What should an hour of care actually cost me to deliver?

The hour doesn’t just cost you the caregiver’s wage. It costs you the wage plus employer payroll taxes, workers compensation insurance, overtime premiums when hours exceed 40, paid travel time between clients, training hours, and the unbilled gaps when scheduled work falls through. Add those together and the true cost of delivering one billable hour runs meaningfully higher than the wage alone.

Start with payroll taxes. On every dollar of wages, you owe the employer portion of Social Security and Medicare, plus federal and state unemployment taxes. That adds roughly 8 to 10 percent on top of wages before anything else.

Workers compensation insurance comes next. Rates vary by state and job classification, but home care and home health work often carries higher premiums than office jobs. Depending on your state, this might add another 2 to 8 percent of payroll or more.

Overtime exposure is where costs can spike. When a caregiver works more than 40 hours in a week, you pay time-and-a-half for those extra hours. If your scheduling allows overtime to accumulate, you’re paying premium rates for hours you might be billing at your standard rate.

Travel time between clients is often paid time under state wage laws, but you can’t bill any client for it. A caregiver who drives 45 minutes between two clients is earning wages during that travel, and no revenue is coming in to cover it. This is one of the hidden costs that bookkeeping for medical businesses needs to capture or the numbers will lie to you.

Training hours work the same way. Orientation for new hires, ongoing competency training, and compliance updates all represent paid time with zero billable hours attached.

Then there are unbilled gaps. Client cancellations, no-shows, and scheduling holes where the caregiver is on the clock but has nothing billable. Some of this hits payroll directly and some shows up as missed revenue, but either way it increases your effective cost per billable hour.

When you add everything together, the fully loaded cost of one billable hour can run 30 to 50 percent above the bare wage. An owner who sets rates based only on the wage quietly loses money on every hour delivered.

The fix is knowing your real numbers. Full-service bookkeeping that tracks cost and margin per client-hour shows you the true picture. When your books separate billable hours from total paid hours, capture payroll tax and workers comp expense accurately, and show margin by client and by caregiver, you can set rates based on reality instead of guessing.

If you run a home care or home health business and want books that reveal your actual cost per hour, reach out to schedule a consultation.