Kentucky - Assisted Living Facility — Licensing, Medicaid Enrollment and Startup Requirements

Last reviewed: 2026-08-15

In Kentucky, an Assisted Living Community (ALC) is a licensed congregate residential setting that provides sleeping accommodations, personal care, and supervision for five or more unrelated adults. Historically certified by the Department for Aging and Independent Living, oversight was transferred in 2022 to the Cabinet for Health and Family Services (CHFS), Office of Inspector General (OIG), which now licenses these facilities under three distinct tiers: Social Model, Basic Health Services, and Dementia Care.

The single biggest structural barrier to entry for this service in Kentucky is that Medicaid does not cover Assisted Living Facility services. ALCs are strictly private-pay entities, and there is a statutory prohibition on public funding for services provided in this setting. Providers seeking Medicaid reimbursement for congregate residential care cannot enroll as an ALC; they must instead pursue licensure as a Personal Care Home (which receives State Supplementation) or enroll as a residential provider under a 1915(c) waiver such as the Supports for Community Living (SCL) waiver.

1. Service Definition and Scope

Kentucky defines an Assisted Living Community (ALC) as a licensed facility providing sleeping accommodations and assisted living services, as set forth in a resident lease, for five or more adult persons not related to the owner or manager. The state recently expanded its definition of long-term care facilities to formally include ALCs.

To accommodate varying levels of resident acuity, Kentucky established three specific licensure options under 902 KAR 20:480. Facilities must operate strictly within the scope of their specific licensure tier, particularly regarding the administration of medications and dementia care.

• Statutory Definition: KRS 194A.700 defines ALCs as serving 5 or more unrelated adults with housing and personal care.
• Social Model (ALC): The baseline licensure tier providing basic assistance with activities of daily living (ADLs) and instrumental activities of daily living (IADLs) without medical nursing services.
• Basic Health Services (ALC-BH): A higher licensure tier that permits the facility to provide basic health services and medication administration via licensed nursing staff.
• Dementia Care (ALC-DC): A specialized licensure tier required for facilities that advertise or provide dedicated care for residents with Alzheimer's disease or related dementias.
• Medicaid Exclusion: Kentucky Medicaid does not define ALC as a covered service category; room, board, and assisted living services in this setting are entirely private pay.

2. Regulatory and Oversight Agencies

The regulatory landscape for ALCs in Kentucky shifted significantly in 2022. Facilities are no longer merely certified by aging agencies but are formally licensed as long-term care facilities by the state's primary health regulatory body.

While Medicaid does not oversee ALCs directly, residents living in ALCs may independently receive Medicaid Home and Community Based (HCB) Waiver services from outside visiting agencies, which involves separate Medicaid oversight entities.

• Licensing Agency: The CHFS Office of Inspector General (OIG), Division of Health Care is the sole authority for licensing and surveying ALCs.
• Medicaid Agency: The CHFS Department for Medicaid Services (DMS) oversees all Medicaid enrollment and waiver funding, though it does not enroll ALCs.
• Waiver Administration: The Department for Aging and Independent Living (DAIL) administers the HCB Waiver for individuals receiving outside services in their ALC apartment.
• Fire Safety Oversight: The Kentucky State Fire Marshal's Office conducts life-safety inspections and must approve the physical plant prior to OIG licensure.

3. Gatekeeping Prerequisites: Who Can Even Apply

The most critical gatekeeping reality in Kentucky is the absolute lack of Medicaid funding for ALCs. An applicant cannot submit a Medicaid provider enrollment application for ALC services because the provider type does not exist in the Kentucky Medicaid Management Information System (MMIS).

For state licensure, however, Kentucky removes a major structural barrier that applies to other long-term care facilities: ALCs are explicitly exempt from the state's Certificate of Need (CON) process. Applicants can proceed directly to physical plant approval and licensure without proving regional bed need.

• Medicaid Funding Ban: Statutory prohibition dictates that ALCs are private business entities and no public funding is available for services provided in this setting.
• Certificate of Need (CON) Exemption: Under KRS 216B.020(1) and 902 KAR 20:480 Section 3(1), ALC, ALC-BH, and ALC-DC facilities are entirely exempt from CON review.
• Fire Marshal Prerequisite: Proof of approval by the State Fire Marshal's office is a mandatory prerequisite that must be attached to the OIG license application.
• Alternative Medicaid Pathway (Personal Care Home): Providers seeking state funding must apply for a Personal Care Home license, which does require a Certificate of Need.
• Alternative Medicaid Pathway (SCL Waiver): Providers seeking Medicaid HCBS funding must enroll as Supports for Community Living (SCL) residential providers, which requires DMS certification rather than ALC licensure.

4. Licensure and Certification Requirements

Licensure is governed by 902 KAR 20:480. Applicants must submit a comprehensive application packet to the OIG Division of Health Care well in advance of their target opening date.

The application process heavily scrutinizes the facility's physical plant and its legal agreements with residents. The state requires a review of the facility's blank lease agreement to ensure it meets all statutory consumer protection requirements.

• Application Form: Applicants must submit the official 'Application for License to Operate an Assisted Living Community' to the OIG.
• Submission Timeline: Per 902 KAR 20:480 Section 3(2), the application must be submitted at least 60 days prior to the planned opening date.
• Required Attachments: The application must include a copy of a blank lease agreement that includes all elements required by KRS 194A.
• Licensure Fees: The state charges a $42 initial license application fee, with initial certification/licensure fees typically around $500.
• Architectural Review: Facility architectural plans must be submitted and approved to ensure compliance with specific ALC building codes.

5. Medicaid Provider Enrollment

Because ALCs cannot enroll as Medicaid providers, this section outlines how facilities interact with the Medicaid system when residents require waiver services, or how a facility might enroll under an alternative, covered provider type.

All Medicaid HCBS provider enrollment in Kentucky is processed through the Kentucky Medicaid Partner Portal Application (KY MPPA), and service authorizations are managed through the Medicaid Waiver Management Application (MWMA).

• ALC Enrollment Status: ALCs are blocked from enrolling in KY MPPA for room, board, or assisted living services due to the lack of a covered provider type.
• Outside Provider Access: ALC residents may enroll in the HCB Waiver and receive services from outside, KY MPPA-enrolled home health or personal care agencies visiting the facility.
• Alternative Enrollment (SCL): Facilities serving individuals with intellectual disabilities can enroll as SCL waiver residential providers via KY MPPA.
• HCBS Certification: Any provider enrolling in a Medicaid waiver must pass an initial certification review by DMS to ensure compliance with the CMS HCBS Final Rule.
• System Integration: Case managers use the MWMA system to enter person-centered planning goals and ensure no conflict of interest exists between housing and service provision.

6. Staffing, Training and Background Checks

Kentucky administrative regulation 902 KAR 20:480 establishes strict minimum staffing requirements to ensure resident safety, particularly during overnight hours and in higher-acuity licensure tiers.

Facility directors and direct-care staff must meet specific educational, training, and background clearance standards before providing care.

• Awake Staff Requirement: Per 902 KAR 20:480, at least one staff person must be awake and on-site at all times at each licensed entity or building on the campus.
• Nursing Availability: ALC-BH and ALC-DC facilities must have a nurse readily available in person, by telephone, or by other means of live, two-way communication at all times.
• Manager Qualifications: The designated manager or director of the facility must meet the specific educational and experience requirements outlined in KRS 194A.717(3).
• Dementia Training: Staff working in an ALC-DC must complete specialized, state-approved training on Alzheimer's disease and related dementias.
• Background Checks: All staff must undergo Kentucky state criminal background checks and abuse registry clearances prior to employment.

7. Documentation, Policies and Records

ALCs must maintain comprehensive administrative and resident records, which are subject to unannounced inspections by the OIG. The resident lease agreement serves as the foundational document governing the scope of care.

Facilities must also maintain written policies covering emergency preparedness, medication management (if applicable), and resident rights.

• Lease Agreement: Must explicitly detail the services provided, fee structures, and eviction/discharge policies as mandated by KRS 194A.
• Resident Records: Facilities must maintain files including move-in assessments, individualized service plans, and incident reports.
• Medication Administration Records (MAR): ALC-BH and ALC-DC facilities must maintain accurate MARs for any resident receiving medication assistance.
• Emergency Policies: Facilities must have written disaster and emergency preparedness plans that are approved by local emergency management authorities.
• HCBS Compliance (Alternative Providers): If operating as an enrolled waiver provider (e.g., SCL), the facility must document person-centered planning goals directly in the MWMA system.

8. Billing, Rates and Claims

Because ALCs are excluded from Medicaid funding, billing is entirely a private transaction between the facility and the resident or their family. Facilities set their own market rates.

For alternative residential models that do bill Medicaid (such as SCL waiver homes), claims are submitted electronically through the state's MMIS.

• Private Pay Structure: ALCs set their own rates for room, board, and care tiers; no state Medicaid rate schedule applies to ALC services.
• Rate Transparency: Facilities must provide at least 30 days' written notice to residents before implementing any fee increases, as stipulated in the lease agreement.
• State Supplementation: Residents in licensed Personal Care Homes may receive State Supplementation to offset costs, but this funding is not available to ALC residents.
• Medicaid Claims (Alternative): Enrolled waiver providers bill via the KY MMIS using standard HIPAA 837P transactions for approved HCBS services.
• Outside Agency Billing: Visiting home health agencies bill Medicaid directly for services provided to ALC residents; the ALC cannot act as a pass-through biller.

9. Approval Sequence and Timeline

The pathway to opening an ALC in Kentucky is a sequential process that begins with local approvals and culminates in a state OIG survey. The process typically takes 3 to 6 months from the completion of physical construction.

Because there is no Medicaid enrollment step for the facility itself, the timeline ends once the OIG issues the initial license.

• Step 1: Local Approvals: Secure local zoning permits and complete facility construction or renovation to meet ALC building codes.
• Step 2: Fire Marshal Inspection: Pass a life-safety inspection and obtain written approval from the Kentucky State Fire Marshal.
• Step 3: OIG Application: Submit the Application for License to Operate an ALC, the blank lease, and fees to OIG at least 60 days before the planned opening.
• Step 4: OIG Desk Review: OIG reviews the application packet, architectural plans, and lease agreement for statutory compliance.
• Step 5: On-Site Survey: OIG conducts an initial health and safety inspection of the physical plant and reviews staff credentials.
• Step 6: License Issuance: OIG issues a provisional or initial license, allowing the facility to legally admit residents.

10. Common Denials and Survey Findings

The OIG conducts routine and complaint-driven surveys of ALCs. Deficiencies can result in directed plans of correction, fines, or license revocation.

During the initial application phase, delays are almost exclusively caused by incomplete documentation or physical plant issues that fail Fire Marshal inspection.

• Lease Deficiencies: Failure to include all statutorily required consumer protection elements in the resident lease agreement.
• Staffing Lapses: Failure to maintain the required awake, on-site staff 24/7, a frequent citation during overnight surveys.
• Scope of Practice Violations: Social Model ALCs cited for illegally providing or managing health services that are restricted to ALC-BH or ALC-DC tiers.
• Fire Safety Violations: Citations for blocked egress, expired fire extinguishers, or failure to conduct and document required fire drills.
• Incomplete Applications: Applications denied or delayed for missing the Fire Marshal approval letter or submitting less than 60 days before opening.

11. Key Contacts and Resources

Prospective ALC operators will interact primarily with the CHFS Office of Inspector General for licensure and the State Fire Marshal for physical plant approval.

Providers seeking to understand Medicaid waiver options or alternative enrollment pathways should contact the Department for Medicaid Services or DAIL.

• Licensing Authority: CHFS Office of Inspector General (OIG), Division of Health Care (processes ALC applications and conducts surveys).
• Medicaid Agency: CHFS Department for Medicaid Services (DMS) (oversees all Medicaid policy and alternative waiver enrollment).
• Waiver Administration: Department for Aging and Independent Living (DAIL) (administers the HCB Waiver; reachable at 877-315-0589).
• Fire Safety: Kentucky State Fire Marshal's Office (conducts mandatory pre-licensure life-safety inspections).
• Provider Portal: Kentucky Medicaid Partner Portal Application (KY MPPA) (used only if enrolling as an alternative Medicaid HCBS provider).

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