Last updated 2026-07-23
TL;DR
A residential care facility is any state-licensed home, small or large, that provides housing, meals, supervision, and help with daily activities for people who can't safely live alone but don't need hospital-level nursing care. The term covers assisted living communities, group homes, and board-and-care homes. It is not a nursing home, and Medicare generally won't pay for the room-and-board part of it.
What is a residential care facility?
A residential care facility is a licensed home, usually small to mid-sized, that houses people who need help with daily life but don't require round-the-clock skilled nursing. The label is a catch-all. Depending on the state and the population served, the same kind of building might be called an assisted living facility, a residential care home, a group home, or a board-and-care home. What they share is the basic model: private or shared bedrooms, meals, housekeeping, staff supervision, and help with things like bathing, dressing, and medication reminders. The scale of this industry is bigger than most people assume. The National Center for Health Statistics counted about 28,900 licensed residential care communities in the US, with roughly 996,100 beds combined, in its most recent full survey of the sector. That number includes everything from four-bed homes in a residential neighborhood to 200-bed assisted living campuses. What a residential care facility is not: a hospital, a skilled nursing facility, or a place that provides ongoing IV therapy, ventilator care, or complex wound management without a separate medical license layer. Those services belong to nursing homes and are regulated differently, with different staffing rules and different Medicare and Medicaid coverage rules.
What is assisted living, and what is an assisted living facility?
Assisted living is a residential care model built for adults, mostly older adults, who need help with daily activities like bathing, dressing, medication management, and meals, but who don't need the level of medical care a nursing home provides. An assisted living facility is the licensed building or program that delivers that care. Residents usually have their own room or apartment, share common dining and activity spaces, and have staff available on-site around the clock, though not necessarily a nurse on every shift. The National Center for Assisted Living, the trade group representing much of this industry, describes assisted living as combining housing, personal care services, and health care in a way designed to feel like home rather than a medical facility. Staffing, admission criteria, and the services a facility is allowed to offer without a nursing license all vary by state. Some states cap the level of care an assisted living facility can provide (no residents needing two-person transfers, for example), while others allow a wider range if the facility has the staff and license tier to support it. If you're comparing specific licensing terms and paperwork by state, start with the assisted living facility overview and the assisted living facilities state comparison page, since the exact rules differ enough that a generic answer isn't useful for filling out an application.
What is a group home?
A group home is a small residential setting, often a single-family house licensed to serve a handful of residents, usually built around a specific population rather than age alone. Group homes commonly serve adults with intellectual or developmental disabilities, people with serious mental illness, or people in recovery from substance use. The staffing model, the size limit (often 4 to 8 residents in a licensed home), and the services allowed are set by the state agency that licenses that particular population's care, which is frequently a different agency than the one that licenses senior assisted living. The federal Administration for Community Living oversees policy and funding connected to home and community-based long-term services and supports, though actual licensing sits with state agencies, not a federal one. For group homes serving people in addiction recovery specifically, SAMHSA maintains guidance on what it calls recovery residences, which range from peer-run sober homes with no clinical staff to more structured, staffed settings. Because group homes are usually located in ordinary residential neighborhoods, zoning is a real issue. Many states rely on the federal Fair Housing Act's protections for group homes to prevent municipalities from blocking them through zoning that treats a licensed group home differently than an unrelated group of housemates. That doesn't mean zoning is automatic. Confirm local zoning and occupancy rules with your city or county planning department before you sign a lease or a purchase contract.
What is the difference between assisted living and a nursing home?
| Primary purpose | Help with daily activities, housing, meals | Medical care, rehab, skilled nursing | |
|---|---|---|---|
| Staff on-site | Caregivers, medication aides, some states require an RN/LPN on call or part-time | Licensed nurses on staff, physician oversight required | |
| Typical resident | Needs supervision and help with ADLs | Needs medical monitoring, wound care, IV therapy, or rehab | |
| Medicare coverage | Generally does not cover room and board [1] | Covers up to 100 days per benefit period after a qualifying hospital stay, under specific conditions [2] | |
| Setting | Apartment-style rooms, common areas | Hospital-like rooms, nursing stations | CMS's Care Compare tool lets families and operators look up inspection history and staffing data for nursing homes nationally, which is worth knowing even if you're building assisted living, since referral sources and hospitals use that same tool when placing patients. If you're weighing which model fits a specific resident population, the assisted living overview page walks through admission criteria in more detail. |
The core difference is the level of medical care. Assisted living is built around help with daily living activities. A nursing home (also called a skilled nursing facility) is built around ongoing medical and rehabilitative care, delivered by licensed nurses, often after a hospital stay or as a resident's health declines to the point of needing continuous nursing supervision. | Feature | Assisted living facility | Nursing home (skilled nursing facility) |
What does assisted living provide?
Assisted living generally provides housing, three meals a day, housekeeping and laundry, help with activities of daily living (bathing, dressing, toileting, mobility), medication management or reminders, social and recreational activities, and staff available on-site 24 hours a day. Most states also require an emergency call system in each resident's room and a written service plan that's updated as a resident's needs change. What it typically does not provide, at least not without an add-on license or waiver, is skilled nursing care, physical therapy delivered as a facility service, or care for residents who need two-person assistance for transfers, have unmanaged behavioral health crises, or need ventilator or IV care. Some states allow a higher "enhanced" or "limited nursing" tier of assisted living license that closes some of that gap. It's genuinely state-specific, so don't assume your state's rules match a neighboring state's rules just because the facility type has the same name. Families searching for a placement often start by looking at senior assisted living facilities near me type searches, and operators building a service plan template should map every offered service against what their specific state license tier actually permits, not against a generic national list.
Does Medicare cover assisted living facilities?
No, not the room and board. Medicare's own guidance is direct: it generally does not pay for long-term care, including the custodial care and housing costs at an assisted living facility [1]. Medicare Part A will cover a stay in a skilled nursing facility, but only under specific conditions, and it's a different setting than assisted living. Specifically, Medicare Part A covers up to 100 days of skilled nursing facility care per benefit period, following a qualifying inpatient hospital stay of at least three days, with full coverage for the first 20 days and a daily coinsurance amount owed by the patient for days 21 through 100 [2]. After day 100, Medicare stops paying for that benefit period entirely. Medicare Part B may still cover medically necessary services a resident receives while living in assisted living, things like doctor visits, physical therapy sessions, or durable medical equipment, but that's coverage for the medical service, not for the facility's housing or personal care charges. Families sometimes confuse this distinction and are surprised, mid-move, that Medicare isn't going to offset the monthly rate.
Does Medicaid cover residential care or group homes?
Sometimes, but almost never for the room and board itself. States can use Medicaid Home and Community-Based Services (HCBS) waivers or state plan options to pay for personal care, case management, and certain support services delivered in a residential care setting, but federal Medicaid rules generally exclude paying for a resident's rent and food in that setting. Whether a specific assisted living facility or group home accepts Medicaid waiver funding, and what services that waiver actually pays for, depends entirely on your state's Medicaid agency and which waiver program the facility is enrolled in. Some states have dedicated assisted living or adult foster style waivers; others rely on more general HCBS waivers that can be used across settings. If Medicaid funding is part of your business model, get the waiver enrollment requirements from your state Medicaid agency before you finalize a location or a staffing plan, because waiver enrollment often has its own separate application and inspection process on top of the basic facility license.
How is a residential care facility licensed, and does the name change by state?
Yes, the name and the licensing agency both change by state, sometimes dramatically. What one state calls a "residential care facility," another calls an "assisted living residence," an "adult care home," a "personal care home," or a "community-based residential facility." The population served can also determine which agency licenses you: senior-focused facilities often fall under an aging or health department, while group homes for people with developmental disabilities or mental illness often fall under a separate disability services or behavioral health agency. This is the single most common mistake new operators make: assuming the rules, fees, and staffing ratios they read about from another state apply to theirs. They don't. Every state licensing agency publishes its own regulations, application forms, and inspection checklists, and those change over time. Before you spend money on a location, confirm the exact facility type name, fee schedule, and application steps with your state licensing agency directly. Zoning adds another layer. A location that's zoned for single-family residential use may or may not allow a licensed group home or small assisted living home, depending on local ordinance and how many unrelated residents the zoning code allows to live together. Check with your local planning or zoning office in addition to the state licensing agency.
How do I start a group home or residential care facility?
The rough sequence looks similar across most states, even though the specific forms and fees differ. First, decide which population you're licensing for (seniors, adults with IDD, mental health, or recovery), because that decision drives which state agency and rule set applies to everything else. Second, form your business entity and get an EIN. Third, find a location that meets both zoning requirements and the physical plant standards your license type requires (bedroom size, number of exits, sprinkler or fire alarm requirements, ADA access where applicable). Fourth, build your written policy and procedure manual, staffing plan, and emergency preparedness plan, since most states require these as part of the application packet, not as an afterthought. Fifth, complete required background checks and any state-mandated training or certification for the administrator and direct care staff. Sixth, submit the license application with the required fee and schedule the pre-licensure inspection, which usually covers fire and life safety as well as the health department's own checklist. Building that policy manual and staffing plan from scratch is where most first-time applicants lose weeks, mostly because they don't know what the state inspector expects to see. This is the part of the process our $299 State Group Home Licensing Kit is built for: state-specific policy templates and staffing plan documents so you're not drafting them cold. It won't get your application approved faster and it doesn't replace your state's own checklist, but it does save you from rebuilding documents that every applicant needs anyway. After licensure, expect ongoing annual or biennial re-inspections, incident reporting requirements, and (if you want Medicaid waiver revenue) a separate provider enrollment process with your state Medicaid agency.
What staffing and inspection requirements apply to residential care facilities?
Staffing ratios vary enormously by state and by facility size, and by whether residents need higher levels of assistance. Some states set a minimum number of direct care staff per resident count on each shift; others require a specific staff-to-resident ratio only during waking hours and a lower one overnight. Nearly every state requires the administrator or licensee to complete some form of state-approved training, and requires background checks (often through a state or FBI fingerprint system) for anyone with direct resident contact. Inspections typically happen at three points: before initial licensure, on a routine cycle after that (commonly annual, sometimes every two years), and in response to a complaint or reported incident. Inspectors generally check life safety items (fire extinguishers, exit signage, smoke detectors, evacuation drills), medication storage and administration records, staff training files, resident service plans, and general sanitation. A facility that fails a life safety item can face a correction deadline, a fine, or in serious cases a suspended admission hold until it's fixed. Documentation is where facilities most often get dinged, not because the care itself is bad, but because the paperwork proving the care happened wasn't kept the way the state requires. Build your recordkeeping system around what your state's inspection checklist actually asks for, not around a generic best-practices template.
What does a residential care facility cost, to run and to live in?
For residents and families, cost is one of the most concrete numbers available, and it varies a lot by care setting and region. Genworth's national Cost of Care Survey put the median monthly cost of an assisted living facility at $4,500 in 2021, compared to $7,908 for a semi-private nursing home room and $9,034 for a private nursing home room, nationally [3]. Home health aide services came in around $5,148 a month in that same survey. Those are national medians; costs in a specific metro area can run well above or below that, sometimes by thousands of dollars a month. For operators, startup costs depend heavily on whether you're buying or leasing a home, how many beds you're licensing, what physical plant upgrades the fire marshal requires, and your state's licensing fee schedule. There's no honest single number to give here, because a 4-bed group home in a converted house and a 60-bed purpose-built assisted living community are completely different capital projects. Get actual bids on any required build-out and get the exact fee schedule from your state licensing agency before you budget a project, rather than relying on a national average from a different kind of facility.
Which type of residential care facility fits which population?
| Population | Common facility type | Typical licensing agency focus | |
|---|---|---|---|
| Older adults needing help with daily living | Assisted living facility / residential care home | State aging or health department | |
| Adults with intellectual or developmental disabilities | Group home / supported living home | State developmental disabilities agency | |
| Adults with serious mental illness | Group home / residential treatment facility | State behavioral health or mental health agency | |
| Adults in substance use recovery | Recovery residence / sober living home | Varies; some states license, some rely on certification bodies aligned with SAMHSA guidance | The practical takeaway: don't pick your facility type name first and your population second. Pick the population you actually want to serve and are qualified to serve, then find the exact license category your state uses for that population. Two facilities that look identical from the street, a house with six bedrooms and a common kitchen, can be licensed under completely different statutes with completely different staffing and training requirements depending on who lives there. |
Frequently asked questions
What is assisted living?
Assisted living is a residential care model for adults who need help with daily activities like bathing, dressing, and medication management but don't need hospital-level nursing care. Residents typically have their own room, share common areas, get meals and housekeeping, and have staff available around the clock. It's licensed at the state level, and the exact name and rules vary by state.
What is an assisted living facility?
An assisted living facility is the licensed building or program delivering assisted living services: housing, meals, help with daily activities, and staff supervision. It's distinct from a nursing home because it's not built around skilled medical care. States use different names for this license type, so confirm the exact term with your state licensing agency.
What is a group home?
A group home is a small licensed residential setting, often a single-family house, serving a limited number of residents who share a specific need, commonly intellectual or developmental disabilities, mental illness, or substance use recovery. It's licensed separately from senior assisted living, usually by a state disability or behavioral health agency rather than an aging department.
What is the difference between assisted living and a nursing home?
Assisted living focuses on help with daily activities like bathing and medication reminders. A nursing home (skilled nursing facility) provides ongoing medical care and rehab from licensed nurses, often after a hospital stay. Medicare generally won't pay for assisted living room and board but does cover up to 100 days of skilled nursing facility care under specific conditions.
What does assisted living provide?
Assisted living typically provides a private or shared room, three daily meals, housekeeping and laundry, help with bathing, dressing, and mobility, medication management or reminders, social activities, and 24-hour on-site staff availability. It generally does not include skilled nursing, IV therapy, or two-person transfer care unless the facility holds a higher-tier license.
Does Medicare cover assisted living facilities?
No, not for room and board. Medicare's own guidance states it generally does not pay for long-term custodial care or housing at an assisted living facility. Medicare may still cover specific medical services a resident receives there, like doctor visits or physical therapy, but not the facility's monthly rate for housing and personal care.
How do I start a group home?
Pick the population you want to serve, since that determines which state agency licenses you. Then form your business entity, secure a location that meets zoning and physical plant rules, build your policy and staffing manuals, complete required background checks and training, and submit your license application along with the required inspections. Requirements and fees are entirely state-specific.
Does Medicaid cover residential care facilities or group homes?
Sometimes for services, rarely for room and board. States can use Medicaid Home and Community-Based Services waivers to pay for personal care and support services delivered in a residential setting, but federal Medicaid rules generally exclude paying rent and food costs directly. Waiver enrollment and covered services vary by state and by facility.
How much does assisted living cost per month?
Genworth's national Cost of Care Survey found a median assisted living cost of $4,500 a month in 2021, compared to $7,908 for a semi-private nursing home room. Costs vary a lot by state and metro area, sometimes by thousands of dollars, so a national median is a starting point, not a local estimate.
What's the difference between a group home and assisted living?
Assisted living is generally built for older adults needing help with daily activities. Group homes usually serve a different population, adults with developmental disabilities, mental illness, or substance use recovery needs, and are licensed by a different state agency with its own staffing, training, and physical plant rules.
Do all residential care facilities require a state license?
Yes, in every state, operating a facility that houses and cares for people who can't fully care for themselves requires a license from the relevant state agency. Operating unlicensed can bring fines, closure orders, and in some states criminal penalties. Confirm the exact license category and application steps with your state licensing agency before opening.
How long does it take to get a group home license?
There's no single national timeline; it depends on the state, the population served, and how complete your application and building are on first submission. Expect the process to include an application review, background checks, a pre-licensure inspection, and possibly a waiting period tied to your state's fiscal or administrative calendar. Confirm expected timelines directly with your state licensing agency.
What is assisted living vs nursing home in terms of medical care level?
Assisted living residents generally manage their own health with staff assistance for daily tasks and medication reminders. Nursing home residents typically need ongoing skilled nursing care, wound care, IV therapy, or rehab under licensed nurse supervision. That difference in medical need, more than building size, is what separates the two license categories.
Sources
- Medicare.gov, Long-term care coverage page: Medicare generally does not cover long-term custodial care or room and board at assisted living facilities
- Medicare.gov, Skilled nursing facility care coverage page: Medicare Part A covers up to 100 days of skilled nursing facility care per benefit period after a qualifying hospital stay
- Genworth Cost of Care Survey, 2021: National median monthly costs: $4,500 for assisted living, $7,908 for semi-private nursing home room, $9,034 for private nursing home room
- Medicaid.gov: Medicaid Home and Community-Based Services (HCBS) waivers can cover services in residential care and group home settings.
- Medicaid.gov: Medicaid covers nursing facility care, which differs from how Medicaid treats residential care/assisted living settings.
- Social Security Administration: Supplemental Security Income (SSI) payment standards affect what low-income residents can afford to pay for residential care or group home placement.
- Electronic Code of Federal Regulations (eCFR), 42 CFR Part 483: Federal regulations under 42 CFR Part 483 set requirements for long-term care facilities, relevant to staffing and inspection standards distinguishing nursing homes from residential care facilities.