Last updated 2026-07-25
TL;DR
Assisted living facilities provide housing, meals, and help with daily activities (bathing, medication, dressing) for people who don't need round-the-clock nursing care. Medicare doesn't cover the room and board cost. Licensing runs through your state health or social services agency, not a federal body, so requirements vary widely by state.
What is assisted living?
Assisted living is a residential care model for adults, usually seniors, who need help with daily activities but don't require the level of medical care a nursing home provides. Residents typically have their own apartment or room, eat meals in a communal dining area, and get support with things like bathing, dressing, medication reminders, and mobility. The federal government doesn't define or regulate assisted living directly. The Centers for Medicare & Medicaid Services (CMS) notes that assisted living is licensed and regulated at the state level, which is why you'll see very different rules for staffing ratios, apartment size, and admission criteria depending on where you operate [1]. Some states call it "assisted living," others use terms like "residential care facility," "personal care home," or "community-based residential facility." The National Center for Assisted Living (part of the American Health Care Association) estimates there are roughly 28,900 to 31,400 licensed assisted living communities in the U.S., though the exact count shifts depending on how a state classifies smaller residential care homes [2]. That range itself tells you something: there's no single national registry, because there's no single national definition.
What is a group home?
A group home is a residential setting where a small number of unrelated people, often with intellectual/developmental disabilities, mental illness, or substance use recovery needs, live together with staff support. Group homes are usually smaller than assisted living facilities (commonly 4 to 10 residents) and are licensed under a different part of the state code, frequently the state's disability services or behavioral health agency rather than its aging or health department. The overlap with assisted living is real but limited. Both models provide supervised housing and daily living support. The difference is population and funding stream: group homes for IDD populations are frequently funded through Medicaid Home and Community-Based Services (HCBS) waivers under Section 1915(c) of the Social Security Act [3], while assisted living for seniors is more often private-pay or funded through a state's Medicaid state plan personal care option, if the state offers one. If you're deciding which license track fits your business plan, start by identifying who you actually want to serve. A facility built for seniors aging in place looks and operates differently than one built for adults with IDD or people in recovery. For a broader look at how these categories diverge, see assisted living and check your state's own definitions before you draft a business plan around a label.
What is an assisted living facility?
An assisted living facility (ALF) is the licensed building or program itself, the physical operation that holds the state license to provide housing plus personal care services to residents. It's a legal and regulatory term, more than a marketing one. When your state licensing agency uses the phrase "assisted living facility," they mean an entity that has gone through their application process, met physical plant standards, and agreed to inspections. Most states require an ALF to maintain a written policy manual covering medication management, emergency procedures, resident rights, admission and discharge criteria, and staff training. California, for example, regulates these under the Residential Care Facilities for the Elderly Act, administered by the Department of Social Services [4]. Florida licenses assisted living facilities under Chapter 429 of its statutes, through the Agency for Health Care Administration [5]. Every state has its own version of this, so the phrase "assisted living facility" always needs a state-specific answer, not a generic one. If you're comparing naming conventions across markets, our related pages on assisted living facility and assisted living facilities break down how states label these operations differently, which matters when you're filling out a licensing application that expects a specific legal term.
What is assisted living vs nursing home?
| Care level | Help with daily activities | 24-hour skilled nursing | |
|---|---|---|---|
| Regulator | State licensing agency | State + CMS (42 CFR 483) | |
| Medicare coverage | Not covered (room & board) | Limited, short-term skilled stays only [7] | |
| Typical staff | Caregivers, medication aides | RNs, LPNs, CNAs | |
| Setting | Apartment-style, communal dining | More clinical, hospital-adjacent feel | A resident who needs a feeding tube managed daily or IV antibiotics belongs in a nursing home. A resident who needs reminders to take pills and help getting dressed fits assisted living. The line blurs in practice, which is exactly why states set specific "negotiated risk" or discharge criteria rules for when a resident's needs exceed what assisted living can legally provide. |
The core difference is medical intensity. Assisted living provides help with daily living activities in a homelike, less clinical setting. Nursing homes (skilled nursing facilities) provide 24-hour licensed nursing care for people with significant medical needs, post-surgical recovery, or conditions requiring regular clinical monitoring. Nursing homes are certified under federal Medicare and Medicaid rules found in 42 CFR Part 483, which sets requirements for things like RN coverage, care planning, and resident assessments [6]. Assisted living facilities are not subject to this federal certification framework at all. That's a meaningful distinction for operators: if you're building an assisted living business, you're working entirely within your state's licensing code. If you want to accept Medicare or Medicaid reimbursement for skilled nursing services, you're in a completely different, federally regulated world. Here's a quick comparison: | Feature | Assisted Living | Nursing Home |
What does assisted living provide?
Assisted living typically provides a private or semi-private living unit, three meals a day, housekeeping, laundry, transportation to appointments, social and recreational activities, and personal care assistance with activities of daily living (ADLs) like bathing, dressing, toileting, and mobility. Many facilities also offer medication management or reminders, though the scope of what staff can legally administer varies enormously by state license type. What it does NOT typically provide is skilled nursing care. Staff in assisted living are usually certified nursing assistants, personal care aides, or medication technicians, not RNs on duty around the clock. If a resident needs wound care, injections, or complex medical monitoring, most states require either a higher license tier (sometimes called "assisted living with a nursing overlay" or a specific ALF license type for higher-acuity residents) or a transfer to a nursing home. Staffing ratios are one of the biggest variables here, and there's no federal minimum. States set their own ratios, often varying by shift (day vs. night) and by resident acuity. When you build your staffing plan for licensing, you'll need to pull your specific state's ratio requirement directly from its administrative code rather than assume a national standard exists, because it doesn't.
How to start a group home
Starting a group home involves five things happening roughly in parallel: choosing your population and license type, securing a compliant property, writing your policy and procedure manual, building your staffing plan, and submitting your application to the state licensing agency. First, decide who you're licensing to serve. Adult foster care, IDD group homes, mental health residential programs, substance use recovery homes, and senior residential assisted living (RAL) each fall under different statutes and sometimes different state departments entirely. Calling your local Department of Health or Department of Human Services (the name varies by state) early saves you from designing a program around the wrong license category. Second, confirm your property meets zoning and physical plant requirements. Many states require a minimum square footage per resident, a specific number of bathrooms, fire suppression systems, and an occupancy classification from your local fire marshal. Zoning fights are common; some municipalities try to treat group homes like commercial uses even though the federal Fair Housing Act protects group homes for people with disabilities from discriminatory zoning restrictions in most circumstances [8]. Third, write your policy and procedure manual. This covers admission and discharge criteria, medication management, emergency and disaster planning, resident rights, grievance procedures, staff training requirements, and incident reporting. Most state applications require this manual as a submitted document, more than an internal reference. Fourth, build a staffing plan that meets your state's ratio and qualification requirements, including background check and training documentation for every staff member. Fifth, submit your application with your licensing fee (this ranges widely, often somewhere between a few hundred dollars and a couple thousand, confirm with your state licensing agency for the exact figure), and prepare for a pre-licensing inspection. This is the point where a lot of first-time operators either overspend on consultants or underprepare and get bounced back for missing documents. A State Group Home Licensing Kit that assembles the state-specific policy templates, staffing plan structure, and application checklist can save a meaningful amount of back-and-forth, though it doesn't replace direct contact with your licensing agency or a local land-use attorney if zoning gets contested.
How do I start a group home? (application walkthrough)
Practically speaking, here's the order operators tend to follow once they've picked a population and state: 1. Request the specific licensing application packet from your state agency (don't rely on a general web search; call and ask for the current version, since forms get updated). 2. Complete a business entity filing (LLC or corporation) with your Secretary of State, since most licensing agencies require a legal entity, not an individual applicant. 3. Line up your property and get a fire marshal and health department walkthrough scheduled before you sign a long lease, if possible. It's far cheaper to find out a building fails occupancy rules before you're locked into rent. 4. Draft your policy manual, admission agreement, and staffing plan. 5. Complete required training (many states mandate an administrator certification course, sometimes 40 to 80 hours, before you can even apply). 6. Submit the application, pay the fee, and schedule your pre-opening inspection. 7. Correct any deficiencies cited in the inspection report and request re-inspection if needed. 8. Receive your license (often provisional for the first 6 to 12 months in many states, confirm with your state licensing agency) and open for admissions. Budget real time for this. Depending on the state and how quickly you can produce documentation, licensing can take anywhere from a couple months to close to a year, especially if your first inspection turns up corrections. Nobody should promise you a fast approval; the timeline depends entirely on your state's current backlog and your paperwork quality.
What is the difference between assisted living and nursing home? (deeper look at levels of care)
Beyond the basic definitions, the practical difference shows up in three places: licensing framework, staffing, and payment source. Licensing framework: assisted living is licensed purely at the state level with no federal certification requirement. Nursing homes must meet both state licensure and, if they want Medicare or Medicaid payment, federal Conditions of Participation under 42 CFR Part 483 [6], which includes required resident assessments (the Minimum Data Set) and regular federal/state survey inspections. Staffing: nursing homes must have a registered nurse on duty at least 8 consecutive hours a day, 7 days a week, and licensed nursing coverage 24 hours a day under federal rule, per CMS guidance on nursing home staffing requirements . Assisted living has no equivalent federal floor; staffing minimums come entirely from state code, and some states don't require any RN on staff at all, only that one be available on-call or through a contracted arrangement. Payment: Medicare pays for a limited nursing home stay following a qualifying hospital stay, specifically skilled nursing care, and only up to 100 days per benefit period with cost-sharing kicking in after day 20 [7]. Assisted living has no comparable Medicare benefit at all. This single fact drives a lot of family confusion and a lot of operator business-model decisions, which is why it gets its own section below.
Does Medicare cover assisted living facilities?
No. Medicare does not cover the cost of room and board at an assisted living facility. CMS is direct about this: Medicare Part A and Part B do not pay for long-term custodial care, including the personal care and housing costs of assisted living . This is one of the most common points of confusion for families and new operators alike, so it's worth stating plainly and repeating. Medicare may cover specific medical services delivered to a resident who happens to live in assisted living, like doctor visits, physical therapy, or durable medical equipment, the same way it would for someone living at home. But it does not pay the facility for housing, meals, or the personal care itself. Medicaid is a different story, though still state-dependent. Some states cover assisted living-type services (not room and board, which residents or their families still pay) through a Medicaid HCBS waiver or state plan personal care option. Medicaid.gov explains that HCBS waivers under Section 1915(c) let states pay for services "furnished to individuals eligible for Medicaid... as an alternative to institutional care" [3]. Whether your state's assisted living program can bill Medicaid at all, and for which specific services, depends entirely on your state's plan and waiver structure. Some states have zero Medicaid assisted living coverage; others cover services extensively but still require private payment for room and board. If your business model depends on Medicaid reimbursement, confirm the specific waiver or state plan option with your state Medicaid agency before you build a pro forma around it. Don't assume coverage exists just because a neighboring state offers it.
What does the licensing and inspection process actually look for?
State inspectors (sometimes called surveyors) typically check three broad categories during both the initial licensing visit and ongoing renewal inspections: physical plant safety, resident care documentation, and staff qualifications. Physical plant items commonly include working smoke detectors and fire extinguishers, accessible exits, adequate lighting, clean and sanitary kitchen and bathroom conditions, and posted emergency evacuation plans. Resident care documentation includes signed admission agreements, individual service plans, medication administration records, and incident reports. Staff files typically need to show background check clearance, completed orientation and ongoing training hours, and, in many states, TB testing or other health screenings. Inspections aren't a one-time event. Most states conduct annual or biennial renewal inspections plus unannounced visits triggered by complaints. Keeping your policy manual and your actual daily practice aligned matters more than having a beautifully written manual that nobody follows, because inspectors check both.
How much does it cost to open an assisted living facility or group home?
Costs vary too much by state and property type to give one number, but the major cost categories are consistent everywhere: licensing fees, property acquisition or lease-up, renovation to meet fire and accessibility code, staffing before your first resident arrives, insurance, and required training or certification courses for administrators. Licensing fees themselves are usually the smallest line item, often in the range of a few hundred to a couple thousand dollars depending on facility size and state, confirm with your state licensing agency for current figures. The much larger costs are typically property-related: sprinkler system installation, ADA-compliant bathroom modifications, and commercial kitchen upgrades can each run into tens of thousands of dollars depending on the building's starting condition. Because this article makes no earnings or income claims, and shouldn't, the honest answer for any prospective operator is to build a state-specific cost worksheet before signing a lease, not after. A generic multi-state average is close to meaningless when your specific state's square-footage and staffing rules drive the real number.
Which state agency actually issues the license?
It depends entirely on your state and your population type, and there's no substitute for confirming directly with your state's agency before you draft an application. In general, senior assisted living and residential care for the elderly fall under a state's Department of Health or Department of Social/Human Services. IDD group homes often fall under a separate developmental disabilities division. Mental health and substance use recovery homes frequently fall under a behavioral health authority. Florida licenses assisted living facilities through the Agency for Health Care Administration under Chapter 429 [5]. California licenses residential care facilities for the elderly through the Department of Social Services [4]. Every state organizes this differently, sometimes splitting authority between two or three agencies depending on facility size or resident acuity. Confirm with your state licensing agency which specific division handles your intended population before you spend money on property or staffing plans, since the wrong department can mean starting the application process over.
Frequently asked questions
What is assisted living?
Assisted living is a residential care option for adults, usually seniors, who need help with daily activities like bathing, dressing, and medication management but don't need 24-hour skilled nursing care. It's licensed at the state level, with no single federal definition or certification, so rules and terminology vary by state.
What is a group home?
A group home is a small residential setting, typically housing 4 to 10 residents, where people with intellectual/developmental disabilities, mental illness, or substance use recovery needs live together with staff support. It's licensed separately from assisted living, usually under a state's disability or behavioral health agency rather than its aging services department.
What is an assisted living facility?
An assisted living facility is the licensed operation, meaning the specific building and program that holds a state license to provide housing plus personal care services. It's a regulatory term defined by each state's own statute, such as Florida's Chapter 429 or California's Residential Care Facilities for the Elderly Act, not a single national standard.
What is assisted living vs nursing home?
Assisted living helps residents with daily activities in a homelike setting and is licensed only at the state level. Nursing homes provide 24-hour skilled nursing care and must meet federal Conditions of Participation under 42 CFR Part 483, including required RN coverage, in addition to state licensing.
What does assisted living provide?
Assisted living typically provides housing, meals, housekeeping, laundry, transportation, activities, and help with daily living tasks like bathing, dressing, and medication reminders. It generally does not provide skilled nursing services such as wound care or IV medication management, which require a nursing home or a higher-acuity license tier.
How do I start a group home?
Choose your population and license type, confirm zoning and property requirements, write a policy and procedure manual, build a compliant staffing plan, complete any required administrator training, and submit your application with fees to your state licensing agency, then prepare for a pre-licensing inspection before you can admit residents.
Does Medicare cover assisted living facilities?
No. Medicare does not pay for room, board, or personal care costs at assisted living facilities, per CMS guidance on long-term custodial care coverage. Medicare may still cover separate medical services, like doctor visits or therapy, provided to a resident who lives there, just not the facility costs themselves.
What is the difference between assisted living and nursing home care?
The core difference is medical intensity and regulation. Nursing homes provide 24-hour licensed nursing care and answer to federal Medicare/Medicaid certification rules. Assisted living provides help with daily living in a less clinical setting and answers only to state licensing rules, with no federal staffing floor.
Does Medicaid pay for assisted living?
It depends on the state. Some states cover certain assisted living services (not room and board) through a Medicaid HCBS waiver under Section 1915(c) or a state plan personal care option. Coverage, eligibility, and covered services vary significantly, so confirm directly with your state Medicaid agency.
How long does it take to get an assisted living or group home license?
Timelines vary by state and by how complete your application is, but the process commonly takes several months, and sometimes closer to a year if corrections are needed after inspection. There's no federal standard timeline, and no agency can honestly guarantee a fast approval.
What's the difference between assisted living and independent living?
Independent living is housing for seniors who don't need regular personal care help, often apartment-style with optional meals and activities. Assisted living adds licensed support for daily living activities like bathing, dressing, and medication management, and requires a state license that independent living communities generally don't need.
Can a group home accept Medicare or Medicaid residents?
Group homes typically don't bill Medicare, since Medicare doesn't cover custodial residential care. Many IDD group homes are funded through Medicaid Home and Community-Based Services waivers instead, which pay for specific services under a state's approved 1915(c) waiver, separate from room and board costs.
What staffing ratio does an assisted living facility need?
There's no federal staffing ratio for assisted living. Each state sets its own minimums, often varying by shift and resident acuity, in its administrative code. Confirm your specific state's current ratio requirement with your licensing agency before building a staffing plan for your application.
Sources
- Medicaid.gov, Home & Community Based Services: Assisted living is licensed and regulated at the state level, not federally certified
- National Center for Assisted Living, Assisted Living Facts and Figures: Estimated number of licensed assisted living communities in the U.S.
- Medicaid.gov, Home & Community Based Services 1915(c): HCBS waivers under Section 1915(c) fund services as an alternative to institutional care
- California Department of Social Services, Residential Care Facilities for the Elderly Act: California licenses assisted living type facilities under the RCFE Act via DSS
- Online Sunshine, Florida Statutes Chapter 429: Florida licenses assisted living facilities under Chapter 429 through AHCA
- eCFR, 42 CFR Part 483: Nursing homes must meet federal Conditions of Participation including required assessments and surveys
- Medicare.gov, Skilled Nursing Facility Care Coverage: Medicare covers skilled nursing facility stays only up to 100 days per benefit period with cost-sharing after day 20
- Medicare.gov, Long-Term Care Coverage: Medicare does not cover long-term custodial care including assisted living room and board