How to start a home health agency in California

Step 1: Decide on licensed-only or Medicare-certified

A California home health agency can operate with a state license alone, serving private-pay and contracted patients, or also seek Medicare and Medi-Cal certification. Certification is a separate part of the same CDPH application, with its own forms and financial tests, and most agencies that plan to serve seniors pursue it. Non-medical personal care is a different license (a home care organization from CDSS); see our home care startup guide if that's your model.

Step 2: Assemble the CDPH application

• HS 200 Licensure and Certification Application and HS 215A applicant information for each owner and officer
• IRS EIN document, an organizational chart, proof you control the office property and a floor plan
• Background forms CDPH 322 and CDPH 325, plus Live Scan fingerprints
• A list of the areas you will serve; a parent agency's service area is limited to about four hours of surface travel
• Proof of financial responsibility; a licensed-only agency shows funds to operate for its first three months

Step 3: Add Medicare and Medi-Cal certification

Medicare applicants file CMS-855A with the Medicare contractor along with CMS-1561, CMS-1572 and related forms, and must prove initial reserve operating funds to run for three months after billing privileges are granted, not counting Medicare receivables (42 CFR 489.28). New home health agencies are screened at Medicare's highest risk level, and a change in majority ownership within 36 months of enrollment generally means billing privileges do not transfer. Medi-Cal certification adds DHCS forms and a capitalization plan.

Step 4: Budget payroll at the health care minimum wage

Licensed home health agencies are covered by California's health care worker minimum wage (SB 525). For most covered facilities, including home health agencies, the minimum is $23 an hour from July 1, 2026 through June 30, 2028, rising to $25 on July 1, 2028. Local minimums in cities like San Francisco ($19.61) are lower, so the $23 health care rate controls. Because workers' comp is priced on payroll, this floor directly sets your premium.

Step 5: Put insurance in place

California's home health licensing rules require proof of financial responsibility but do not set specific insurance limits. The Labor Code still requires workers' compensation from your first employee, and hospitals, payers and referral partners routinely ask for liability certificates before they send patients. In-home nursing is classified under 8827(2), with an approved advisory pure premium rate of $2.794 per $100 of payroll for policies starting on or after September 1, 2026. A nurse or aide at $23 an hour full time is about $47,840 a year in payroll, or roughly $1,340 in advisory pure premium before carrier expenses.

• Workers' compensation for clinicians, aides and office staff (office-only staff may qualify for clerical class 8810)
• Professional and general liability, typically $1M per occurrence / $3M aggregate
• Hired and non-owned auto for staff driving between patients
• Abuse and molestation, cyber liability for patient records, and employment practices liability