OIG Limits Sign-On Bonuses to In-Home Family Caregivers

On January 5, 2026, the Office of Inspector General (“OIG”) for the Department of Health and Human Services published Advisory Opinion No. 25-12 (“AO 25-12”), an unfavorable opinion regarding sign-on bonuses offered to caregivers who provide in-home support services to Medicaid recipients.

In-Home Support Services Framework

In-home support services (“IHSS”) provided by caregivers are a significant component of many state Medicaid programs, designed to help beneficiaries with functional limitations remain safely in their homes rather than in institutional care. Under these programs, Medicaid programs permit beneficiaries to select attendants – who are not required to be licensed or certified – to provide services such as personal care (e.g., bathing and dressing), homemaker services (e.g., routine light house cleaning and meal preparation), and health maintenance activities (e.g., skilled tasks like medication administration, medical management, or respiratory care). The exact specifications of these programs vary by state, with some states permitting family members of beneficiaries to be employed by a home care agency that contracts with Medicaid managed care organizations to provide IHSS to their family members and to be paid by the Medicaid program for providing those services.

Program Structure and Proposed Sign-on Bonuses

The Requestors in AO 25-12 operate a home care agency in a state where the Medicaid program covers IHSS for eligible beneficiaries and permits family members of beneficiaries to serve as their paid caregivers as employees of contracted home care agencies. Under the Proposed Arrangement, Requestors would offer a sign-on bonus to potential caregivers, which it would advertise in its recruitment efforts. Requestors noted that the potential caregivers would primarily be the family members of homebound beneficiaries, and that the caregivers would also often be individuals who were the decision-makers selecting a home care agency on behalf of their family members. The Requestor also noted that its competitors were already offering similar incentive payments to recruit potential caregivers.

“Inextricable Link” Between Hiring and Referrals

In this unfavorable opinion, the OIG concluded that the Proposed Arrangement implicated the Anti-Kickback Statute (AKS) because there is an “inextricable link” between the agency’s employment of the caregiver and the referral of the beneficiary to the agency, as the potential caregivers were expected to mostly be family members of the beneficiaries in need of services as well as the decision-makers who would select the agency the beneficiary would use for IHSS. The OIG emphasized, “[i]n this circumstance, the advertisement of the [bonus] appears to be a solicitation for an all but guaranteed referral before employment commences and not an ‘amount paid by an employer to an employee . . . for employment in the furnishing of any item or service for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.’”

The OIG found that the Proposed Arrangement did not fall within the protection of an AKS exception or safe harbor. The OIG specifically noted that the statutory exception and regulatory safe harbor for employees would not apply because the bonus is not simply a bonus paid by an employer to an employee – it is inherently linked to a referral for Federal health care program business.

AKS Concerns with Bonuses as Upfront Payments

Applying a facts and circumstances analysis, the OIG concluded that the risk of fraud and abuse was not sufficiently low to merit a favorable opinion because prospective caregivers “may readily interpret the advertisement of the sign-on bonus as an upfront payment that they would receive upon signing an employment contract and prior to the performance of any work under their employment contract.” The OIG found this problematic here because of the bonus’s “greater potential to inappropriately steer prospective [caregivers] to select one Agency over others not just for employment but for the provision of Medicaid-reimbursable items and services” to the caregiver’s family member beneficiary based on which agency advertises the most compelling sign-on bonus.

The OIG distinguished the sign-on bonus at issue in the Proposed Arrangement from typical sign-on bonuses for new employees by noting that in the typical case, there is “only the hope of future referrals” whereas in this case, the marketing materials offering the sign-on bonus operate as “advertisements” for new clients for the home care agency because the caregivers, in most cases, would be agents for the Medicaid beneficiaries (clients). The OIG further noted its concerns that the Proposed Arrangement presented potential unfair competition and quality of care concerns due to competition between the Requestors and competitors to offer increasingly higher sign-on bonuses to induce caregivers and the family members they are responsible for to choose one agency over another based on the amount of the bonus being offered without regard for quality.

Beneficiary Inducement Concerns Due to Influencing Provider Selection

The OIG concluded that the Beneficiary Inducements Civil Monetary Penalty Law,  1128A(a)(5) of the Social Security Act, would be implicated by the Proposed Arrangement when the Requestors offer a sign-on bonus to a prospective caregiver employee who is in a position to select an agency for a family member who may become a client because that offer of remuneration would be likely to influence the caregiver to choose Requestors for the provision of items and services that are reimbursable by Medicaid.

Key Takeaways

While AO 25-12 is narrow (advisory opinions are binding only on the requestors and limited to the certified facts provided to the OIG), it provides several practical signals for IHSS agencies operating in states where family members or guardians often serve as paid attendants and may also be involved in selecting the agency. Key takeaways include:

Referral linkage can create AKS risk

The OIG concluded that the Proposed Arrangement implicated the AKS because, in these “unique and specific circumstances,” there was an “inextricable link” between employing the attendant and the attendant’s selection of the agency for the Medicaid client.

Program advertising is closely scrutinized.

The OIG viewed the advertisement of the sign-on bonus as a “solicitation for an all but guaranteed referral before employment commences” and therefore rejected application of the employment safe harbor in those circumstances. The OIG also focused on how the advertised offer could be understood in the market. Because the bonus would be advertised only as the amount of the bonus, the OIG concluded that prospective attendants could reasonably view it as an “upfront payment” received upon signing and before any work is performed, heightening concerns about inappropriate steering. Steering risk was framed in terms of agency selection for Medicaid-reimbursable services and the OIG emphasized that the bonus could inappropriately steer attendants to select one agency over another not just for employment, but for the provision of Medicaid-reimbursable items and services to the attendant’s family member client based on which agency advertises the most compelling sign-on bonus.

Competition and quality of care concerns

The OIG raised concerns about escalating pressure and diversion of resources from client care, and concluded that the arrangement would implicate the CMP Law governing beneficiary inducements because the remuneration would be likely to influence the attendant’s choice of agency for a family member who may become a client.

Retention and training benefits may present a different risk profile than sign-on bonuses

For example, the OIG previously issued a favorable opinion (AO 22-03) allowing home health agencies to pay certain tuition costs (and salaries) for newly hired employees pursuing CNA certification, emphasizing features such as availability to all new hires, advertising “without reference to the potential for new employees to provide home health aide services to their children or relatives,” and employment-based conditions not tied to referral ability.

Use of the advisory opinion process to clarify and benchmark market practices

AO 25-12 states that Requestors certified to the OIG that competitors in the community were already marketing employee compensation packages to prospective caregivers that may include a sign-on bonus as well as certain other bonuses. Knowing this, Requestors sought a formal advisory opinion from the OIG about sign-on bonuses. Under the OIG’s advisory opinion process, the OIG notifies requestors if the OIG is unable to issue a favorable opinion and gives the requestor the option to withdraw the request and incur no costs. Notably, the fact that the Requestors chose to pay the fee and have the OIG move forward with finalizing and issuing the opinion, after being informed that the opinion would be unfavorable, suggests intent to utilize the OIG’s advisory opinion process to caution competitors from offering similar sign-on bonuses and level the playing field.

For home care agencies operating in family-caregiver states, AO 25-12 is a reminder to pressure test recruiting incentives not only as “employment” compensation, but also for their real-world effect on beneficiary choice and referral dynamics.