What to Know Before Starting a Home Care Agency

The senior market is booming, and many older adults will need care in the coming years. This could be an attractive opportunity for entrepreneurs looking for underserved niches. However, before you start a home care agency, it’s important to understand the exposures involved.

The Aging Population

The U.S. Census Bureau says 10,000 people turn 65 each day. The Baby Boomer generation numbers about 73 million. By 2030, all of them will be 65 or older.

The majority of these retirees will need care at some point. The Administration for Community Living says that roughly 60% of older adults will need assistance with things like driving to appointments, making meals, and getting dressed.

Seniors can receive this care in many different ways, including at nursing homes and assisted living facilities. However, many seniors don’t want to move into care facilities – they’d prefer to remain in their homes. A survey from the AARP found that 77% of adults aged 50 and above want to remain in their homes for the long term.

How Home Care Agencies Serve Aging Populations

Many seniors who decide to stay in their homes need some assistance. Although friends and family members sometimes provide unpaid care, this isn’t an option for everyone. Home care agencies fill the gap.

According to the Washington State Department of Health, home care agencies provide non-medical services to people with functional limitations. Services vary but often include assistance with bathing, eating, dressing, personal hygiene, and other activities of daily living. Home care providers may also assist with housework, essential shopping, meal preparation, and travel to medical services. In some cases, they help the family members who are also providing care.

The home care market is huge – and it keeps growing. According to IBISWorld, the home care provider market grew an average of 3.1% per year between 2017 and 2022, reaching $129.9 billion in 2022.

Regulations for Home Care Agencies

Even though home care agencies provide non-medical care, they may still be regulated at the state level. Before you start a home care agency, you will need to find out the requirements in your state.

For example, there are multiple laws in Washington that pertain to home care agencies, including requirements for licensing and proof of commercial general liability insurance. In California, the Home Care Services Bureau handles licensing requirements for home care agencies. The California Home Care Services Consumer Protection Act became law in 2016 and establishes rules for licensing, registration, and background checks.

Home Care Agency Exposures

Home care agencies serve vulnerable individuals. As a result, they take on significant responsibility. If anything goes wrong, the agency could be held liable. Home care agencies can also face liability if their workers are injured on the job. Consider the following risk scenarios:

• One of your employees is involved in a crash while driving a client to a doctor’s appointment. The client is already frail and experiences severe injuries.
• A client falls in his home and breaks his hip. His family sues your agency, claiming your employee was negligent for not keeping the house tidy and that this resulted in tripping hazards that caused the injury.
• An employee steals from your clients. When the clients and their families discover the theft, they sue your agency.
• One of your employees physically abuses your clients. The employee is arrested, and your company sued for negligent hiring practices.
• An employee injured her back while trying to help a client move from the bed to a wheelchair. Your employee files a workers’ compensation claim.

Setting Up a Successful Home Care Agency

If you want to seize the opportunities created by the aging population and start a home care agency, you’ll need to manage your risks.

• Find out the requirements in your state. In addition to general business requirements, you may have to meet licensing and registration requirements specific to home care agencies.
• Vet your employees. Since your employees will be dealing with vulnerable clients, it’s important to run background checks. If driving is part of the job, run driving record checks, too.
• Train your employees. Make sure your employees know how to lift safely and avoid other common risks to themselves and the seniors they serve.
• Secure robust insurance tailored for the home health industry. In addition to state-mandated insurance – which may include workers’ compensation, commercial auto, and general liability insurance – you may want additional coverage types to protect your agency.

Do you need help managing your risks? Heffernan Insurance Brokers has developed an insurance program designed to meet the needs of home care businesses. We can help you navigate exposures common in the home care industry. Learn more.