Skip to main content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.


The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Guide to Assisted Living and State Policy - Executive Summary

Publication Date

Robert L. Mollica, KerenBrown Wilson, Barbara S. Ryther and Heather Johnson Lamarche

LTC Resource Center
University of Minnesota
National Academy for State Health Policy

May 1995

This report was prepared under contracts #HHS-100-94-0024 and #HHS-100-98-0013 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the Research Triangle Institute. Additional funding was provided by American Association of Retired Persons, the Administration on Aging (grant #90AM0698101), the National Institute on Aging, and the Alzheimer’s Association. For additional information about this subject, you can visit the DALTCP home page at or contact the ASPE Project Officer, Gavin Kennedy, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W. , Washington , D.C. 20201 . His e-mail address is:

The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.


In 1992 the Academy published a guide to assisted living for state policy makers that analyzed policies in five states: Florida, Massachusetts, New York, Oregon and Washington. In 1994, the Academy surveyed the Departments of Aging, Health and Medicaid and the Housing Finance Agency in all 50 states to identify states that have passed legislation, issued regulations or established policies concerning assisted living or that have established a process to develop recommendations. Based on responses to the survey, we contacted key respondents in each state that indicated that assisted living legislation, regulations or policy has or was being developed. We identified 22 states that have passed legislation, issued regulations or have implemented programs through Medicaid home and community based waiver services programs. In addition, 6 states have issued draft regulations or have legislation pending that would establish a program. Another 5 states have created a task force to make recommend s or conducted a study.

The study analyzed state approaches to assisted living and compared states according to their definition of assisted living, the living unit requirements, tenant policies, services, financing, medication policy, and staffing requirements. State approaches can be grouped into three distinct models: institutional or board and care; a new housing and services model and a services model (see matrix). The institutional model is followed by Alabama, Rhode Island, South Dakota, Virginia and Wyoming. Models were classified as institutional if they allowed multiple occupancy rooms and separate bathrooms shared by more than two persons. These models either do not allow people who qualify for placement in a nursing facility to be served, did not allow any skilled services to be provided or have adjusted their service and level of care criteria to facilitate aging in place but have retained an institutional approach to care.

The new housing and services model generally requires apartment settings or private rooms, allows skilled nursing services to be provided and allow occupancy by tenants who qualify for placement in a nursing facility. States in this category include Arizona, Hawaii (proposed), Iowa (pending), Massachusetts, Ohio, Oregon and Washington.

The Hawaii model has been recommended by a task force and legislation creating a definition of assisted living passed the end of April. Ohio's classification follows passage of legislation in 1993 and issuance of draft rules in 1994. Implementation has been halted as the legislature is considering a repeal of the bill and creation of a Medicaid waiver program that would be implemented under rules that are similar to those issued by the Department of Aging.

Under the service model, states certify or license the provider of services rather than the setting in which services are provided. A few states have created a financing source for assisted living through Medicaid waivers rather than a separate licensure category. The waivers define the service requirements and do not create a new licensure category.

States using the service model approach can be further divided into states that allow assisted living services to be provided only in apartment settings and those that allow services in a range of settings. States certifying the service provider and limiting service to apartment settings include Connecticut, Minnesota, New Jersey, North Dakota and Wisconsin. Programs in Minnesota and North Dakota have been developed through Medicaid waivers rather than a separate licensure category. Wisconsin's model has been recommended by a task force and legislation approving funding through a Medicaid waiver is pending.

States which focus on the service component of assisted living and allow delivery in both apartment, single and double occupancy bedrooms include Alaska (proposed rules), Florida, Maine, Maryland, New York, North Carolina (proposed), Oklahoma (task force report), Utah and Texas.

The study examined the definitions used by states as well as federal agencies, associations and companies selling long term care insurance policies. While the definitions have much in common, there is little likelihood that a definition will be developed that is commonly accepted for two primary reasons. First, the private market is extensively developed in many states and attempts to define public policy that conflicts with the directions of the market will adversely affect current and future projects. Second, allowing the delivery of skilled nursing services in residential settings creates competition with nursing facilities for “patients” needing personal care, assistance with medications and some skilled services. On the other hand, state policy makers are seeking to offer more choice and service options in residential settings to people who are aging in place. Those conflicts are likely to yield resolutions and result in definitions and models that are suited to each state.



State definitions follow the purpose of the state's policy. States seeking to address and encourage “aging in place” in a range of settings have defined assisted living in a way that allows higher levels of service (personal mm and skilled nursing) to be delivered in multiple settings. States seeking to develop residential settings for people who may need to move from their home or apartment have developed assisted living as a setting in which personal care and skilled services can be provided. These states tend to require apartment settings for assisted living residences.

State definitions tend to address the services and/or settings that are covered by assisted living, the needs that may be addressed, the services provided and the autonomy and decision making that must be provided to residents.



Perhaps the most controversial component in assisted living is the requirement for the living unit. The study identified three general requirements. A number of states require apartment settings in order to maximize the residential and homelike qualities. A second model offers private bedrooms with attached baths or double occupancy bedrooms shared by agreement of the residents. A third model offer shared bedrooms with bathrooms or bathing facilities that may not be attached to the room and can be shared by more than two residents.

While some contend that apartment style models raise costs and require features that residents may not use or that may be harmful (stoves, microwaves), others contend that kitchens or kitchenettes do not add significant costs, can be safe and provide an ambiance that is familiar and encourages autonomy. Kitchenettes can be used for snacks and facilitate socialization when friends or family members visit who often prepare a meal during their visit.

Feasibility studies, market strategies and reimbursement policy for low income residents shape a developer's position on how state regulations should deal with the type of living unit.


Tenant Policy

The study differentiated licensing rules that specify whom may be served in assisted living versus program requirements that determine whom will be subsidized. Tenant policies follow four approaches. New Jersey offers the broadest criteria and allows residents with unstable health conditions and extensive medical needs as long as the residence is staffed to meet the service need. The second approach allows people needing skilled services to be served as long as their health conditions are stable and they do not require 24 hour nursing care. A third model ties residency to the need for skilled care for a specified period of time (45, 90 or 120 days) or allows health related services in a part time or intermittent basis. Finally, states have listed the specific conditions and diagnosis that people may or may not have to live in an assisted living residence.



State rules all allow or require the provision of personal care or personal assistance services that are provided or arranged by the assisted living residence. State policies vary on the extent to which skilled nursing services can be provided. Some states limit skilled services to a number of days. One state requires that skilled services must be provided by a certified home health agency while other states allow assisted living residences to provide services directly or through contracts with outside agencies. A few states license the service and allow a number of options for its provision. Facilities providing assisted living services may be required to obtain a separate service license or contract with an outside agency. While all states allow assisted living residences to provide assistance with administration of medications, the specific tasks listed in statute or regulations vary.


Financing Services

Medicaid and SSI continue to be the primary sources of financing for low income tenants. Major changes are anticipated in federal housing programs and proposals to cap the rate of growth in Medicaid or to create a Medicaid block grant, if passed, will significantly change the climate and policy directions. If a Medicaid block grant is passed by Congress, two directions are likely. Because states spend the vast majority of Medicaid funds for institutional long term care, states will either cut back on community and residential alternatives in order to maintain funding for the major source of long term care or develop strategies which shift resources from institutional models to residential and in-home services.

Under current policies, states have combined SSI and Medicaid financing to support tenants in existing assisted living residences. The use of HUD mortgage insurance, tax exempt bonds and tax credits allows developers to construct more affordable projects and both the tax exempt bonds and tax credit programs have set aside requirements for low income tenants (50% or 60% of median income). Combining SSI and Medicaid policy allows states to support tenants with incomes up to 40% of median income. States can combine SSI and Medicaid eligibility options to make assisted living affordable for a broader range of people. Since Medicaid cannot be used to pay for room and board in non-institutional settings, states must rely on SSI to cover these costs. The SSI payment may not be adequate in states with higher development costs and a higher state supplement may be needed. States should consider the net state cost of an additional state supplement and Medicaid compared to the net state cost of care in a nursing home.

People who receive social security and/or small pensions who do not qualify for SSI also lack sufficient income to afford the monthly fees. Medicaid rules allow eligibility to be set at 300% of the federal SSI payment (about 40% of median income) for people who qualify for placement in a nursing home. States then establish a maintenance allowance that is sufficient to allow tenants to pay for room and board. Combining these SSI and Medicaid options can limit, but not eliminate, the affordability gap. See the later discussion of these options.

Significant changes may be made in financing of services as Congress considers steps to reduce the rate of growth in Medicaid. Approaches that would cap the rate of growth at 5 % for five or seven years or convert Medicaid to a block grant will significantly affect state policy development.


Financing Housing

Major changes have also been proposed in HUD housing programs. While legislation implementing these proposals has not yet been submitted, the Administration's summary of the proposal may give state's additional flexibility to finance assisted living. The implications of funding levels will affect the extent to which this flexibility can be utilized by states seeking to address multiple housing needs.

HUD has implemented rules adding assisted living to its mortgage insurance, section 232, program. The program helps developers obtain lower cost loans to build new facilities.

The study identified a number of state housing finance agencies that are or plan to provide loans for assisted living. Only a few states have coordinated policy development between Housing Finance Agencies, Medicaid, Health and Aging Departments.