Last updated 2026-07-25
TL;DR
Assisted living facilities are typically larger, license under state assisted living rules, and offer apartment-style units with communal dining and activities. Residential care homes (often called board and care or group homes) are usually houses licensed for a handful of residents, offering more home-like, lower-staffed settings. Both fall under state, not federal, licensing, and neither is covered by Medicare for room and board.
What is assisted living?
Assisted living is a state-licensed housing model for adults, mostly seniors, who need help with daily activities like bathing, dressing, medication reminders, and meals but don't need the skilled nursing level of care a nursing home provides. Most assisted living facilities look like apartment buildings or campuses with private or semi-private units, a dining hall, common areas, and organized activities. The federal government doesn't license or define assisted living. Each state writes its own rules, which is why the exact name varies: "assisted living facility" in Florida and Texas, "residential care facility for the elderly" in California, "assisted living residence" in New Jersey. The National Center for Health Statistics counted 28,900 residential care communities in the U.S. in 2020, with about 1.2 million licensed beds, under its umbrella term "residential care community" that includes assisted living [1]. Staffing in assisted living tends to include an administrator or executive director, resident care aides working shifts around the clock, and often a nurse on staff or on call, though the specific ratios and required credentials are set state by state. Check with your state licensing agency for the exact staffing formula, because it's rarely a flat number and often scales with resident acuity.
What is a group home?
A group home is a residential setting, usually a regular house in a regular neighborhood, licensed to provide housing and support to a small number of unrelated residents. Depending on the state and population served, you'll see group homes for adults with intellectual or developmental disabilities (IDD), for people in mental health recovery, for adults in substance use recovery, and for seniors (sometimes called adult foster care or adult family homes). The defining features of a group home versus assisted living are scale and setting. Group homes typically house somewhere between 2 and 15 residents (state caps vary widely), operate out of a converted single-family home, and run with a smaller, more informal staff presence, sometimes a live-in house manager instead of shift-based staff. Some states license these under a completely separate chapter from assisted living; others fold small assisted living homes and group homes into the same license category with a bed-count cutoff. Zoning is where group homes get complicated in a way assisted living campuses usually don't. Because group homes sit in residential neighborhoods, many operators rely on the Fair Housing Act's protections for group homes serving people with disabilities to argue against restrictive local zoning that would otherwise treat the home as a business use [2]. That legal backdrop doesn't erase local zoning review, permits, or fire code compliance, it just limits how far a city can go in blocking a home outright.
What is an assisted living facility (and how is it licensed)?
An assisted living facility is the licensed entity, the physical building plus the operating license issued by a state health or social services agency, that delivers assisted living services under that state's specific regulations. The license spells out resident capacity, physical plant requirements (room size, private bathroom rules, fire sprinklers), staffing minimums, admission and discharge criteria, and what level of care the home is allowed to provide. License categories often stack by acuity. A state might issue a base assisted living license plus an optional "limited nursing" or "extended congregate care" endorsement that allows the facility to keep residents who need more hands-on care, like two-person transfers or catheter care, without discharging them to a nursing home. Getting that add-on typically means proving higher staff ratios and often a licensed nurse presence. Application packets commonly require a floor plan reviewed against fire and building code, a criminal background check for the administrator and all direct-care staff, a policy and procedures manual covering medication management and emergency response, proof of financial solvency, and a facility inspection before the license is issued. If you're building that packet from scratch, a licensing guide for your specific state saves you from missing a required exhibit.
What is assisted living vs nursing home?
| Regulator | State agency | State + federal (42 CFR 483) |
|---|---|---|
| Nursing staff | Often not required 24/7 | RN required 8 hrs/day minimum [3] |
| Typical setting | Apartment-style, private unit | Hospital-style, semi-private common |
| Median annual cost (2023) | $70,800 [4] | $104,025 (semi-private) [4] |
| Medicare coverage | Not covered | Short-term rehab stays only [5] |
The core difference is the level of medical care. Assisted living is for people who need help with daily living tasks but are otherwise medically stable; nursing homes (also called skilled nursing facilities) are for people who need daily medical care, like wound care, IV therapy, or 24-hour licensed nursing supervision, that assisted living staff aren't licensed to provide. Nursing homes are federally regulated for any facility that accepts Medicare or Medicaid payment, under 42 CFR Part 483, which sets requirements for things like a registered nurse on duty at least 8 consecutive hours a day, 7 days a week, and a director of nursing employed full time [3]. Assisted living has no equivalent federal rule; it's licensed entirely at the state level, so requirements swing much harder from state to state. Cost also splits along this line. The median national cost of assisted living was $70,800 a year in 2023 according to Genworth's Cost of Care Survey, while a semi-private nursing home room ran a median $104,025 a year and a private room $116,800 [4]. Neither figure includes the add-on care fees many assisted living communities charge as a resident's needs increase, which can push the effective cost well above the base rate. | Feature | Assisted Living | Nursing Home |
What does assisted living provide?
Assisted living provides housing plus personal care services: help with bathing, dressing, grooming, toileting, mobility, and medication management, bundled with meals, housekeeping, laundry, transportation, and social or recreational activities. It does not typically provide skilled nursing care, rehabilitation therapy, or the level of medical monitoring a hospital or nursing home offers. Most states require a written service plan, sometimes called a negotiated service agreement, that's created after an initial assessment and updated periodically (often every 6 to 12 months, or after any significant change in condition, check your state's rule). That plan lists exactly which services the resident is getting and at what frequency, and it becomes the document surveyors check against during inspection. What assisted living does NOT provide, in nearly every state's regulatory framework, is a guarantee of aging in place through end of life. Facilities have discharge criteria, sometimes called "negotiated risk" limits, that require transferring a resident out once their needs exceed what the license allows, commonly triggered by needs like two-person transfers, ventilator dependence, or stage 3-4 pressure ulcers, though the exact trigger list is state specific.
What's the real difference between assisted living and residential care homes?
In plain terms: assisted living is usually the bigger, more institutional version, and a residential care home is usually the smaller, more house-like version of a similar service. But the terms overlap so much state to state that you have to check the actual regulatory definition where you plan to operate, more than the common-sense meaning of the words. Some states use "residential care home" as their official statutory name for what other states call assisted living, license the exact same size and service range, just with different vocabulary. Other states draw a hard capacity line, for example licensing anything under 6 residents as a "residential care home" or "adult family home" with lighter staffing rules, and anything above that threshold as a full assisted living facility with heavier requirements. A few states run entirely separate license tracks for board and care homes serving people with mental illness or IDD versus senior-focused assisted living. The practical differences an operator actually feels: smaller residential care homes usually have lower minimum staffing requirements, lower startup capital needs, less complex fire and sprinkler mandates (because of smaller occupancy load), and simpler zoning paths in some jurisdictions thanks to fair housing protections for group homes. Larger assisted living facilities usually have higher barriers to entry, but also access to more institutional funding sources, higher private-pay ceilings, and a bigger potential resident base per location. If you're comparing which model fits your goals, a comparison of assisted living facilities against smaller residential formats is worth reading before you commit to a building size or license type, because reversing that decision after you've signed a lease is expensive.
Does Medicare cover assisted living facilities?
No. Medicare does not pay for room and board at an assisted living facility, group home, or any long-term custodial care setting, under any of its parts (A, B, C, or D). Medicare.gov states plainly that "Medicare doesn't cover long-term care (also called custodial care)" when that's the primary need [5]. What Medicare will cover, if a resident of an assisted living facility qualifies medically, is short-term skilled nursing or rehab care (up to 100 days per benefit period, with a copay kicking in after day 20), home health visits, hospice care, and outpatient medical services delivered to the resident wherever they live, including doctor visits, physical therapy, and durable medical equipment [5]. None of that pays the facility's monthly rent or care fee. Medicaid is a different story, and where most of the public funding for this sector actually flows. Most states offer a Medicaid Home and Community-Based Services (HCBS) waiver under Section 1915(c) of the Social Security Act that can pay for personal care services inside an assisted living or residential care setting, though it generally still doesn't cover the room and board portion, which residents or their families pay separately [6]. Coverage, waiver names, and waitlists vary enormously by state, so confirm eligibility and available slots with your state Medicaid agency.
How to start a group home
Starting a group home means working through five parallel tracks: business formation, property and zoning, state licensing, staffing and policy, and funding, usually in that rough order but with a lot of overlap. First, form your business entity (LLC or corporation) and get an EIN from the IRS. Second, choose and secure a property, and confirm zoning before you sign a lease or close on a purchase, because a house that looks perfect can be unusable if local zoning treats group homes as a prohibited use, even though the Fair Housing Act limits how much a city can restrict homes for people with disabilities [2]. Third, apply for your state license through the agency that regulates your population (aging services for senior care homes, developmental disabilities agency for IDD group homes, behavioral health agency for mental health or recovery homes). That application typically requires a facility floor plan, fire marshal sign-off, background checks on the administrator and staff, a written policy and procedures manual, proof of liability insurance, and a pre-licensing inspection. Fourth, build your staffing plan and required policies before you apply, not after: medication management protocol, emergency and evacuation procedures, resident rights and grievance process, admission and discharge criteria, and incident reporting. Fifth, line up funding, private pay contracts, Medicaid waiver enrollment if you plan to accept it, or state supplement programs, and get your bank accounts and bookkeeping system set up before your first resident moves in, because most states require ongoing financial reporting as part of license renewal. Budget realistically for the license fee itself (commonly a few hundred to a few thousand dollars depending on state and bed count, confirm with your agency), plus the cost of any required renovations to meet fire and accessibility code, plus 60 to 120 days of runway for the licensing review and inspection cycle, which varies by state workload.
How do I start a group home if I've never run a facility before?
If you have no prior operating experience, spend real time before you file anything: read your state's actual licensing statute and administrative code section by section, more than the summary page, because the application will ask you to attest to specific rule numbers. Many states also require the administrator or licensee to complete a state-approved training course or exam (commonly 40 to 100 hours depending on state and license type) before the license is issued, so check that requirement early since it can add weeks to your timeline. Talk to your state licensing surveyor's office directly. Most states publish a pre-application consultation option or at minimum a phone line where you can ask questions about your specific property and population before you submit paperwork, and using it before you sink money into a lease is one of the cheapest risk-reduction moves available. Build your policy and procedures manual against your state's actual checklist, not a generic template. Surveyors inspect against the specific regulation citations in effect in your state, and a manual that reads well but doesn't map to those exact citations creates rework during your first survey. This is the exact gap the $299 State Group Home Licensing Kit is built to close: state-specific application checklists, policy manual templates mapped to citation numbers, and staffing plan worksheets, so you're not reconstructing the regulatory map from scratch.
How does zoning differ for residential care homes vs assisted living facilities?
Small residential care homes (typically 6 or fewer residents) usually qualify in many states for treatment as a single-family residential use, meaning they can locate in neighborhoods zoned for single-family homes without a special use permit, a protection that traces partly to Fair Housing Act reasonable-accommodation principles [2]. Larger assisted living facilities almost always require commercial or institutional zoning, a conditional use permit, or a planned development approval, because of their size, traffic, and parking impact. That size-based dividing line varies by state and even by city, so never assume your home clears zoning just because it's under a certain resident count. Pull your local zoning ordinance and confirm the definition of "family" and "group home" used in that specific code, since some municipalities define occupancy limits by number of unrelated adults rather than by license type, which can create a conflict with your state license capacity. Fire and life-safety code requirements often track a similar size threshold: homes under a certain occupant load may qualify for residential (IRC-based) fire code instead of the stricter institutional (IBC-based) code that applies to larger assisted living buildings, meaning sprinkler and fire alarm requirements can differ substantially by size, more than by license type. Confirm this with your state fire marshal's office and local building department before you commit to a property, because retrofitting sprinklers into an existing house after the fact is one of the most expensive surprises new operators run into.
Which license type should you choose: assisted living or a smaller residential care model?
There's no universal right answer here, it depends on your capital, your target population, and your local market. A smaller residential care home model generally means lower startup capital, simpler staffing, and (in many states) faster licensing timelines, but a lower ceiling on the number of residents you can serve per location and, in some states, restrictions on the acuity level you're allowed to accept. A full assisted living facility license generally means higher upfront capital (larger building, commercial zoning, higher fire code compliance costs), more complex staffing requirements including more likely a nurse on staff, but a larger addressable resident base per site and, in many states, a broader range of services you're licensed to provide including higher-acuity care add-ons. If you're still deciding, start by reading your target state's actual license categories side by side using something like a facility assisted living guide for that state, and map each category against your available capital, your target population's needs, and your local zoning reality before you sign a property lease. Reversing a license category decision after licensing is far more expensive than doing that comparison work up front.
Frequently asked questions
What is assisted living?
Assisted living is a state-licensed residential option for adults who need help with daily activities like bathing, dressing, and medication management but don't need skilled nursing care. It typically combines private or semi-private living units with meals, housekeeping, and organized activities. There's no federal assisted living license; every state writes its own rules and often its own name for the license.
What is a group home?
A group home is a licensed residential setting, usually a house, where a small number of unrelated residents live together with support staff. Group homes serve seniors, people with intellectual or developmental disabilities, people in mental health recovery, and people in substance use recovery. Capacity limits (commonly 2 to 15 residents) and staffing rules vary by state and by the population served.
What is an assisted living facility?
An assisted living facility is the licensed building and operation delivering assisted living services under state regulation. The license sets resident capacity, staffing minimums, physical plant standards (like private bathrooms and fire sprinklers), and admission/discharge criteria. It's issued by a state agency, commonly a department of health or social services, not by the federal government.
What is the difference between assisted living and a nursing home?
Assisted living serves people who need help with daily activities but are medically stable; nursing homes serve people who need daily skilled medical care like wound care or IV therapy. Nursing homes accepting Medicare or Medicaid must meet federal rules under 42 CFR Part 483, including a required registered nurse presence, while assisted living is regulated only at the state level.
What does assisted living provide?
Assisted living provides housing plus help with daily living tasks (bathing, dressing, mobility, medication reminders), meals, housekeeping, laundry, transportation, and activities. It does not provide skilled nursing, rehabilitation therapy, or hospital-level medical monitoring. Services are documented in a written service plan created after a resident assessment and updated periodically under state rules.
Does Medicare cover assisted living facilities?
No. Medicare does not cover room and board or custodial care at assisted living facilities under any part of the program. Medicare.gov confirms it excludes long-term custodial care. Medicare can still cover short-term skilled nursing stays, home health visits, and hospice delivered to a resident living in assisted living, but not the facility's monthly fee itself.
How do I start a group home?
Form a business entity, confirm zoning on your property before committing to it, apply for a state license through the agency covering your population (aging, developmental disabilities, or behavioral health), build required policies and a staffing plan, and line up funding sources including possible Medicaid waiver enrollment. Timelines and fees vary heavily by state; confirm specifics with your licensing agency.
Is a residential care home the same as assisted living?
Sometimes, yes: some states use "residential care home" as their official term for what other states call assisted living. In other states, residential care home refers specifically to smaller homes (often under 6 residents) with lighter staffing rules than a full assisted living facility license. Always check your specific state's statutory definitions rather than assuming based on the name.
How many residents can live in a group home?
It depends entirely on the state and license type. Many states cap small residential group homes at 6 residents for simplified zoning and staffing treatment, while others allow higher counts (8, 10, 15, or more) under a full assisted living or larger group home license. Confirm the exact capacity cap tied to your specific license category with your state agency.
Do group homes have to follow the Fair Housing Act?
Group homes serving people with disabilities are protected under the federal Fair Housing Act, which limits how much local zoning can restrict or exclude them from residential neighborhoods. This protection reduces, but doesn't eliminate, local zoning review, permitting, and fire code compliance requirements that still apply to the property.
What's the difference in cost between assisted living and a nursing home?
Genworth's 2023 Cost of Care Survey put median annual assisted living cost at $70,800, versus $104,025 for a semi-private nursing home room and $116,800 for a private nursing home room. Assisted living costs often rise further with add-on care fees as a resident's needs increase, so the base rate isn't always the final bill.
What license do I need to open a senior group home?
The specific license name varies by state (assisted living facility, residential care facility for the elderly, adult family home, adult foster care home are common terms), issued by your state's aging services or health department. You'll need to identify your state's exact category based on the number of residents and level of care you plan to provide, then apply through that agency directly.
Can a group home accept Medicaid?
Many states offer a Medicaid Home and Community-Based Services waiver under Section 1915(c) of the Social Security Act that can pay for personal care services delivered inside a group home or assisted living setting. Room and board is usually still paid separately by the resident. Waiver availability, names, and waitlists differ significantly by state; check with your state Medicaid agency.
Sources
- CDC National Center for Health Statistics, Long-Term Care Providers and Services Users in the United States, 2020: 28,900 residential care communities and about 1.2 million licensed beds nationally
- HUD, Fair Housing Act (42 U.S.C. 3601 et seq.) overview: Fair Housing Act protections limiting local zoning restrictions on group homes for people with disabilities
- eCFR, Title 42 Part 483 Subpart B, Requirements for Long Term Care Facilities: Federal requirement for a registered nurse on duty at least 8 consecutive hours a day in Medicare/Medicaid certified nursing homes
- Genworth, Cost of Care Survey 2023: Median annual cost of $70,800 for assisted living and $104,025/$116,800 for semi-private/private nursing home rooms in 2023
- Medicare.gov, Long-term care coverage: Medicare does not cover long-term custodial care such as room and board in assisted living
- Medicaid.gov, Home & Community-Based Services 1915(c): Section 1915(c) HCBS waivers can fund personal care services in assisted living or residential settings, generally excluding room and board