Last updated 2026-07-26
TL;DR
Assisted living facilities and residential care homes (group homes) both offer housing plus personal care, but differ in size, licensing category, and staffing rules. Medicare doesn't pay room and board for either. Evaluating a company or state program means checking its license status, staffing ratios, inspection history, and Medicaid waiver participation before you sign or apply.
What is assisted living?
Assisted living is a licensed residential option for people who need help with daily activities like bathing, dressing, medication reminders, and meals, but who don't need the round-the-clock skilled nursing care a nursing home provides. Residents typically live in private or semi-private apartments or rooms and pay for a housing plus services package. There's no single federal definition of assisted living. Each state writes its own licensing category, often called "assisted living facility," "residential care facility for the elderly," or "personal care home," and each state sets its own rules on room size, staffing, medication assistance, and admission and discharge criteria. The Centers for Medicare & Medicaid Services (CMS) confirms this patchwork directly: "States, not the federal government, are the primary regulators of assisted living" [1]. That state-by-state variation is exactly why evaluating any assisted living company (a multi-site operator, a franchise, or a single home) starts with checking the specific state license, not the marketing brochure. A facility can look identical on a website in two different states and operate under completely different staffing minimums, inspection cycles, and resident rights protections. If you're researching options for a family member, start with your state's assisted living facility licensing lookup, not a for-profit referral site, since referral sites are often paid by the facilities they list.
What is a group home?
A group home is a residential setting, usually a house in a regular neighborhood, where a small number of residents (commonly 4 to 10, though state caps vary) live together and receive supervision, personal care, or behavioral health support from paid staff. Group homes serve different populations depending on the state license type: people with intellectual or developmental disabilities (IDD), adults recovering from mental illness or substance use, or seniors who want a smaller, more home-like alternative to a large assisted living building. The term "group home" isn't a strict legal category everywhere. Some states use it interchangeably with "adult foster care home," "community residential facility," or "residential care home," and the licensing agency and rules depend on which population the home is certified to serve. A group home licensed for IDD services usually falls under a state's developmental disabilities division, while one serving seniors may fall under aging services or health department rules. Because group homes are smaller than most commercial assisted living buildings, they tend to have different staffing ratios and physical plant requirements. A house licensed for 6 residents doesn't need a commercial kitchen or an elevator the way a 60-bed assisted living building might, but it still has to meet fire safety, staffing, and background check rules set by the licensing agency.
What is an assisted living facility (and what makes one different from a group home)?
An assisted living facility is the licensed building or company that provides the assisted living service package: housing, meals, help with activities of daily living, medication management, and some level of health monitoring, for a monthly fee. Facilities range from small houses licensed for a handful of residents up to large campuses with 100+ units. The practical differences between an assisted living facility and a group home usually come down to scale and population focus, not the type of care itself. A large assisted living facility often has separate departments for dining, activities, and nursing oversight, plus a facility administrator who holds a state-specific license or certification. A group home is smaller, often staffed by direct support professionals rather than a full administrative team, and is more likely to specialize in one population (IDD, mental health, or recovery) rather than general senior care. When evaluating a company that operates both types, or that's expanding from one to the other, check whether it holds a separate license for each home and population served. States generally require a distinct license per location, per population category, even if one company owns dozens of houses. Operating without the matching license is a common cause of enforcement action, and it's worth pulling the specific state's assisted living facilities licensing statute before assuming a company's paperwork covers every address it runs.
What is assisted living facility care actually paying for?
An assisted living facility fee generally covers a private or shared room, meals, housekeeping, help with daily activities (bathing, dressing, toileting, mobility), medication reminders or administration depending on state rules, and some level of social or recreational programming. It does not typically include skilled nursing, physical therapy, or hospital-level medical care. The plain-English version from a federal source: the National Institute on Aging describes assisted living as designed for people "who need help with some daily activities... but do not need the level of care provided by a nursing home" [2]. That's the core distinction buyers and operators both need to keep straight, because it drives licensing category, staffing rules, and what insurance (if any) will pay. Costs vary enormously by state and region. Genworth's Cost of Care Survey, one of the most widely cited private-pay benchmarks in the industry, put the 2023 national median monthly cost of assisted living at $5,350. That figure is private-pay; it doesn't reflect what a Medicaid waiver program pays a provider, which is usually lower and set by each state's Medicaid agency.
What does assisted living provide, specifically?
Assisted living typically provides: a furnished or unfurnished living unit, three meals a day, laundry and housekeeping, 24-hour staff availability for emergencies, help with activities of daily living, medication management within state-allowed limits, and organized social activities. Many facilities also coordinate transportation to medical appointments and offer a range of care levels residents can move between as needs change. What assisted living does not reliably provide, unless a facility has a specific waiver or specialty license, is skilled nursing care, ventilator or feeding tube management, or intensive psychiatric treatment. States set explicit "negotiated risk" or exclusion criteria defining who can and can't be admitted or retained in assisted living based on acuity level; those criteria differ by state and are worth reading directly from your state licensing agency's admission and retention rules rather than trusting a facility's sales pitch. A quick gut check when evaluating any assisted living company: ask to see the specific state regulation on admission/retention criteria and staffing ratios, more than the facility's internal policy manual. The regulation is enforceable; the internal manual is a company's own choice and can be changed without notice.
What is the difference between assisted living and a nursing home?
| Level of medical care | Help with ADLs, medication reminders | 24/7 licensed nursing care | |
|---|---|---|---|
| Typical staff | Personal care aides, med techs | RNs, LPNs, CNAs under nursing supervision | |
| Regulator | State licensing agency (varies by state) | State health department + federal Medicare/Medicaid certification | |
| Medicare coverage | Generally not covered | Short-term rehab stays can be covered under specific conditions | |
| Medicaid coverage | Often via HCBS waiver (services only, not room/board) | Covered as a Medicaid benefit in all states | |
| Typical 2023 national median cost | $5,350/month (assisted living, private pay) | Higher; semi-private nursing home room median was $8,669/month in 2023 | Nursing homes must be certified to participate in Medicare and Medicaid, and CMS publishes their inspection results, staffing data, and quality ratings through the Care Compare tool [3]. Assisted living facilities are licensed at the state level and don't have a comparable federal certification or a single national inspection database, which is part of why evaluating an assisted living company takes more direct legwork with the state agency. |
The core difference is medical intensity. Assisted living is for people who need help with daily activities but not ongoing skilled nursing care. A nursing home (also called a skilled nursing facility) is for people who need daily medical care, rehabilitation, or supervision from licensed nurses, often after a hospital stay or due to a chronic condition requiring clinical management. | Feature | Assisted living | Nursing home (skilled nursing facility) |
Does Medicare cover assisted living facilities?
No. Medicare does not pay for the room and board or personal care costs of assisted living. Medicare.gov states plainly that Medicare "doesn't cover: Room and board when the primary reason you need help is for supervision, and non-skilled personal care" in long-term care settings including assisted living [4]. Medicare will cover specific medical services a resident receives while living in assisted living, such as doctor visits, physical therapy ordered by a doctor, or durable medical equipment, the same way it would for anyone living at home. It just won't pay the facility's monthly rent-and-care fee. Medicaid is a different story, and this is where evaluating funding sources gets more nuanced. Many states use Medicaid Home and Community-Based Services (HCBS) waivers, authorized under Section 1915(c) of the Social Security Act, to pay for personal care services delivered inside assisted living or residential care settings [5]. Medicaid.gov describes HCBS waivers as allowing states to pay for services "furnished to an individual... as an alternative to institutional care" [5]. Even under a waiver, Medicaid typically pays only for the care component, not room and board, which the resident or their family still has to cover through income, Supplemental Security Income, or a state supplemental payment program. Coverage details, waiver names, and income limits differ by state, so confirm the specifics with your state Medicaid agency and your state's aging or disability services office.
How to start a group home: the licensing sequence
Starting a group home means working through a state licensing process that generally follows the same skeleton everywhere, even though the specific forms, fees, and timelines vary widely by state and by population served (IDD, mental health, recovery, or senior residential care). The typical sequence looks like this: 1. Pick your population and license category. Decide whether you're licensing for IDD, mental health, substance use recovery, or senior adult foster care/residential care, since each has a different regulating division and rule set. Confirm the exact category name and statute with your state licensing agency. 2. Check zoning and property requirements before you sign a lease or mortgage. Many states require proof of occupancy compliance, local zoning approval, and a fire marshal inspection before they'll issue a license. See our zoning and property guidance for how to sequence this against your lease timeline. 3. Write your policy and procedure manual. States require documented policies covering medication management, emergency procedures, resident rights, grievance processes, staffing plans, and incident reporting. This is usually the single most time-consuming piece of a new application, and it's also the piece most often bounced back for revisions. 4. Complete staff background checks and training. Most states require criminal background checks, sometimes through a state or FBI fingerprint system, plus first aid/CPR and population-specific training (behavior support, medication administration, abuse reporting) before staff can work unsupervised. 5. Submit the license application with required fees. Fee amounts and required attachments (floor plans, insurance certificates, financial statements) vary by state; confirm exact figures with your licensing agency rather than relying on a third-party estimate. 6. Pass the pre-licensing inspection. A licensing surveyor or fire marshal visits the physical location to confirm it matches the application, meets life safety code requirements, and has the required emergency supplies, exits, and signage. 7. Maintain compliance after opening. Ongoing requirements include annual or biennial re-licensing, incident reporting, staffing ratio maintenance, and responding to complaint-driven or routine inspections. Building this paperwork from scratch, state by state, is genuinely the slowest part of opening a home. That's the specific gap GroupHomePath's $299 one-time State Group Home Licensing Kit is built to close: state-specific application checklists and policy manual templates so you're not starting from a blank page or guessing at a category that doesn't apply to your state. It doesn't replace your state agency's approval process, and it doesn't guarantee approval timelines, but it does save the weeks most operators spend hunting down which department even handles their category. You can start building your state-specific packet at /licensing-kit-builder.
How do I start a group home if I'm choosing between assisted living and a smaller residential model?
If you're deciding between opening a large assisted living facility and a smaller residential group home, the honest answer is: the smaller model is almost always the more realistic starting point for a first-time operator, and the licensing category should follow the population you actually want to serve, not the other way around. A large assisted living building requires more capital (commercial kitchen, elevator, sprinkler systems, larger staff roster) and a more complex license application, often including a certificate of need in states that regulate bed supply. A residential group home in a house, licensed for a handful of residents, has a lower barrier to entry but still requires a real license, real staffing plans, and real inspections. Neither path skips the state agency. Before you commit, compare your state's specific requirements for both categories side by side (bed caps, staffing ratios, fire code differences, and fee schedules) using your state licensing agency's published regulations, and read our related guides on assisted living at home and facility assisted living models to understand which fits your capital, your population focus, and your local zoning.
How do you evaluate an assisted living or residential care company before working with, buying from, or investing in it?
Evaluating a company in this space, as a family choosing a home, an operator considering a franchise, or an investor looking at an acquisition, comes down to five checks that matter more than any marketing material. First, verify the license is current and matches the address and population served. Every state licensing agency maintains a public lookup or a records request process; a company that can't produce a current license number for the exact physical address is a red flag, full stop. Second, pull the inspection and complaint history. Most states publish deficiency reports, survey results, or complaint investigation summaries online, sometimes through the same portal used for nursing home Care Compare data or a parallel state system for assisted living and residential care [3]. Repeated deficiencies in the same category (medication errors, staffing shortfalls, fire safety) across multiple inspection cycles tell you more than a single bad report. Third, check staffing ratios against the state minimum, not against the company's stated policy. States set floors; companies can staff above them, but many staff exactly at the floor or below it and rely on inconsistent enforcement to get away with it. Fourth, confirm the funding model. If Medicaid HCBS waiver payments are part of the business model, confirm the company is an approved Medicaid provider in that state, since being licensed and being an approved Medicaid provider are two separate approvals [5]. Fifth, read the resident agreement or admission contract for discharge and eviction language. State long-term care ombudsman programs, funded partly under the Older Americans Act, exist specifically to help residents and families navigate disputes with facilities, and a company's willingness to point you toward that resource (rather than discourage contact) says something real about how it operates.
What should be in a residential care home policy and procedure manual?
A compliant policy and procedure manual for a residential care home or group home typically covers: admission and discharge criteria, medication management and storage, emergency and disaster procedures, staffing plans and supervision ratios, resident rights and grievance procedures, abuse and neglect reporting protocols, infection control, dietary and nutrition plans, and incident/accident reporting timelines. Most state licensing agencies require these policies as attachments to the initial application, and inspectors will ask to see them again during routine and complaint-driven inspections, more than at the time of licensing. A manual that exists only on paper and isn't actually followed by staff is one of the most common findings in deficiency reports. If you're building this from scratch, our policies-and-procedures resources walk through each required section in more detail, and the state-specific templates in the GroupHomePath Licensing Kit are built around the categories most state applications actually ask for, so you're filling in state-specific facts rather than guessing at the required structure.
Frequently asked questions
What is assisted living?
Assisted living is a licensed residential setting where people who need help with daily activities like bathing, dressing, and medication reminders can live in their own room or apartment while receiving support and meals, without needing the round-the-clock skilled nursing care a nursing home provides. Each state sets its own licensing rules and terminology.
What is a group home?
A group home is a smaller residential setting, usually a house, where a limited number of residents (often 4 to 10, depending on the state) live together with paid staff support. Group homes commonly serve people with intellectual or developmental disabilities, mental health needs, substance use recovery needs, or seniors who want a smaller alternative to a large facility.
What is an assisted living facility?
An assisted living facility is the licensed building or company providing housing, meals, personal care assistance, and medication support to residents for a fee. Facilities range from small licensed homes to large campuses. States regulate them individually; there's no single federal definition or certification standard, per CMS [1].
What is assisted living vs nursing home?
Assisted living is for people who need help with daily activities but not ongoing medical care. A nursing home provides 24/7 skilled nursing care and is federally certified to participate in Medicare and Medicaid, with inspection data published through CMS Care Compare. Assisted living is licensed only at the state level, with no equivalent national database.
What does assisted living provide?
Assisted living typically provides a private or shared living unit, meals, housekeeping, help with activities of daily living, medication reminders (within state-allowed limits), 24-hour staff availability, and social or recreational programming. It generally does not provide skilled nursing, rehab therapy, or intensive psychiatric care unless the facility holds a specific additional license.
How to start a group home?
Starting a group home means picking a population category (IDD, mental health, recovery, or senior), confirming zoning and fire code compliance for your property, writing required policy and procedure manuals, completing staff background checks and training, submitting a license application with fees to your state agency, and passing a pre-licensing inspection before opening.
What is the difference between assisted living and nursing home?
The difference is medical intensity: assisted living residents need help with daily activities, while nursing home residents need ongoing skilled nursing or rehabilitative care from licensed nurses. Nursing homes are federally certified for Medicare/Medicaid and inspected under CMS standards; assisted living is licensed and inspected only at the state level.
Does Medicare cover assisted living facilities?
No. Medicare does not cover room and board or custodial personal care in assisted living. Medicare.gov confirms it doesn't cover long-term supervision or non-skilled personal care [5]. Medicare can still pay for covered medical services (doctor visits, therapy) a resident receives while living in assisted living, the same as anyone at home.
How do I start a group home in my state?
Start by identifying your state's specific licensing agency for the population you want to serve, since IDD, mental health, recovery, and senior residential care often fall under different divisions. Then work through zoning approval, policy manual development, staff background checks and training, the license application with fees, and a pre-licensing inspection, all confirmed directly with your state agency.
Does Medicaid pay for assisted living or group homes?
Many states use Medicaid Home and Community-Based Services (HCBS) waivers under Section 1915(c) of the Social Security Act to pay for personal care services in assisted living or residential settings, but this usually covers services only, not room and board. Coverage, waiver names, and eligibility differ by state; confirm with your state Medicaid agency [6].
What's the difference between a residential care home and an assisted living facility?
They often provide similar care, but residential care homes are typically smaller (a house serving a handful of residents) while assisted living facilities can be much larger commercial buildings with more staff and departments. Some states use the terms almost interchangeably; others license them as distinct categories with different rules.
How much does assisted living cost compared to a nursing home?
Genworth's 2023 Cost of Care Survey put the national median assisted living cost at $5,350 per month, compared to $8,669 per month for a semi-private nursing home room, reflecting the difference in medical intensity and staffing between the two settings [3]. Costs vary significantly by state and region.
What should I check before choosing an assisted living or group home company?
Verify the license is current for the exact address and population served, review the state's inspection and complaint history, confirm staffing meets the state minimum, check whether the company is an approved Medicaid provider if you plan to use a waiver, and read the admission/discharge terms in the resident contract before signing anything.
Sources
- National Institute on Aging, Residential Facilities, Assisted Living, and Nursing Homes: Assisted living is designed for people who need help with daily activities but not nursing-home-level care
- Genworth, Cost of Care Survey 2023: 2023 national median monthly cost of assisted living ($5,350) and semi-private nursing home room ($8,669)
- Medicare.gov, Long-Term Care: Medicare doesn't cover room and board or non-skilled personal care for supervision-based long-term stays
- Medicaid.gov, Home & Community-Based Services 1915(c): States use 1915(c) HCBS waivers to pay for services as an alternative to institutional care
- Administration for Community Living, Long-Term Care Ombudsman Program: The Long-Term Care Ombudsman Program, funded under the Older Americans Act, helps residents resolve disputes with facilities