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%.
What's left of a Medicaid hour?
Before you sign a managed-care contract or accept a rate, put it next to the wage you would have to pay. The calculator shows the margin per billed hour after payroll burden, unbilled time and travel, the wage at which the rate breaks even, and where you land on the 80/20 rule.
Last reviewed November 5, 2026
Burden: FICA 7.65%, FUTA/SUTA, workers' comp (home care class codes run 3 to 8%), paid sick leave, training time. Unbilled: paid time you cannot bill, such as travel, meetings, no-shows and authorization overruns.
Saved scenarios
Save a rate to compare contracts side by side. Rates change? Re-run from the rates tracker.Margin per billed hour · Texas
$5.3122% of the rate
Workable. Each billed hour leaves $5.31 for growth, recruiting and the owner. Break-even wage $15.94.
Caregiver wage$11.65
what the caregiver sees per hourPayroll burden$1.63
14% taxes, workers’ comp, leaveUnbilled time$1.15
8% of paid time you cannot billTravel$0.75
mileage and drive time per billed hourOffice and overhead$3.50
scheduler, software, insurance, rentBreak-even wage$15.94margin = $0
80/20 ratio52%needs 28% more
vs state median+$0.00$11.65 BLS 2025
Shareable card
Texas · $24.00 Medicaid hour$5.31 left after a $11.65 wage52% of the rate reaches the caregiver (80% required by July 2030). Break-even wage $15.94.caregiverscheduling.com/tools/medicaid-hour-margin
Scenarios stay in this browser.
How it calculates
One billed hour, five deductions.
- Wage cost The wage plus everything that rides on it: FICA, unemployment, workers’ comp, paid leave. Home care burden typically lands between 12% and 20%.
wage cost = wage × (1 + burden %) - Unbilled time Caregivers are paid for time you cannot bill: travel between clients, training, no-shows discovered at the door, minutes over the authorization. Spread across billed hours it is a cost per billed hour.
unbilled cost = wage cost × unbilled % ÷ (1 − unbilled %) - Travel and overhead Mileage reimbursement per billed hour, and the office: a scheduler for every 25 to 30 caregivers, software, insurance, rent. $3 to $5 per billed hour is common at 25 caregivers.
margin = rate − wage cost − unbilled cost − travel − overhead - Break-even wage The wage at which margin is zero with your burden and unbilled percentages. If this is below your state median, the rate does not support market wages.
break-even = (rate − travel − overhead) ÷ ((1 + burden) × (1 + unbilled ÷ (1 − unbilled))) - 80/20 ratio The share of the Medicaid payment that reaches the direct care worker as compensation: wages, benefits and the employer share of FICA. CMS requires 80% for homemaker, home health aide and personal care services by July 9, 2030; some states will set it earlier.
ratio = wage × 1.0765 ÷ rate
How Caregiver Scheduling handles this
Coming soon in Caregiver Scheduling: checked-in visits will become timesheets, and the hours you approve will go to QuickBooks for payroll, so the wage side of this calculator will come from one record instead of a spreadsheet. Timesheets and QuickBooks (coming soon).
Sources
Frequently asked questions
It depends on the state, the program and the payer. Personal care (T1019) rates range from under $15 an hour in a few states to over $30 in others, with most between $18 and $28. Managed-care plans negotiate from the state fee schedule.
Start with 7.65% FICA, add your state unemployment rate on the taxable wage base (often 1 to 3% effective), workers’ comp for home care class codes (3 to 8%), and paid sick leave where required (about 3%). Most agencies land between 12% and 20%.
The employer share of FICA and unemployment counts, as do wages, benefits and training time. Overhead, software and the scheduler’s salary do not. The ratio here uses wage plus 7.65%.
Rate is hard; terms are easier. Ask for a travel add-on in rural counties, a differential for weekends and nights, faster authorization turnaround, and an EVV grace process. Bring this card: a payer that sees the break-even wage next to the state median understands the problem.
Only if the hours let you retain caregivers you would otherwise lose and you have a date to revisit it. Track the margin per client in your billing reports so the loss stays visible.
Related guides
Operations
Caregiver Payroll Burden: What Each Hour Really Costs
Payroll taxes, unemployment insurance, workers' comp and paid leave add 13–22% to every caregiver hour. Line-by-line breakdown and why turnover makes it worse.
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.
Operations
Home Care Agency Profit Margins: What's Typical and What Moves Them
Gross vs. net margin for non-medical home care, a worked hour at the 2025 median rate and wage, and the five levers that move profit most.
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