How Much Does It Cost to Start an Adult Day Care?

"How much does it cost to start an adult day care?" has no single answer, and any one number you find online is a guess. Two things you don't control set most of the cost: your state's licensing rules and the rate your state's Medicaid program pays. Those rules decide how much space you need and how many staff must be on the floor. The rate decides how long your savings have to carry the center before it pays for itself.

This guide goes through every cost category with real figures where they exist. It then runs the numbers for a 40-participant center, so you can see how the costs and the revenue fit together.

Start with who pays you

Before pricing out a building, find out who will pay for your participants' care. In 2022, the CDC counted about 3,100 adult day services centers in the United States, serving roughly 182,000 participants. About 79% of those participants had some or all of their services paid by Medicaid.

For most centers, then, the Medicaid rate in your state is the number your whole budget depends on. And those rates vary enormously:

• Texas pays Day Activity and Health Services (DAHS) at $18.59 per unit (effective September 1, 2025). One unit is a half day, so a full day of six or more hours is two units, or $37.18. Texas DAHS rates and billing
• Georgia pays Adult Day Health Level 1 at $82.49 per full day and Level 2 at $108.23 (effective July 1, 2024). Georgia CCSP and SOURCE

Private pay is a different market. The CareScout 2025 Cost of Care Survey puts the national median for adult day health care at $95 per day, about $24,700 a year for five days a week. The survey also notes that private pay rates are "heavily influenced by Medicaid reimbursement rates," so your local Medicaid rate tends to set the private price too.

Look up your state's rate before anything else. Our state guides cover Maryland, Florida, Ohio, Illinois, North Carolina, and more than a dozen other states.

1. Licensing and Medicaid enrollment

License fees themselves are usually small. Texas, for example, charges $75 for a three-year license (26 TAC §559.37). A new building or a conversion also pays a plan review fee of $12 per client, with a $500 minimum and a $1,000 maximum.

Medicaid enrollment can cost more. The federal provider enrollment application fee for institutional providers is $750 for applications submitted in 2026. In Texas, TMHP charges it to providers enrolling for the first time, reenrolling, revalidating, or adding a practice location. Providers who have already paid it to Medicare or another state's Medicaid program are exempt with proof. Check with your state whether the fee applies to its adult day provider type.

The bigger cost here is time. In Texas, the licensing inspection happens after the building is approved and one to three people have been admitted. Georgia accepts new waiver provider enrollment only in March and September windows. Every month between signing a lease and receiving your first Medicaid payment is a month of rent and payroll with nothing coming in. That is covered in section 6.

Staff background checks are usually part of licensing too, and the rules and costs vary by state. See criminal background checks for adult day care employees.

2. The building

Your state's space rules set your capacity. In Texas, licensed capacity is calculated at 40 square feet per client of usable space, and usable space excludes kitchens, restrooms, offices, corridors, stairways, storage, and outdoor areas (26 TAC §559.42). A center licensed for 40 participants therefore needs at least 1,600 square feet of activity space alone, and the whole building has to be larger than that.

The same Texas rule requires:

• At least half of client restrooms to meet ADA standards (a center licensed for 45 or fewer can instead provide one accessible unisex restroom)
• A rest area, separate from the treatment room, with enough reclining lounge chairs or beds for the clients

Plan for three kinds of building cost:

• Rent or mortgage at your local commercial rate
• Build-out: ADA restrooms, a treatment or nurse's room, a kitchen or warming area, and life safety work such as fire alarms and exits. Get a contractor's quote after the state's plan review, not before.
• Furnishings: tables, activity supplies, recliners for the rest area, medication storage, and office equipment

Because capacity is calculated from usable square feet, the building you choose sets the most revenue the center can ever earn. Look at a few buildings before you sign.

3. Staff: your largest ongoing cost

Staffing ratios are set by the state, and they differ:

• Texas: at least one direct service staff member for every eight clients, and an RN or LVN on site for at least eight hours a day (26 TAC §559.61)
• Florida: at least one direct service staff member for every six participants at all times, and never fewer than two staff on site (Fla. Admin. Code R. 59A-16.102)

National median pay, from the Bureau of Labor Statistics (2025):

• Home health and personal care aides: $17.21/hour
• Nursing assistants and orderlies: $20.13/hour
• Licensed practical and licensed vocational nurses: $30.96/hour
• Registered nurses: $46.90/hour

Wages in your area may be higher or lower, so check your state's numbers.

On top of direct care staff, most centers also need a director, an activities coordinator, a driver, and kitchen help, plus payroll taxes and workers' compensation. Hire and train before you open, because the licensing inspection happens while you're operating.

4. Transportation

Most participants can't drive themselves, so many centers provide transportation. That adds vehicles, drivers, fuel, maintenance, and commercial auto insurance to the budget.

Wheelchair-accessible vehicles are the expensive part. For one example, BraunAbility lists a 2026 Chrysler Pacifica with its Power XT conversion at $88,685 MSRP ($47,935 for the vehicle and $40,750 for the conversion), before tax, title, and fees. Used, leased, or contracted transportation can cut the upfront cost considerably.

5. Insurance, meals, software, and the rest

Insurance. Expect general liability, professional liability, property, commercial auto if you transport, and workers' compensation. Prices depend on your state, your building, and your claims history, so get quotes from agents who already insure adult day providers.

Meals. Meals are a cost, but the Child and Adult Care Food Program (CACFP) can pay part of it back. From July 1, 2026, to June 30, 2027, the free-category rates in the contiguous states are $2.54 for breakfast, $4.76 for lunch or supper, and $1.30 for a snack. See 2026–2027 CACFP rates for adult day care.

Software. Your software handles attendance records, Medicaid claims, and the documentation that inspectors and auditors check. ElderSuite costs $299 per month for one location after a 30-day free trial. The rate you start with is locked for as long as your subscription stays active, and it doesn't rise as your center grows. The price is per location, not per participant or per user. Every feature, unlimited users and workstations, training, support, and updates are included, with no setup or training charges.

That is not how most adult day software is priced. Many platforms built for adult day charge per participant per month, so the bill rises with every person you enroll. General-purpose platforms more often charge per staff user. Data migration, custom reports, integration setup, and refresher training are often billed separately. For a new center, that means the software bill grows at exactly the moment you are trying to reach break-even.

When you compare software, ask each vendor:

• Does the price go up when you add participants, staff logins, or workstations?
• Can the rate increase at renewal?
• What do setup, training, support, and add-on modules cost?

Price each quote at the census you expect in year one and in year three, not only at opening. See how much adult day care software costs.

Everything else. Business formation, accounting, a phone and internet line, a computer or two, marketing to case managers and families, and professional development. The National Adult Day Services Association sells its Standards & Guidelines manual, which covers the basics of starting a center, for $199 to members and $499 to non-members.

6. Budget for the months before revenue

This is where new centers most often run short. You pay rent and payroll from the day you open, but Medicaid revenue arrives only after:

1. Your license is issued
2. Your Medicaid enrollment or contract is approved
3. Participants are referred and authorized
4. Your claims are submitted, accepted, and paid

Enrollment ramps up one participant at a time. On top of that, a claim with a missing authorization number or a wrong diagnosis code comes back unpaid, which pushes your first payments back even further.

Two things help:

• Working capital. Budget enough cash to cover operating costs for the months it will take to reach break-even census. SBA microloans go up to $50,000 (the average is about $13,000) and can be used for working capital, supplies, furniture, and equipment, though not real estate.
• Clean claims from the first week. Every rejected claim delays cash. ElderSuite's billing tools fill each claim from the participant's record and flag anything missing before the claim goes out. See also adult day care claim denials.

Running the numbers: a 40-participant center

Here is how the figures above fit together. This is an illustration, not a budget: it uses national median wages and assumes full attendance every day.

Direct care payroll under Texas's 1:8 ratio. Forty participants require five direct care staff on the floor. At the nursing assistant median of $20.13 an hour for 2,080 hours a year, that comes to $209,352. Add one LVN for eight hours a day at $30.96 an hour ($64,397), and the total is $273,749 before payroll taxes, benefits, a director, a driver, rent, or anything else.

The same center in Florida. The 1:6 ratio requires seven direct care staff for 40 participants, about $83,700 more in aide payroll alone.

Revenue at full attendance, about 250 service days a year:

• Texas DAHS: 40 participants × 2 units × $18.59 = $1,487.20 a day, or about $371,800 a year
• Georgia ADH Level 1: 40 participants × $82.49 = $3,299.60 a day, or about $824,900 a year

CACFP at full attendance, if every participant qualifies in the free category: breakfast, lunch, and a snack come to $8.60 per participant per day, or up to $86,000 a year toward meal costs.

The comparison shows why the same 40-participant center can be a strong business in one state and a very tight one in another. Actual attendance is rarely 100%, so model your plan at the census you expect in months 3, 6, and 12, not only at full capacity.

Where ElderSuite helps

Software doesn't make your building or your payroll cheaper. It does reduce the costs that come from time, errors, and audits.

• Set it up before you open. The 30-day free trial has full access and needs no credit card, so you can load participants, staff, payers, and routes while the center is being built.
• Attendance becomes billable units. When you enter a participant's pickup and drop-off times in Attendance & Transportation Records, ElderSuite works out the units that day is worth, so attendance and billing always match. Attendance tracking
• Claims go out clean. Scrub Claims fills in the diagnosis code, service codes, insured ID, and authorization number from the participant's record and flags anything it couldn't complete. Process Claims builds the 837P and uploads it to your clearinghouse.
• Drivers write, you scan. Transportation route sheets print for each route. Drivers write the times by hand, and Scan Times reads them back into ElderSuite.
• CACFP claims come from your meal counts. ElderSuite totals meals for the month and fills the claim forms, and it flags days that have a meal but no attendance before you file.
• Records are ready for inspection. Staff certificates and licenses are kept on each employee's record, and nursing assessments can be set to recur so renewals aren't missed. The HHS Office of Inspector General's review of Georgia adult day health facilities found problems at all 20 facilities it checked, which is why documentation deserves a place in your plan from the start. Documentation software

A startup checklist

1. Find your state's Medicaid adult day rate, and check whether new provider enrollment is open.
2. Read your state's licensing rules on space per participant, staffing ratios, and nursing requirements.
3. Choose a building that meets those rules, and get plan review before you commit to build-out.
4. Price staffing at local wages under your state's ratio.
5. Decide how you'll handle transportation.
6. Get insurance quotes from agents who insure adult day providers.
7. Apply for CACFP.
8. Budget working capital for the months before Medicaid revenue arrives.
9. Choose software whose price won't climb as you add participants and staff. Start the trial early, and open with participants, staff, and payers already set up.

Where the numbers come from

• CDC/NCHS Data Brief 502: Adult Day Services Center Participant Characteristics, 2022
• CareScout 2025 Cost of Care Survey results
• Texas licensing rules: fees, 26 TAC §559.37; space and safety, §559.42; staffing, §559.61; HHSC: how to become a DAHS provider
• Florida staffing rule, R. 59A-16.102
• CMS provider enrollment application fee for 2026 and TMHP's notice
• BLS Occupational Outlook Handbook: healthcare occupations
• SBA microloans
• NADSA: Opening an Adult Day Center