If you run a home healthcare agency, you already know the work is rewarding but risky. Your employees visit patients' homes, lift and transfer people who need help, handle medical equipment, and face exposure to infectious diseases. When someone gets hurt on the job—and in home healthcare, injuries happen more often than you'd think—workers' compensation insurance is what protects both your employee and your business. But here's what most agency owners don't realize: your premium isn't set in stone. Understanding how workers' comp works for home healthcare can save you thousands of dollars a year.
Do You Need Workers' Comp for Your Home Healthcare Business?
In most states, workers' compensation becomes mandatory the moment you hire your first employee. It doesn't matter if that employee works part-time, full-time, or just occasionally—if they're on your payroll, you need coverage. The only states with slightly different rules are a handful that allow very small businesses to operate without it, but even then, having coverage is strongly recommended.
Here's where it gets tricky: even if you classify your workers as independent contractors (1099 employees), you may still be required to provide workers' comp coverage. The only exception is if each contractor provides you with a certificate proving they carry their own workers' compensation policy. If they can't produce that certificate, you're on the hook for covering them. Many home healthcare agencies have learned this the hard way after an audit or a workplace injury.
Understanding Class Codes and What They Mean for Your Rates
Workers' comp premiums are based on class codes, which categorize employees by the type of work they do and the risk level involved. For home healthcare, most states use NCCI code 8835. This code covers a broad range of workers—home health aides, personal care providers, companions, traveling nurses, therapists, and social workers. Basically, if your employee provides healthcare services outside a traditional medical facility, they probably fall under 8835.
A few states handle it differently. Pennsylvania and Delaware split home healthcare into two codes: code 0942 for professional services (licensed nurses, therapists, and certified healthcare workers) and code 0943 for non-professional and companionship services (aides and assistants without medical licenses). California uses code 8827 specifically for in-home caregivers providing non-medical assistance. Knowing which code applies to your employees is crucial, because each code has a different base rate.
Why does this matter? Because if your employees are misclassified, you could be paying the wrong rate—sometimes too much, sometimes too little. And if you're audited and found to have been underreporting risk, you'll owe back premiums plus penalties. Accuracy here isn't optional.
What Does Workers' Comp Actually Cost for Home Healthcare?
On average, home healthcare businesses pay about $2.79 per $100 of payroll for workers' comp coverage in 2025. That means if your annual payroll is $100,000, you'd pay roughly $2,790 a year. Some sources cite lower rates—around $1.77 per $100 of payroll—but these figures vary widely depending on your state, your carrier, and your claims history.
For context, a home health aide making $13.80 per hour might generate a workers' comp premium of about $42 per month, or roughly $504 per year. That might not sound like much for one employee, but when you're managing a team of ten, twenty, or fifty workers, those costs add up fast. The good news? You have more control over these costs than you think.
What Factors Affect Your Premium?
Your workers' comp premium isn't just based on payroll and class codes. Insurers look at several operational factors that reflect the level of risk your business presents. Do your employees work with patients who have physical disabilities? Do they provide pediatric care or work with elderly patients? Do they drive long distances between appointments? All of these factors can increase risk—and therefore, your premium.
Another big factor is your state. Workers' comp costs vary dramatically depending on where you operate. States with higher average wages or stricter safety regulations tend to have higher premiums. Your carrier also matters—some insurers specialize in high-risk industries like home healthcare and offer better rates than general carriers.
But the single biggest factor affecting your premium is your claims history, which is measured by something called your experience modification rate, or EMR.
How Your Experience Mod Affects Your Premium
Your experience modification rate (EMR or X-Mod) is a number that compares your company's claims history to other businesses in the same industry. The baseline is 1.0, which means you're average. If your EMR is below 1.0—say, 0.85—you're safer than average, and your premium gets discounted. If your EMR is above 1.0—say, 1.20—you're riskier than average, and your premium increases.
Here's how it works. Insurers look at the last three years of your safety record and compare your actual losses to what they expected based on businesses similar to yours. They consider both claims frequency (how often injuries happen) and claims severity (how expensive those injuries are). A single catastrophic claim can hurt you, but multiple small claims can be just as damaging because they signal poor safety practices.
This is where investing in safety pays off. If you can reduce injuries through better training, safer equipment, and proactive risk management, your EMR will drop over time—and so will your premium. For a home healthcare business with a $100,000 payroll, improving your EMR from 1.2 to 0.9 could save you over $800 a year. Scale that up to a larger operation, and the savings become substantial.
Reducing Risk and Lowering Your Costs
The best way to control your workers' comp costs is to prevent injuries in the first place. Home healthcare workers face unique risks—lifting and transferring patients, slipping on wet floors in unfamiliar homes, exposure to infectious diseases, and long hours on their feet. Tailored safety training that addresses these specific challenges can dramatically reduce workplace accidents.
Focus on proper patient lifting techniques, infection control protocols, and emergency response procedures. Make sure your workers know how to assess a home environment for hazards before they start working. Provide them with the right equipment—transfer belts, slip-resistant shoes, and personal protective equipment. And create a culture where employees feel comfortable reporting near-misses and minor injuries before they become major claims.
Some insurers offer discounts or premium credits for businesses that implement certified safety programs. Ask your carrier if they have resources or incentives available. Even if they don't, the investment in safety training will pay for itself through fewer claims and a lower EMR.
How to Get the Right Coverage for Your Agency
Start by making sure you're working with an insurance agent or broker who understands the home healthcare industry. Not all carriers are willing to insure home healthcare agencies, especially those with higher EMRs or limited claims history. You want someone who knows which carriers specialize in this space and can get you competitive quotes.
When you apply for coverage, be prepared to provide detailed information about your operations—your payroll, the types of services you provide, the number of employees, and whether they work with high-risk patients. The more transparent and accurate you are, the better your quote will reflect your actual risk.
Finally, review your policy annually. As your business grows, your payroll changes, and your EMR improves, your premium should adjust accordingly. Don't just auto-renew without checking if you're still getting the best rate. A little effort each year can save you a lot of money over time—and ensure that your employees are protected when they need it most.
