How to Record Per-Visit Billing and Payer Receivables in QuickBooks

Short answer: A home health or home care agency records revenue when each visit or hour of care is delivered, invoices the payer (Medicare, Medicaid, insurance, VA, or private pay), and books the later EFT as a payment against accounts receivable. The difference between the billed charge and the allowed amount is written off to a contractual allowance account, which is contra revenue, not income and not bad debt.

Last updated July 2026.

Why home health books work differently

Two things make agency bookkeeping trip people up. First, you deliver care today but the cash shows up weeks later, so income and the deposit almost never land in the same period. Second, the payer decides what your visit is worth, not your rate sheet. You might bill 200 dollars for a skilled nursing visit and the plan allows 150. That 50 dollar gap is real, but it is not a loss you took and it is not a customer who stiffed you. Get those two ideas straight and the rest falls into place.

Recognize revenue when the visit is delivered

Revenue belongs to the period when care was provided, whether you bill per visit or per hour. A Tuesday home health aide shift earns revenue on Tuesday, even if the Medicaid remittance does not arrive for a month. For Medicaid personal care and home health services, your claim is backed by Electronic Visit Verification (EVV) data, the electronic record of who showed up, when they clocked in and out, and where. Most agencies bill straight from those verified visit records, so your revenue recognition and your claim ride on the same underlying data.

On a true accrual basis, you record the earned revenue and an accounts receivable balance the moment the visit is billed. Debit Accounts Receivable and credit the appropriate revenue line (Skilled Nursing, Home Health Aide, Therapy, Private Pay, and so on). On cash basis books, which are simpler and mirror the bank, you skip the receivable and record revenue when the payer pays. Talk through which basis fits your agency with your CPA, then apply it the same way every month.

Payer accounts receivable: bill now, collect later

When you submit a claim, you have created a receivable. The payer owes you for care already delivered. Weeks later an EFT lands in your bank feed, and that deposit is not fresh revenue. It is a payment on the receivable you already booked. If you record the EFT as income a second time, you double count, so the discipline is to always ask what the deposit is settling.

A single payer EFT usually clears many clients and many visits at once, so the raw number in your bank feed means little until you tie it to the remittance advice. Each payer sends an ERA (electronic remittance advice) or a paper EOB (explanation of benefits) that lists which claims the lump payment covers, how much was allowed on each, and what was adjusted. Keep that remittance with the deposit. At reconciliation and at audit, it is your proof the number is right.

Contractual allowances: the gap is not a write off you lost

Here is the entry that trips up the most agencies. Government programs and insurers pay a net allowed amount set by contract or fee schedule. The difference between what you billed and what they allow is a contractual allowance (also called a contractual adjustment). It is a reduction of revenue recorded through a contra revenue account. It is not bad debt, and it is not an operating expense.

Bad debt is different: that is money a payer or client genuinely owes and fails to pay. A contractual allowance is money you were never going to receive because the contract set a lower price. Confusing the two overstates both revenue and expenses and distorts every margin. The distinction matters enough that Medicare cost reporting rules specifically bar folding true bad debt into a contractual allowance account.

Take a worked example on accrual books. You deliver a skilled nursing visit, bill the plan 200 dollars, and the plan allows 150. Weeks later the EFT for that visit arrives.

Each pair balances, Accounts Receivable nets to zero on that claim, and net revenue lands at 150, which is what you actually earned. The Contractual Allowance account sits right under gross revenue on your profit and loss statement, so you can see the spread between what you charge and what payers pay. On cash basis books, many agencies simply record the 150 to revenue when it arrives and track the gross charge and the 50 adjustment inside the billing system, which keeps QuickBooks on the money that truly moved. Both approaches are defensible. Pick one and stay with it.

Split the payroll ACH, do not lump it

Caregivers who work under your direction, following your schedule, your care plans, and your supervision, are almost always W-2 employees. When you run payroll through a provider like ADP, Gusto, or Paychex, one big ACH debit usually leaves your account. That single number hides several different things, and posting the whole debit to Wages Expense is wrong.

The debit typically bundles net wages paid to caregivers, the payroll taxes, and amounts withheld from employees. Split it so each piece lands where it belongs:

• Gross wages to Wages Expense (Caregiver Wages, and often a separate Administrative Wages line).
• The employer share of payroll taxes to Payroll Tax Expense.
• Employee withholdings (income tax, the employee share of FICA, benefit deductions) that pass through liability accounts rather than becoming their own expense.

Your payroll provider's report shows the exact breakdown for every run. Match the ACH debit in the bank feed to that report so wages, taxes, and withholdings post separately. Lump it all into one expense line and your labor cost, your single largest number, becomes impossible to analyze.

W-2 or 1099: classify carefully

Worker classification is where agencies pick up real risk, and home care is a sector regulators watch closely. Hands-on aides and home health aides generally fail the IRS and Department of Labor tests for independent contractor status, because the agency controls the schedule, the assignments, and how the work is done. Those workers are W-2 employees. Treating them as 1099 contractors to save on payroll taxes can lead to back taxes, penalties, and wage claims, and it strips caregivers of protections like workers' compensation and unemployment coverage.

There is a narrower gray area. Some skilled per-visit clinicians who genuinely run their own practice and serve multiple agencies, such as an independent physical therapist or occupational therapist, can sometimes be 1099 contractors. The test is facts and control, not job title, so document the relationship and confirm each borderline case with your CPA or employment counsel rather than guessing.

For anyone you do pay as a contractor, the reporting threshold matters. For payments made on or after January 1, 2026, a 1099-NEC is required once you pay a contractor $2,000 or more in the year. Track contractor pay in its own account so you can pull the totals at year end without hunting.

Caregiver mileage under an accountable plan

Caregivers driving between clients rack up real miles. If you reimburse that mileage under an accountable plan, meaning the caregiver substantiates the business miles and returns any excess, the reimbursement is not wages. It is not taxable to the caregiver and it does not run through payroll. Post it to an expense account such as Mileage Reimbursement or Auto Expense, and keep the mileage logs that support it.

Without an accountable plan, mileage money becomes taxable wages and gets swept into payroll, which raises everyone's tax bill. The paperwork is what makes the difference, so build a simple monthly submission routine. Have caregivers photograph their mileage logs and any expense receipts so you can pull the expense and mileage data off each receipt automatically and post reimbursements to the right account instead of retyping every line. Keep the substantiation on file; that is what an accountable plan lives or dies on.

Get the statement into QuickBooks and reconcile

None of this ties out until the bank activity is actually in QuickBooks, and that is where agencies catching up on the books get stuck. Bank feeds usually reach back only about 90 days, so payer EFTs and payroll debits from earlier months may simply be missing. When the feed will not go far enough, you can convert a bank statement to QuickBooks for a home health agency by turning the PDF statement into a .qbo file and importing the cleared transactions straight into your register. The same workflow helps medical and dental practices that reconcile against payer remittances, and the accountants who clean up several agencies at once.

Once the months are in, reconcile every bank and card account against the real statement each month. Tie each payer EFT to its ERA, match each payroll debit to the provider report, and confirm mileage reimbursements landed outside of wages. When a deposit was booked without its remittance or a payroll run was lumped, the reconciliation will not clear, which is how you catch it before it hardens into a bad number.

Frequently asked questions

How do I record a payer EFT in QuickBooks for a home health agency?

Post the EFT as a payment against the accounts receivable you created when you billed the visits, not as new revenue. A single deposit usually covers many claims, so tie it to the ERA or EOB and record the difference between billed and allowed amounts as a contractual allowance. Keep the remittance with the deposit for reconciliation and audit.

Is a contractual allowance the same as bad debt?

No. A contractual allowance is the contracted gap between what you bill and what a payer allows, recorded as contra revenue that reduces gross revenue to net. Bad debt is money genuinely owed that a payer or client fails to pay. Mixing them overstates revenue and expenses, and Medicare rules specifically bar folding bad debt into a contractual allowance account.

Are home care aides W-2 employees or 1099 contractors?

Hands-on aides who work under your schedule and supervision generally fail the IRS and Department of Labor tests for contractor status, so they are W-2 employees. Some independent skilled per-visit clinicians who serve multiple agencies can sometimes be 1099, but that is fact specific. Confirm any borderline case with your CPA or employment counsel before classifying.

What is the 1099 threshold for contractors in 2026?

For payments made on or after January 1, 2026, you must issue a 1099-NEC once you pay a contractor $2,000 or more during the year. Track contractor pay in its own account so the year end totals are easy to pull.

How should I book caregiver mileage reimbursements?

Under an accountable plan, where caregivers substantiate business miles and return any excess, reimburse mileage as a non-taxable expense posted to Mileage Reimbursement or Auto Expense, not through payroll. Keep the mileage logs on file. Without an accountable plan, the money becomes taxable wages and must run through payroll, raising the tax bill for everyone.

The pattern that keeps agency books trustworthy is the same every month: recognize revenue when the visit is delivered, treat each payer EFT as a payment on receivables, book the billed to allowed gap as a contractual allowance, split the payroll ACH into wages, taxes, and withholdings, classify workers carefully, and reconcile against the real statements. Set the accounts up that way once and your profit and loss statement will finally show what you earned versus what payers actually pay.