delivered under Medicaid home and community-based services authorities, including through managed care plans.
Wages and salary, benefits such as health and dental insurance, paid leave, and the employer share of payroll taxes for direct care workers. Training, travel and PPE costs are taken out of the payments before the ratio is figured.
States can set a lower percentage for small providers that meet criteria the state defines, and can make hardship exceptions. Check your state Medicaid agency’s plan.
Related guides
Compliance
Medicaid 80/20 Rule: What HCBS Agencies Do in 2026
CMS-2442-F gives providers six years to put 80% of Medicaid HCBS payments into worker compensation. Here's what changes now versus what changes in 2030.
Authorizations
How to Become a Medicaid Provider for Home Care
To bill Medicaid for home care you need a state license, a Type 2 NPI, state Medicaid enrollment and screening, waiver or managed care contracts, EVV and authorizations.
Operations
Private Pay vs. Medicaid: Choosing Your Agency's Payer Mix
Private pay means higher rates and fast payment; Medicaid means steady volume at state-set rates with authorizations and EVV. Compare rates, cash timing and admin before you mix them.
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