HomeCareAtlas Team · Updated November 2026
Researched from primary state regulatory sources.
How to Start a Home Care Agency in Tennessee
Starting a home care agency in Tennessee costs roughly $40,000 - $75,000 and takes 3-5 months. Here's every step, fee, and deadline — sourced directly from Tennessee Department of Mental Health and Substance Abuse Services (TDMHSAS, Office of Licensure).
Tennessee calls a non-medical home care agency a Personal Support Services Agency (PSSA). You need a PSSA license to help people with bathing, dressing, meals, chores, and errands. The license comes from the TDMHSAS Office of Licensure, not the Health Facilities Commission. The rules are in Tenn. Comp. R. & Regs. 0940-05-38 under Tenn. Code Ann. Title 33. You do not need a Certificate of Need. There is no fire inspection or on-site visit for a PSSA. The state does an electronic desk audit instead. The license is good for up to one year. You renew it every year. Tennessee has no income tax on wages. But TN Revenue says LLCs and corporations doing business here must pay franchise and excise taxes.
To start a non-medical home care agency in Tennessee, you need a Personal Support Services Agency (PSSA) License from the Tennessee Department of Mental Health and Substance Abuse Services (TDMHSAS, Office of Licensure). The application fee is $810 (annual license fee (per office)), the process takes approximately 3-5 months, and total startup costs range from $40,000 - $75,000. You need a PSSA license from TDMHSAS ($810 a year for one office). No Certificate of Need. Every worker needs a criminal background check plus abuse and sex offender registry checks before client contact.
- License Required
- Yes — Personal Support Services Agency (PSSA) License
- Regulatory Body
- Tennessee Department of Mental Health and Substance Abuse Services (TDMHSAS, Office of Licensure)
- Application Fee
- $810 (annual license fee (per office))
- Timeline
- 3-5 months (our estimate)
- Total Startup Cost
- $40,000 - $75,000
- Key Requirement
- You need a PSSA license from TDMHSAS ($810 a year for one office). No Certificate of Need. Every worker needs a criminal background check plus abuse and sex offender registry checks before client contact.
- Last Verified
- November 2026 against Tennessee Department of Mental Health and Substance Abuse Services (TDMHSAS, Office of Licensure) regulations
Annual License Fee (per office)
Source: Tenn. Comp. R. & Regs. 0940-05-02-.05(1) · Checked Oct 2026
Our estimate
This is our best guess. Check with the Tennessee Department of Mental Health and Substance Abuse Services (TDMHSAS, Office of Licensure).
Residents Age 70+
Moderate Opportunity
How Tennessee compares to neighboring states
| State | License Fee | Timeline | Startup Cost |
|---|---|---|---|
| Tennessee ← | $810 | 3-5 months | $40,000 - $75,000 |
| North Carolina | $510 | 8-14 Weeks | $50,000 - $90,000 |
| Georgia | $550 | 2-4 Months | $30,000 - $65,000 |
| Kentucky | $500 | 60-90 Days | $30,000 - $60,000 |
| Alabama | $0 (no license) | No timeline | $12,000 - $30,000 |
Tennessee Licensing Overview
The Tennessee Department of Mental Health and Substance Abuse Services (TDMHSAS, Office of Licensure) oversees all non-medical agencies.Tennessee calls a non-medical home care agency a Personal Support Services Agency (PSSA). You need a PSSA license to help people with bathing, dressing, meals, chores, and errands. The license comes from the TDMHSAS Office of Licensure, not the Health Facilities Commission. The rules are in Tenn. Comp. R. & Regs. 0940-05-38 under Tenn. Code Ann. Title 33. You do not need a Certificate of Need. There is no fire inspection or on-site visit for a PSSA. The state does an electronic desk audit instead. The license is good for up to one year. You renew it every year. Tennessee has no income tax on wages. But TN Revenue says LLCs and corporations doing business here must pay franchise and excise taxes.
PSSA License Required
Any agency that helps people with personal care or chores at home needs a PSSA license. You apply to the TDMHSAS regional office for your area. Fees are set by rule 0940-05-02-.05. A PSSA-only office pays $810 a year. If you add a second license type at the same office, it costs $1,010.
No Certificate of Need
PSSAs do not need a Certificate of Need. CON only applies to skilled home health agencies. This saves you months compared to starting a home health agency.
Desk Audit, Not a Site Visit
TDMHSAS reviews PSSAs with an electronic desk audit. You do not need a fire safety inspection. You still need written policies that follow rule 0940-05-38-.06.
Background & Registry Checks
Every worker needs a criminal background check. TDMHSAS says the results must be back before the worker has contact with a client (T.C.A. 33-2-1202; rule 0940-05-38-.07). You must also check the abuse registry and the sex offender registry before the worker sees a client, and every year after that (rule 0940-05-38-.07).
Insurance
The PSSA rules say you must have proof of liability insurance for the agency and its workers (0940-05-38-.07(3)). They set no dollar amount. TN Labor says workers' comp is required once you have five or more employees, counting part-time workers. Check with TN Labor for your case. The PSSA rules do not list a surety bond.
Estimated Startup Costs (2026)
Budget for $40,000 - $75,000 to ensure 3-6 months of runway.
| Category | Low Est. | High Est. |
|---|---|---|
| PSSA license fee (yearly, per office) | $810 | $810 |
| Business formation (LLC/Corp) | $300 | $1,500 |
| Liability insurance (estimate) | $1,500 | $4,000 |
| Workers' comp insurance | $1,500 | $4,000 |
| Background & registry checks | $300 | $1,000 |
| Office space & setup | $2,000 | $6,000 |
| Policies & procedures development | $1,500 | $4,000 |
| Technology & software | $1,000 | $3,000 |
| Marketing & branding | $2,000 | $8,000 |
| Working capital (3-6 months) | $15,000 | $35,000 |
We map every cost and file your Tennessee license for you.
Tennessee PSSA Licensing Timeline
1-2 weeks
Pick your agency type & register your business
Non-medical care means a PSSA license. Skilled care means a home health license from the Health Facilities Commission, and that needs a CON. Register your LLC or corporation with the Tennessee Secretary of State. Get your EIN from the IRS.
2-4 weeks
Read the rules & write your policies
Read rules 0940-05-38 and 0940-05-06. Write policies on staff training, abuse reporting (TCA 71-6-103), client rights, infection control, emergencies, and records. Decide who will run the agency day to day.
1-2 weeks
Send your forms to the regional office
Send the Initial Application, Fact Sheet, Background Check and Privacy Statement Form, and Financial Statement to your TDMHSAS regional office (West, Middle, or East). List the counties you will serve and where you keep records. Most senior-care agencies apply to TDMHSAS. If half or more of your clients have intellectual or developmental disabilities, you apply to the Department of Disability and Aging (DDA) instead (rule 0940-05-38-.04(3)).
1 week
Pay the license fee
TDMHSAS sends you an invoice after it gets your forms. A PSSA-only office pays $810. Fees are not refundable. No license is issued until the fee is paid.
2-4 weeks
Recruit staff & run checks
Hire caregivers who are 18 or older. Get criminal background check results back before any client contact. Check the abuse registry and sex offender registry before any client contact. Finish pre-service training before the first shift.
4-8 weeks
Pass the desk audit & get your license
A licensure surveyor reviews your policies and records by electronic desk audit. Fix any problems they find. Then you get an initial license good for up to one year. Renew it every year.
We can do all of them for you in Tennessee.
New 2026 Legal Mandates
PSSA Licensure (Tenn. Code Ann. Title 33; Rule 0940-05-38)
Ongoing - You must hold a PSSA license before you offer personal support services. Report unlicensed agencies to the TDMHSAS Office of Licensure.
Abuse Reporting (TCA 71-6-103)
Ongoing - Tennessee law makes you report suspected abuse, neglect, or exploitation of adults. Your policies must say how staff spot it, write it down, and report it.
Background & Registry Checks (Rule 0940-05-38-.07)
Ongoing - Every worker needs a criminal background check, with results back before client contact. The rule also says every two years (0940-05-38-.07(2)(c)). TDMHSAS says in its 2025 PSSA provider slides that it will not enforce that part. Check the abuse registry and the sex offender registry before client contact and once a year.
Staff Training (Rule 0940-05-38-.08)
Ongoing - Workers must be trained before they start. Topics include client rights, abuse reporting, infection control, safety, and emergencies. Workers also need job-related training at least once a year. Anyone who helps with medications must be trained by or under a registered nurse.
HIPAA Compliance
Ongoing - Follow federal health privacy rules if they apply to you. Train staff, keep records safe, and have a plan for breaches.
Our Tennessee licensing team tracks the law so you do not have to.
Caregiver Mandates
Important Warning
Nashville has many agencies already. Build your referral network early in every Tennessee market. Start before you open.
- Minimum age 18: All personal support services workers must be 18 or older.
- Criminal background checks: Run a criminal background check. Get the results before the worker has any client contact.
- Abuse & sex offender registry checks: Check both registries before a worker sees a client, and once a year after that.
- Health screening: Follow the Tennessee Department of Health rules for spotting and preventing communicable diseases. Most agencies use a TB screen at hire.
- Pre-service training: Train workers before their first shift on client rights, abuse reporting, infection control, personal care, safety, and emergencies. The rule sets topics, not hours. Medicare home health aides (a different license) need at least 75 hours under federal rules (42 CFR 484.80).
- Annual training: Give job-related training at least once a year. Keep records of it.
- Workers' compensation: TN Labor says it is required once you have five or more full- or part-time employees. It says LLC owners do not count toward the five. Check with TN Labor for your case.
Regional Billing Snapshots
*Regional rates vary by specialized care needs (Dementia, Parkinson's) and local competition.*
We launch Tennessee home care agencies start to finish.
Regional Market Opportunities
Tennessee has about 1.36 million adults 65 and older, or 19% of the state (Census, July 2025). The middle pay for home health and personal care aides is $15.45 an hour (BLS OEWS May 2025, series OEUS470000000000031112008). Nashville is the busiest market. The billing rates below are our estimates. Real rates depend on the area and who pays.
Nashville
A fast-growing metro with many hospitals and well-off retirees. Many agencies already work here.
Key: Pick a focus (like dementia care) or a few neighborhoods to stand out.
Knoxville
A university town with many older adults and a growing health care sector.
Key: Get to know UT Medical Center and local hospital discharge planners.
Chattanooga
A growing mid-size metro with lower costs than Nashville.
Key: Get to know Erlanger Health System and local senior centers.
Memphis
A large metro with many Medicaid members and big hospitals.
Key: If you want more clients, look at TennCare CHOICES.
Rural Tennessee
Rural areas in East, Middle, and West Tennessee may have fewer agencies.
Key: Hiring is harder. Keep clients close together and plan for drive time.
Cost of care in Tennessee
What agencies charge clients vs. what caregivers earn in Tennessee. The difference is the agency's gross margin per billable hour — before overhead like insurance, admin, marketing, and compliance costs.
$30.5
Avg. hourly rate charged to clients
$18.04
Avg. caregiver hourly wage
$12.46
Gross margin per hour
41%
Gross margin %
What this means for agency owners
In Tennessee, agencies keep roughly $12.46 per billable hour after paying the caregiver. That's a 41% gross margin.
This is a strong margin that gives you room to cover overhead costs (insurance, admin, marketing, compliance) and still run a profitable agency.
Sources: Avg. hourly rate from CareYaya and CareScout 2025 surveys (averaged). Caregiver wage from Care.com. Gross margin is before overhead costs like insurance, admin, marketing, and compliance.
Tennessee Medicaid Programs
CHOICES (Long-Term Services & Supports)
TennCare's main program for long-term care at home. CHOICES pays for home and community-based services for seniors and adults with disabilities so they can stay at home.
Agency Angle: Enrolling as a CHOICES provider gives you access to a large pool of Medicaid-funded clients. This is key if you want volume, especially in Memphis and rural areas.
TennCare (Managed Care)
Tennessee's Medicaid program. Home care services are paid through managed care organizations (MCOs) that contract with providers.
Agency Angle: Get credentialed with every TennCare MCO to get the most referrals. Each MCO has its own enrollment process and rates.
Becoming a Provider
Essential 2026 Tech Stack for Owners
Tiles outlined in teal are areas HomeCareAtlas covers in our platform.
Tennessee Licensing FAQ
Do I need a license to start a home care agency in Tennessee?
Yes. Tennessee calls it a Personal Support Services Agency (PSSA) license. It covers non-medical help like bathing, meals, chores, and errands. You apply to the Department of Mental Health and Substance Abuse Services (TDMHSAS) Office of Licensure. Working without a license is against the law.
Do I need a Certificate of Need (CON) in Tennessee?
No. PSSAs do not need a CON. A CON is only for skilled home health agencies licensed by the Health Facilities Commission.
How much does it cost to start a home care agency in Tennessee?
The license fee is set by rule 0940-05-02-.05. A PSSA-only office pays $810 a year. The fee is not refunded. Our estimate for total startup costs is $40,000 to $75,000. That covers insurance, office setup, training, marketing, and cash to run.
How long does licensing take in Tennessee?
Our estimate is about 3-5 months. That covers writing policies, sending your forms, paying the fee, hiring staff, running checks, and the desk audit. There is no on-site visit or fire inspection for a PSSA.
What insurance is required in Tennessee?
The PSSA rules require proof of liability insurance but set no amount (0940-05-38-.07(3)). Many agencies carry $1,000,000 per occurrence. TN Labor says workers' comp is required once you have five or more employees. The PSSA rules do not list a surety bond.
Is Tennessee a good market for home care agencies?
Tennessee has about 1.36 million adults 65 and older, or 19% of the state (Census, July 2025). Nashville is growing fast but has many agencies. Knoxville and Chattanooga are good places to look too. There is no income tax on wages. TN Revenue says LLCs and corporations pay franchise and excise taxes.
What are the biggest mistakes new agencies make in Tennessee?
Two big ones. First, underestimating Nashville competition. Second, waiting too long to build referral ties. Start meeting hospitals, discharge planners, and senior centers before you open.
Starting in a Nearby State?
Licensing requirements vary a lot between states. Compare your options:
North Carolina
$510 fee · 8-14 Weeks
Georgia
$550 fee · 2-4 Months
Kentucky
$500 fee · 60-90 Days
Alabama
No state license required · N/A
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Sizing up the competition? See the 1,100 home care agencies already operating in Tennessee →
Home care agencies in Tennessee
Want to see the competition up close? Look at who is already open, city by city.
- Home care agencies in Nashville
- Home care agencies in Chattanooga
- Home care agencies in Memphis
- Home care agencies in Knoxville
- Home care agencies in Franklin
Looking for care for a family member? Find agencies near you
Considering other states?
- Alabama
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Where our numbers come from
We check each fact against Tennessee's own rules. Tap a source to read it yourself.
- License needed?YesTenn. Comp. R. & Regs. 0940-05-02-.01; T.C.A. Title 33, Ch. 2, Part 4· Oct 2026
- Who oversees itTennessee Department of Mental Health and Substance Abuse Services (TDMHSAS, Office of Licensure)TDMHSAS "Become a Licensed Provider" page· Oct 2026
- License namePersonal Support Services Agency (PSSA) LicenseTenn. Comp. R. & Regs. 0940-05-38· Oct 2026
- The rulesTenn. Code Ann. Title 33; Tenn. Comp. R. & Regs. 0940-05-38 (Personal Support Services Agencies)Tenn. Comp. R. & Regs. 0940-05-38 (rev. Dec. 2022)· Oct 2026
- First license fee$810Tenn. Comp. R. & Regs. 0940-05-02-.05(1)· Oct 2026
- License lasts1 yearTenn. Comp. R. & Regs. 0940-05-02-.02(1)-(2)· Oct 2026
- BondNoneTenn. Comp. R. & Regs. 0940-05-38-.07(3)· Oct 2026
- Owner/manager trainingNo state minimumTenn. Comp. R. & Regs. 0940-05-38· Oct 2026
- Caregiver trainingNo state minimumTenn. Comp. R. & Regs. 0940-05-38-.08· Oct 2026
- Background checksCriminal background check (TBI/FBI fingerprints or a Tennessee-licensed private investigation company) back before direct client contact, plus Abuse Registry and Sex Offender Registry checks before contact and every yearT.C.A. §33-2-1202; Tenn. Comp. R. & Regs. 0940-05-38-.07(2)(c)-(e)· Oct 2026
- How long it takes3-5 monthsBest guess — not confirmed yet
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This guide is for informational purposes only and does not constitute legal, regulatory, or business advice. Licensing requirements, fees, and regulations change frequently. Always verify current requirements with your state's licensing agency before making business decisions. HomeCareAtlas is not responsible for the accuracy or completeness of this information.
Researched and reviewed by
John Helmy, Founder of HomeCareAtlasBuilding tools and resources to help home care agency owners navigate licensing, compliance, and growth.