Types of Assisted Living Licenses: What You Need to Know

assisted living license by state assisted living profit margins medicaid assisted living reimbursement private pay vs medicaid assisted living residential care license staffing requirements assisted living types of assisted living licenses Jun 03, 2025

Are you thinking about starting an assisted living business but feeling overwhelmed by all the license types? Don’t worry! We’ve got you covered. Understanding the right license for your facility is crucial to your success — and it doesn’t have to be complicated.

Let’s break it down in a way that makes sense so you can pick the right license and get started with confidence!

Check out this video, too;  

Why Choosing the Right License Matters

Before you dive into your assisted living business, it’s essential to choose the right license. The wrong one can mean:

  • Higher costs 💸

  • More regulation 📑

  • Limited growth 🚫

Once you understand the basics, you’ll know exactly which license suits your business model.

Let’s look at the two main types of licenses you’ll encounter:


Private Pay vs. Medicaid Licenses

The first decision you'll make is whether to go with Private Pay or Medicaid. Here's the difference:

Private Pay License:

  • Residents pay out of pocket

  • You can set your own rates 💰

  • Fewer regulations = More flexibility

Medicaid License:

  • The state pays a portion of the resident’s care (based on income)

  • More regulation and requirements 📜

  • Reimbursement rates are set by the state, which can limit profit potential.


Assisted Living vs. Skilled Nursing Facility (SNF)

You might hear people mix up Assisted Living with Skilled Nursing Facilities (SNFs) (also known as nursing homes). Here’s how they differ:

  • Assisted Living: Provides daily assistance with things like meals, bathing, and dressing, but doesn't require 24/7 medical staff.

  • Skilled Nursing Facilities (SNF) (Nursing Homes): These require full-time medical staff and more complex care (nurses, therapists, etc.).


Research Your State’s Licensing Requirements

Did you know each state has its own regulations and license names? For example, some states call it a “Residential Care Facility” instead of “Assisted Living.” Here’s how to figure out what you need:

  1. Search: “[Your state] Assisted Living Licensing Requirements”

  2. Call: Your state’s Department of Health or Human Services to get a clear breakdown of the license options

  3. Check: State regulations on staff-to-resident ratios, training, and background checks


Understand Medicaid Reimbursement

If you choose a Medicaid license, you’ll need to understand the reimbursement process:

  • The state will pay a set amount for each resident

  • You’ll receive regular payments, but the rate is fixed (it's much more difficult to increase rates like you can with Private Pay)

  • You may need to meet additional requirements, such as more extensive recordkeeping


Know the Staffing Requirements

Different licenses also come with different staffing requirements. Some states require you to have certified staff, CPR training, or background checks. Be sure to:

  • Know your state’s requirements for staff-to-resident ratios

  • Understand the types of training required for staff (e.g., dementia care, medication administration)

  • Ensure all certifications are up-to-date to meet state regulations


Next Steps: Take Action Today!

Ready to make your dream of owning an assisted living facility a reality? Here’s how to take action:

Step 1: Download the Business Plan Checklist to start building your plan
Step 2: Apply to the Assisted Living Investing Mastermind for expert coaching
Step 3: Start taking action and watch your business grow!

Got questions? Drop them in the comments below, and let’s chat! ⬇️

Download Your FREE Calculator

Send Me My Calculator

Stay connected with news and updates!

Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.

We hate SPAM. We will never sell your information, for any reason.