The market for non-medical homecare, encompassing crucial activities of daily living (ADLs) such as bathing, dressing, meal preparation, and companionship, represents a fundamentally different economic model from certified Home Health Agencies (HHA) that rely on Medicare or skilled Medicaid reimbursement. This private-pay non-medical sector is driven almost entirely by consumer wealth and demographic necessity, offering operators higher gross margin potential and reduced compliance overhead compared to complex public-payer rate structures. For sophisticated investors and operators, success in this domain is dictated not merely by population density but by the intersection of high household disposable income and a favorable state-level regulatory environment that minimizes structural barriers and operational labor liability.

This is a continued analysis of our 2025 State Home Care Market Scorecard.

A. Defining the Private-Pay Opportunity

The core investment thesis is founded on an aging US population requiring long-term care (LTC) services combined with sufficient household income to self-fund those services. Non-medical private-pay providers offer services that are typically excluded from Medicare coverage, which is primarily focused on episodic, skilled medical recovery. The demographic imperative—the population aged 65 and over—is the primary demand signal, but this must be cross-referenced with local economic indicators, specifically median household income, which determines the target population’s capacity to absorb the high cost of continuous private care.  

B. Synthesis of Core Market Findings (Tier Ranking Overview)

The analysis reveals a strategic divide across states based on regulatory friction and operational labor costs.

C. The Need for Regulatory Due Diligence

Regulatory environment mapping is not simply a compliance exercise; it is a critical component of financial modeling. State requirements governing agency licensing, initial caregiver training hours, paid sick leave (PSL) mandates, and state-level modifications to federal overtime laws (FLSA) directly dictate initial capital outlay, speed-to-market, ongoing operational expenditures (Opex), and liability exposure. A proactive assessment of these frictions allows investors to strategically direct resources toward states that maximize operating efficiency and minimize regulatory drag.  

II. Strategic Market Environment: Demand, Wealth, and Demographic Imperatives

A successful private-pay homecare strategy must locate areas where wealth and demand converge, as the service is largely discretionary and expensive, funded by private sources or long-term care insurance.

A. The Wealth and Aging Index

The key indicators for private-pay viability are the size of the population aged 65 and over and the state’s median household income. States with high median household incomes correlate strongly with a larger pool of consumers who possess the financial reserves necessary to self-pay for long-term non-medical care or to cover the deductibles and co-pays associated with long-term care insurance policies.

For example, high-income states such as Maryland, which reported a median household income of $97,501, and Massachusetts, at $96,898, possess a demographic structure capable of sustaining robust private-pay ecosystems. Conversely, states with significantly lower median household incomes, such as Mississippi, reported at $52,658 , typically exhibit heavy reliance on Medicaid for long-term services and supports (LTSS). This financial disparity highlights the essential role of median household income as a critical multiplier: in states where the median income is high, the market penetration potential for successful private-pay agencies is elevated, irrespective of the absolute size of the population. Therefore, high-income states should be prioritized for private capital deployment in the non-medical sector.  

B. Distinguishing Private-Pay from Public-Pay Economics

While the focus of this report is exclusively on private-pay, a brief acknowledgment of public funding mechanisms is necessary to contextualize labor market competition and operational benchmarks.

1. Medicare’s Role

Medicare primarily covers skilled medical services, rehabilitation, and episodic care provided by certified Home Health Agencies (HHAs). It generally excludes non-medical personal care, companionship, or long-term assistance with ADLs—the core services provided by private-pay agencies. However, the Medicare Conditions of Participation (CoPs) for HHAs set a high, federally mandated benchmark for quality and operational rigor, which often influences best practices and regulatory baseline expectations at the state level.  

2. Medicaid HCBS (Contextual Importance)

Medicaid serves as the primary payer for long-term care in the United States. Although private-pay agencies do not rely on Medicaid reimbursement, the sheer scale of state Medicaid Home and Community-Based Services (HCBS) spending is crucial for understanding the competitive labor environment. Medicaid funds a substantial portion of the direct care workforce—the same pool of personal care aides (PCAs) and home health aides (HHAs) sought by private-pay operators. High Medicaid spending in a state, particularly on Home Health and Personal Care, directly correlates with intense competition for available workers, a dynamic explored in detail in Section V.  

III. Regulatory Friction Mapping (I): Market Entry and Structural Barriers

The initial regulatory environment determines the speed and cost of market entry. Key structural barriers include mandatory agency licensing and the presence of Certificate of Need (CON) laws, which serve as powerful indicators of a state’s general attitude toward market competition.

A. Agency Licensing and Registration Requirements for Non-Medical Care

The fundamental regulatory divide for non-medical services lies between states that require a specific license for the agency and those that treat it simply as a general business entity.

1. The Unregulated Advantage (Low Friction)

A distinct competitive advantage exists in states where specific licensing for non-medical home care agencies is not currently required. As of 2025, four states stand out as non-regulated markets for starting a non-medical home care agency: Arizona, Iowa, Massachusetts, and Michigan.  

The absence of a specific state license dramatically reduces initial capital expenditure and eliminates protracted regulatory delays typically associated with state surveys and application processing, which can range from six to eighteen months. For aggressive investors, this creates significant speed-to-market arbitrage, allowing rapid deployment of capital and swift operational scaling. However, this freedom from regulatory assurance shifts the burden of quality control and compliance entirely onto the brand. Agencies operating in non-regulated states must rigorously implement internal policies regarding caregiver background checks and training standards to mitigate legal liability and establish consumer trust, effectively replacing governmental oversight with robust self-regulation.  

2. The Licensed Landscape (High Friction)

In contrast, numerous states require full licensure for non-medical home care agencies. California serves as a salient example of a high-compliance model. California mandates that Home Care Organizations (HCOs) must be licensed, and requires all affiliated Home Care Aides (HCAs) to register in a state registry, which includes mandatory criminal background checks. This system imposes higher initial costs, requires greater administrative infrastructure, and entails substantial ongoing compliance tracking, justifiable only in the high-revenue, high-demand metropolitan markets that California offers. Similarly, states like New York specifically regulate home care agencies through a Certificate of Need (CON) process for establishment.  

B. Certificate of Need (CON) Status as a Regulatory Proxy

The Certificate of Need (CON) framework is a state regulatory tool designed to control the proliferation and expansion of health care resources, particularly major capital expenditures and certain clinical services. While CON laws typically do not apply directly to non-medical services, the presence of CON for related medical home care services (HHAs) provides a powerful indicator of the state’s regulatory mindset, acting as a structural barrier proxy.  Learn more about CON in your state.

1. CON Status for Home Health Agencies

States that specifically apply CON oversight to Home Health Agencies (HHA) include Alabama and Arkansas (where adding or expanding home health services requires review). New York's CON process regulates the establishment of home care agencies. North Carolina explicitly requires all new home health agencies to obtain a CON. Kentucky requires a CON to establish a "health facility" or make a substantial change in a "health service".  

2. Regulatory Intent and Decoupling Risk

The application of CON to related medical home care suggests that the state’s legislative and administrative bodies favor resource control and limiting market competition. In these environments, where the regulatory mindset is inherently cautious and restrictive, there is an increased long-term regulatory risk that non-medical services could eventually be brought under licensing or CON-like oversight. This means that operational freedom currently enjoyed by private-pay providers in these states may be vulnerable to legislative action.  

Conversely, states that have recently repealed or significantly altered CON laws signal a commitment to market liberalization. For example, South Carolina recently repealed all CON requirements except those related to nursing homes and select hospital services. Georgia currently has a moratorium on new CONs for home health services extending through January 1, 2025. For investors, these legislative actions suggest a reduction in systemic regulatory risk, indicating a potentially more hospitable environment for future market expansion.  Learn more about the state of CON laws in all 50 states.

IV. Regulatory Friction Mapping (II): Operational Cost and Labor Liability

Operational profitability in the private-pay sector is highly sensitive to state-mandated labor costs and liabilities that directly erode profit margins and increase administrative complexity. These include minimum training hours and state-level wage and hour deviations from federal standards.

A. Caregiver Training Mandates: Quantifying Compliance Costs

The requirements for initial caregiver training vary wildly by state and by the type of care delivered (PCA vs. HHA). Federal minimums apply primarily to Medicare-certified HHAs - 75 hours of instruction including 16 hours of supervised practical training. However, many states impose their own minimums on non-medical PCAs or HCAs, significantly affecting the cost and speed of staff onboarding.  

1. High-Cost States (40+ Hours Minimum)

States requiring substantial initial training hours create a steep initial barrier for entry-level caregivers, effectively inflating operational expenditure (Opex). In New York, Personal Care Aides (PCAs) require 40 hours of training, while HHAs require 75 hours. New Jersey mandates 76 hours of HHA training. Washington requires 75 hours for long-term care workers within 120 days.  Caregiver Training Requirements By State.

High training mandates pose a significant financial hurdle because agencies must typically compensate or subsidize the non-billable training time for new hires. This compulsory time commitment delays the worker’s entry into revenue-generating service delivery, serving as a substantial, immediate factor of labor inflation that must be budgeted for in the Cost of Goods Sold (COGS) tied to recruitment and retention efforts.  

2. Low-Cost States (Minimal or No Mandate for Private-Pay)

In stark contrast, other states maintain minimal mandates for private-pay workers. California requires Home Care Aides (HCAs) to complete just 5 hours of initial training and 5 hours annually thereafter. Alaska has no initial training requirement for non-medical caregivers, requiring only 8 hours of ongoing annual training. This dramatic reduction in mandated initial training time allows agencies to scale their workforce faster and allocate capital away from non-billable training subsidy and toward direct wages, marketing, or advanced specialty training.  

B. State-Level Overtime and Wage Law Exposure

While the federal Fair Labor Standards Act (FLSA) provides a national baseline, certain states impose stricter standards for domestic workers, increasing payroll liability for agencies.

1. The FLSA Baseline and Agency Liability

Since the 2015 Home Care Final Rule, third-party employers, such as home care agencies, are generally precluded from claiming the FLSA’s companionship and live-in exemptions. Consequently, agencies must pay at least the federal minimum wage and overtime (1.5x regular rate) for all hours worked over 40 in a workweek for most non-medical workers. For multi-state operators, the standard liability rests on managing the 40-hour weekly cap.  

2. High-Liability States (Stricter Daily Rules)

The highest degree of labor liability arises in states that mandate daily overtime thresholds, significantly complicating scheduling for common private-pay scenarios like live-in or extended-hour shifts. California’s laws are the most restrictive, superseding the federal standard. In California, personal attendants are entitled to overtime pay (1.5x regular rate) for hours worked over nine in a single day or over 45 hours in a workweek. Furthermore, double time (2x regular rate of pay) is required for hours worked over twelve in a day or over eight hours on the seventh consecutive day of the workweek.  

California’s rules create a complex compliance mosaic that demands continuous, vigilant scheduling management to prevent steep premium pay exposure, which can severely impact margins on long-duration, high-acuity private cases.  

C. Mandatory Paid Sick Leave (PSL) and Financial Liability

Mandatory Paid Sick Leave (PSL) laws represent a guaranteed non-wage liability that must be meticulously modeled into payroll and operational forecasts. The proliferation of state and municipal PSL mandates creates a high-risk compliance mosaic for multi-state operators.

Currently, 18 jurisdictions have have mandatory PSL laws including Arizona, California, Colorado, Connecticut, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, Washington, and Washington, D.C.  

For an operator, navigating this fragmented landscape demands specialized payroll and HR systems capable of tracking unique accrual rates, carryover limits, and eligible reasons for use across numerous jurisdictions. In states like California, local municipal ordinances may even impose stricter PSL requirements than the state law. This compliance necessity diverts capital toward administrative and legal oversight, increasing the overall cost of operating in these states compared to jurisdictions without PSL mandates (e.g., Texas, Florida, Georgia).  

V. The Public-Pay Footprint: Contextualizing Labor Competition

While private-pay revenues are separate from public funds, the labor force is shared. Understanding the massive scale of public spending on Home and Community-Based Services (HCBS) is vital, as this spending establishes the de facto wage floor and determines the intensity of labor competition.

A. Medicaid Home and Community-Based Services (HCBS) as a Labor Market Proxy

Medicaid HCBS funds essential personal care and home health services. Agencies that draw private capital compete directly against the entire ecosystem subsidized by these public funds for the same pool of direct care workers (PCAs, aides, companions). Nationally, this public-pay home care sector is immense, with 4,258,200 Medicaid enrollees utilizing Home Care services in 2021.  

The scale of public expenditure on home care in certain states creates an extremely competitive environment where labor supply is strained. Fee-for-Service (FFS) Medicaid spending on Home Health and Personal Care, while excluding Managed Care Organization (MCO) spending, serves as an effective proxy for the magnitude of public funding consuming the labor pool.  

The following table highlights the states with the largest FFS spending on Home Health and Personal Care in Fiscal Year (FY) 2023, representing the most aggressive public-sector competition for labor:

Competitive Labor Market Concentration (Source)

B. HCBS Spending Concentration and Wage Pressure

States with massive Medicaid HCBS budgets (e.g., California, New York, Minnesota) are fundamentally high-labor-cost markets. The immense volume of public dollars deployed in these regions ensures high demand for direct care workers. Consequently, the Medicaid reimbursement rate effectively establishes the de facto wage floor for the entire direct care economy.

To attract and retain quality staff, private-pay agencies must reliably offer compensation packages that are sufficiently differentiated from, and superior to, the public-sector rate. This dynamic results in compressed private-pay margins, despite the high potential revenue generated in these densely populated and wealthy markets. Investors must therefore view high HCBS spending as a reliable indicator of intense labor scarcity, necessitating robust investment in sophisticated retention strategies and higher compensation budgets.  

VI. Actionable Investment and Operational Recommendations

The strategic analysis of regulatory friction and market competition synthesizes into tiered investment recommendations, guiding operators and investors toward optimal resource allocation based on risk profile and desired speed-to-scale.

A. The Investment Index: Tiered Market Categorization

1. Tier 1: Low Friction/High Growth Potential (The "Fast Track")

These states offer the quickest path to revenue generation due to minimal structural barriers, allowing capital to be directed almost immediately toward marketing and recruitment rather than compliance bureaucracy.

• Characteristics: Non-medical agencies are either unregulated or have minimal licensing/registration requirements. Caregiver training mandates are low or nonexistent for private-pay workers, and state labor laws largely default to the less-restrictive federal FLSA rules regarding overtime, with limited or no Paid Sick Leave mandates.

• Examples: States like Iowa (unregulated, low PSL liability) offer superior operational efficiency. Arizona and Michigan are also unregulated , though they have mandatory Paid Sick Leave, which adds moderate administrative complexity. These states are ideal for rapid deployment, provided demographic wealth indicators are strong.  

• Operational Priority: Speed-to-market is the primary advantage. Resources should be heavily focused on aggressive local marketing and developing internally rigorous quality assurance and training programs that exceed state minimums, thereby building brand trust to replace the lack of government licensing assurance.  

  
  

2. Tier 2: High Regulation/High Revenue (The "Premium Play")

These markets carry high regulatory friction but offer the greatest concentration of wealthy clients, justifying the increased compliance burden.

• Characteristics: Mandatory agency licensure, high initial caregiver training hours (40+ hours), high labor liability (PSL and daily OT thresholds), and extreme labor competition due to massive Medicaid HCBS spending.

• Examples: California, New York, New Jersey, and Washington represent complex, high-cost environments.  

• Strategy: Entry into these markets requires substantial capital reserves dedicated solely to regulatory compliance, legal risk mitigation, and robust HR infrastructure. Operators must budget for elevated labor costs to compete with the high Medicaid wage floor and must command premium private rates to maintain profitability. Sophisticated compliance technology—particularly for scheduling and payroll—is mandatory to navigate daily overtime thresholds (e.g., California) and manage multi-layered PSL accrual across different municipalities.  

  
  

3. Tier 3: Moderate Friction/Moderate Competition (The "Balanced Approach")

These states present an intermediate level of risk, typically having mandated agency licensing but avoiding the most restrictive labor laws (daily overtime) or the extreme HCBS labor competition of the Tier 2 states. They offer slower scaling potential but potentially more stable, predictable operational costs than the high-friction tier.

B. Domestic Worker Overtime and Wage Law Exposure

The calculation of labor liability is paramount. The following table identifies states that impose overtime rules stricter than the federal standard, which must be accounted for in every shift schedule.

Domestic Worker Overtime and Wage Law Exposure

The key takeaway is that California represents a major outlier. The application of daily overtime rules to personal attendants requires rigorous monitoring of shift length to avoid premium pay exposure. In contrast, states adhering solely to the federal 40-hour weekly rule allow for more flexibility in shift structuring, reducing the complexity of payroll management.  

C. Future Regulatory Watch Items

Operators and investors must monitor several converging policy trends that signal future regulatory evolution in currently low-friction states:

1. Mandatory PPC Licensing: Unregulated states are constantly under pressure to introduce licensing or registration requirements for non-medical agencies, often following high-profile safety incidents. This would convert a Tier 1 (low friction) market into a Tier 3 or Tier 2 market overnight, necessitating advanced planning for application and compliance infrastructure.

2. Expansion of Labor Mandates: The spread of state-level Paid Sick Leave and complex wage laws is a persistent risk. As labor advocacy groups push for stricter protections for direct care workers, states currently adhering only to the FLSA (e.g., Texas, Florida, Georgia) may soon adopt their own PSL or overtime modifications, instantly increasing Opex and compliance overhead for current operators.  

   
   

3. CON Review Reinstatement: While South Carolina has signaled liberalization, any reinstatement of CON for HHAs or related services in states that recently repealed them would signal a reversal of market access principles, confirming the structural risk associated with restrictive regulatory traditions.

VII. Conclusions

Successful resource deployment in the private-pay non-medical homecare market requires a detailed risk-adjusted analysis that transcends simple demographic indicators. The key determinant of sustainable profitability is the operating environment defined by state regulation.

High-growth markets are characterized by two distinct profiles:

1. The Operational Efficiency Model: States such as Iowa, which combine an unregulated market entry environment with minimal PSL or unique OT liability, offer the lowest operational friction. These markets maximize speed-to-scale and administrative efficiency, allowing operators to dedicate capital primarily to service quality and brand recognition.

2. The Premium Revenue Model: States like California and New York offer massive revenue potential due to concentrations of high net-worth individuals, but they require a commensurately large investment in compliance infrastructure. The regulatory mandates—including specific agency licensing, high-hour training minimums, state-specific daily overtime, and mandatory PSL—function as quantifiable barriers to entry, protecting existing, well-capitalized operators.

Investors must recognize that the massive public spending on Medicaid HCBS establishes the non-negotiable labor wage floor across the country. In states with billion-dollar public HCBS markets, private-pay agencies must anticipate and budget for higher labor costs to competitively attract the direct care workforce, effectively compressing potential margins despite high private billing rates. Strategic success is therefore achieved by mapping high-wealth demographics against low structural friction, while maintaining vigilance against evolving labor mandates that increase the administrative compliance mosaic.