Where the Agency Markup Actually Goes

The Headline Numbers

Nationally, an agency's median hourly rate for in-home care is about $33 to $34, based on a 44-hour care week 1Ref 1Genworth Financial / CareScout (2025).Genworth and CareScout Release Cost of Care Survey Results for 2024.National median hourly-equivalent consumer cost of in-home care through an agency for 2024, computed on a 44-hour care week., while the median worker wage for the person actually providing that care is about $16.76 an hour 2Ref 2U.S. Bureau of Labor Statistics (2025).Home Health and Personal Care Aides — Occupational Outlook Handbook.Median hourly worker wage for home health and personal care aides, used to measure the dollar gap between the agency rate and caregiver pay.. That leaves roughly $17 an hour, more than the caregiver's own wage, going somewhere other than the caregiver's paycheck.

That gap is what most people mean by home care agency overhead and markup, and it looks large in isolation. Whether it looks large next to the real cost of hiring privately depends on what a family adds up on the private side, which is the comparison most people skip.

Treating the $17 gap as pure profit is the most common mistake in this comparison. Agencies are labor-intensive businesses running on thin margins after payroll, insurance, and administrative costs are paid — the gap funds a specific list of obligations and services, laid out below, not a windfall.

What the Markup Actually Funds

The roughly $17-an-hour gap between the agency rate and the caregiver's wage is not pure profit. It covers the agency's own employer-side payroll tax and overtime obligations under federal wage law 3Ref 3U.S. Department of Labor, Wage and Hour Division (2016).Fact Sheet #25: Home Health Care and the Companionship Services Exemption Under the FLSA.That home care workers are generally entitled to federal minimum wage and overtime under the FLSA, part of what an agency's payroll obligations fund within its hourly rate., plus recruiting, background screening, ongoing supervision, a backup caregiver on call, and liability and bonding insurance the agency carries on every worker it sends into a home.

None of that shows up on the family's invoice as a line item — it is bundled into the single hourly rate. Roughly, the gap breaks into:

• Payroll tax and overtime compliance — the employer-side share of Social Security and Medicare taxes, unemployment insurance, and time-and-a-half once a caregiver crosses 40 hours in a week 3Ref 3U.S. Department of Labor, Wage and Hour Division (2016).Fact Sheet #25: Home Health Care and the Companionship Services Exemption Under the FLSA.That home care workers are generally entitled to federal minimum wage and overtime under the FLSA, part of what an agency's payroll obligations fund within its hourly rate.
• Recruiting and background screening — advertising, interviewing, and running the checks before a caregiver is ever sent to a home
• Supervision and case management — a coordinator checking in on the caregiver and the plan of care, not just the caregiver's own wage
• Backup staffing — keeping enough caregivers on the roster to cover a sick call without leaving the family without care
• Liability and bonding insurance — coverage the agency carries in case something goes wrong in the home

For what each of those components buys in practical terms, home care agency cost components covers the qualitative side; this piece stays with the dollar figures.

The Private-Hire Number Isn't Just the Wage

A private caregiver's asking wage is only part of what hiring them actually costs. Once a family pays a household employee cash wages above the annual threshold, the family becomes the employer for tax purposes: Social Security and Medicare taxes, federal unemployment tax, and a Schedule H filing with the family's own tax return generally apply 4Ref 4Internal Revenue Service (2026).Publication 926, Household Employer's Tax Guide (for use in 2026).Household employer tax obligations — Social Security and Medicare taxes, FUTA, and Schedule H filing — that apply once a privately hired caregiver's cash wages cross the annual threshold..

None of that is optional once the wage threshold is crossed, and none of it is included in the caregiver's quoted hourly wage. A family that pays a private caregiver $22 an hour and skips the employer-side taxes has not found a $22-an-hour caregiver — it has taken on a compliance risk the quoted number does not reflect.

The employer-side share of Social Security and Medicare taxes alone runs a combined 7.65% of cash wages once the threshold is crossed 4Ref 4Internal Revenue Service (2026).Publication 926, Household Employer's Tax Guide (for use in 2026).Household employer tax obligations — Social Security and Medicare taxes, FUTA, and Schedule H filing — that apply once a privately hired caregiver's cash wages cross the annual threshold., before unemployment tax or any state-level obligations are added. That is a real, recurring add-on to the quoted wage, not a one-time filing fee.

Regional Variation Moves Both Numbers Together

Local wages for home health and personal care aides vary substantially by state, and that variation flows into both sides of the comparison 5Ref 5U.S. Bureau of Labor Statistics (2025).Occupational Employment and Wage Statistics: 31-1120 Home Health and Personal Care Aides.State-level wage variation for home health and personal care aides, used to show that regional cost differences move the agency rate and private-hire wage together.. A high-wage metro pushes up the private-hire baseline wage and the agency's underlying labor cost at the same time, so the dollar gap between agency and private hire tends to hold up regionally even as the absolute numbers shift.

A family relocating the comparison from one state to another should re-run both sides of the math locally rather than assuming a national benchmark applies; a $17 gap in a low-wage state and a $17 gap in a high-cost-of-living metro represent very different shares of the total bill. The safest approach is to price both options against the same local job postings and agency quotes, rather than comparing a national private-hire average against a local agency rate, or the other way around.

The Costs That Don't Show Up on Either Invoice

Some costs of a private hire never appear on a wage comparison at all. If a privately hired caregiver is unavailable — sick, on vacation, or gone for good — there is no backup the way an agency's staffing pool provides. That is the single point of failure private caregiver risk, and it carries a real dollar cost when a family has to scramble for paid last-minute replacement coverage.

Informal hiring arrangements found outside an agency are also a common setting for job scams targeting people trying to fill a caregiving role, including fake checks and requests to send money before any work is done 6Ref 6Federal Trade Commission (2024).Is it a caregiving job or a scam?.FTC guidance on caregiving-job scams and red flags in informal hiring arrangements, supporting the non-wage risk of hiring outside an agency's vetted staffing pool.. Neither risk shows up on a rate comparison, but both belong in the real math of what a private hire can cost — one as a staffing gap to plan for, the other as a reason to verify identity and references carefully before money changes hands.

Doing the Real Math

A fair comparison adds the same categories to both sides: hourly wage, employer-side taxes where they apply, and the cost of covering a gap in care. Run that way, an agency's $33-to-$34 rate and a private caregiver's wage plus taxes and self-arranged backup land closer together than the headline numbers alone suggest.

As an illustrative example, at 20 hours a week:

The private-hire total is still lower here, but the gap is roughly half of what comparing $33 to $20 alone would suggest, and it still leaves out the dollar value of guaranteed backup coverage. A registry sits between the two models, and comparing agency vs registry vs direct hire on the same worksheet is worth doing before deciding on hourly rate alone. Once the dollar math is settled, the remaining question — agency vs private caregiver, and which fits a specific household — is a separate decision built on more than cost; home care agency overhead and markup is only one input into it.