Does a Home Care Agency Have to Offer Caregivers Health Coverage?
The threshold is fifty full-time employees, and your part-time caregivers count toward it as fractions. Add up the monthly hours of everyone who is not full-time, stop at 120 per person, divide by 120, and compare the number you get against fifty. Forty caregivers at twenty-five hours a week comes to thirty-six. Sixty comes to fifty-four. Most owners never run it.
Open the IRS page on applicable large employer status and look for the word caregiver. It is not there. Nothing on that page asks how many people are on your roster, because the test it sets out counts hours of service and never once counts people.
Combine the hours of everyone who is not full-time, the IRS says, and "do not include more than 120 hours of service per employee", then divide by 120. That divisor puts a home care agency somewhere its owner did not expect, because 46 percent of home care workers are part-time.
The rule was written for employers whose staff work one schedule. Yours is the opposite by design.
My caregivers are part-time. Do they count?
Yes, as fractions. The IRS counts a caregiver as one full-time employee if she averages at least thirty hours of service a week, or logs at least 130 hours in a calendar month. Everyone under that line is non-full-time, and her hours still count, pooled.
Full-time caregivers get added on top, one for one.
Where does a roster your size land?
Same assumption throughout: twenty-five hours a week, 4.33 weeks a month, nobody full-time.
| Caregivers | Full-time equivalents | Over the line |
|---|---|---|
| 40 | 36 | No |
| 50 | 45 | No |
| 60 | 54 | Yes |
| 80 | 72 | Yes |
Hours move, so status moves. Review it each year.
I already ran the numbers on a group plan
Of course you did, and it did not work. KFF put the 2026 average single premium at $9,804 a year. On a sixty-caregiver roster that is well into six figures before a single person enrolls, and it lands against a net margin of seven to ten percent. A raise fails for the same reason. Two dollars an hour on a thirty-hour caregiver is $3,120, plus 7.65 percent in employer FICA, so $3,359 a year each.
Both answers need money the agency does not have. What is actually available to a part-time roster is a shorter list.
Does a wellness plan satisfy the mandate?
No. A Section 125 wellness plan is not health insurance and it is not minimum essential coverage, so it does nothing about an employer mandate if your agency is over the line. For failures in the 2026 calendar year the adjusted amount is $3,340 under Code section 4980H(a) per full-time employee, less a thirty-employee reduction. If that is your agency, the call is to your broker and your CPA.
Under the line there is no mandate at all. The vehicle is the 1978 cafeteria plan rules, with CBIZ on the CPA opinion and HitesmanLaw on the legal assurance, both on the compliance page. The longer objection is answered separately.
What would this look like at your agency?
Two inputs answer it. How many caregivers you run, and roughly what they earn. That is the whole ask, it stays small on purpose, and nothing here needs a single piece of paperwork from you or from your payroll company.
Across Home Care Benefits' own proposals the employer has netted between $300 and $900 per participating caregiver per year, after the monthly administration fee, which is itemized on the what it costs page. That is a range and not a quote. Which of your caregivers qualify, and what lands on their check, only your own numbers can answer. Have your CPA read the plan documents.
Run your own numbers
The estimator takes your caregiver count and average wage, then shows what you pay in employer payroll tax today, what turnover at the industry median costs, and how much could be redirected into benefits instead.
Thirty seconds, free, no signup.
Home Care Benefits is not a law firm or an accounting firm, and nothing here is legal, tax or insurance advice. A Section 125 wellness plan is not health insurance and is not a substitute for major medical coverage. Large employer status depends on your own hours of service data, and savings figures are estimates rather than guarantees. Settle both with your CPA.
