Last updated 2026-07-25
TL;DR
Assisted living is a licensed residential setting offering housing, meals, and help with daily activities for people who don't need round-the-clock nursing care. A group home or residential care home is usually smaller, often serving seniors, IDD, or mental health populations. Medicare doesn't cover room and board at either; Medicaid may help through state waiver programs. Starting one requires state licensing, zoning approval, staffing plans, and fire/safety inspections.
What is assisted living?
Assisted living is a licensed housing option for adults, usually seniors, who need help with daily activities like bathing, dressing, medication reminders, or meal prep, but who don't need the level of medical care a nursing home provides. Residents typically live in private or semi-private rooms or apartments and pay for a bundle of housing, meals, and personal care services. The federal government does not license or define assisted living uniformly. Each state writes its own rules, so "assisted living" in Florida looks different from "assisted living" in Oregon on paper, even though the day-to-day experience is often similar. Some states use the term "assisted living facility," others use "residential care facility for the elderly," "personal care home," or "adult foster care." The National Center for Assisted Living notes that all 50 states regulate the industry but definitions and requirements vary widely [1]. Most assisted living communities are private-pay. Median national cost for assisted living was $70,800 per year ($5,900/month) in 2023, according to Genworth's Cost of Care Survey, though this varies heavily by state and region [2]. That figure is a useful benchmark for consumers, but as an operator you'll set rates based on your local market, staffing ratios, and services offered, and you should confirm regional pricing data before building a pro forma. If you're comparing state rules before you commit to a market, start with our assisted living overview, which breaks down how definitions and licensing categories differ by state.
What is a group home?
A group home is a residential setting where a small number of unrelated people, often 4 to 10 residents, live together and receive support services from staff. Group homes exist across several populations: seniors who need help with daily living, adults with intellectual or developmental disabilities (IDD), people in mental health recovery, and people recovering from substance use disorder. The defining feature of a group home isn't the population it serves, it's the model: a home-like setting (often literally a house in a residential neighborhood) with fewer residents than a large institutional facility, and staff who work in shifts to provide supervision, medication management, and daily living support. Group homes are licensed differently depending on which population they serve and which state you're in. A group home for adults with IDD might be licensed under a state's developmental disabilities agency, while a group home for seniors might fall under the same licensing category as assisted living or under a separate "adult foster care" or "adult family home" statute. Zoning is often a live issue for group homes because they sit in residential neighborhoods. The Fair Housing Act generally protects group homes for people with disabilities from being excluded through zoning that treats them differently than other residential uses, a point confirmed by HUD guidance on reasonable accommodation [3]. If you're planning a smaller-scale home rather than a large community, it helps to compare notes with our guide on assisted living at home, which covers the adult family home / adult foster care model many states use as an alternative licensing track.
What is an assisted living facility (and how is it licensed)?
An assisted living facility is the licensed building or program where assisted living services happen. Most states require a specific license to operate one, separate from a nursing home license, and the license spells out things like minimum staffing ratios, resident assessment requirements, medication management rules, and physical plant standards (room size, exits, fire suppression). Licensing generally runs through a state health department, department of social services, or a dedicated long-term care licensing division. The application typically asks for: a business entity and ownership disclosure, a staffing plan with required training hours, a policies and procedures manual covering resident rights and emergency preparedness, proof of liability insurance, and a fire marshal or life-safety inspection sign-off. Many states also require a background check and abuse registry clearance for owners, administrators, and direct care staff before a license is issued. Because these requirements differ enormously state to state, confirm the exact list, fees, and inspection cadence with your state licensing agency before you sign a lease or buy property. Our assisted living facility and assisted living facilities guides walk through what to expect from a typical state application packet.
What is assisted living vs. nursing home?
| Regulator | State licensing agency | State agency + federal CMS certification | |
|---|---|---|---|
| Staffing | Personal care aides, medication aides | RN required 8 hrs/day minimum, licensed nurse 24/7 [4] | |
| Medical care level | Help with ADLs, some medication management | Skilled nursing, rehab, wound care | |
| Typical setting | Apartment-style or shared rooms | Hospital-like rooms, medical equipment | |
| Medicare coverage | Not covered (room & board) | Covered for limited skilled stays post-hospitalization | |
| Medicaid coverage | Sometimes, via HCBS waiver, not room & board | Yes, in most states for eligible residents | The practical dividing line for families (and for you as an operator deciding what license to pursue) is medical acuity. If your target residents need daily wound care, IV therapy, or a ventilator, you're in nursing home territory, which is a different license, different staffing cost, and different federal certification process entirely. |
The short answer: assisted living is for people who need help with daily activities but not ongoing skilled nursing or medical treatment. A nursing home (also called a skilled nursing facility) is for people who need daily medical care, rehabilitation after a hospital stay, or 24-hour nursing supervision. Nursing homes are certified by CMS if they accept Medicare or Medicaid and must meet federal requirements under 42 CFR Part 483, including having a registered nurse on duty for at least 8 consecutive hours a day, 7 days a week, and a licensed nurse on duty 24 hours a day [4]. Assisted living facilities are not federally certified; they're licensed at the state level and generally don't have the same nursing staffing mandates. | Feature | Assisted living | Nursing home (skilled nursing) |
What does assisted living provide?
Assisted living typically bundles housing, meals, and a defined set of personal care and health-related services into one monthly or daily rate, sometimes with add-on tiers for higher acuity residents. Common services include: help with bathing, dressing, and toileting; medication administration or reminders; three meals a day plus snacks; housekeeping and laundry; 24-hour staff availability for emergencies; transportation to medical appointments; and social or recreational activities. Some states require a written resident service plan, updated periodically (often every 90 days to annually depending on the state), documenting what care each resident receives. What assisted living does not typically provide is ongoing skilled nursing care, physical therapy at a rehab level, or the kind of 24/7 RN coverage a nursing home has. If a resident's needs escalate past what the facility is licensed to provide, most states require the facility to either bring in additional licensed services, transfer the resident to a higher level of care, or in some cases obtain a special waiver. As an operator, your policies and procedures manual needs to spell out admission criteria, discharge criteria (what triggers a required transfer to skilled nursing), and how you document the line between "help with daily living" and "skilled care you're not licensed to provide." That distinction is one inspectors check closely, and it's also often the first thing a plaintiff's attorney looks at if there's a bad outcome.
How to start a group home
Starting a group home takes roughly six steps, in this rough order: pick your population and state, form your business entity, secure a compliant property, write your policies and staffing plan, apply for your state license, and pass your pre-opening inspections. 1. Choose your population and state. Licensing categories differ for senior/adult foster care, IDD group homes, mental health residential programs, and substance use recovery homes. Pick one; trying to serve multiple populations under one license usually complicates approval. 2. Form your business entity and get an EIN. Most states require the license applicant to be a registered business (LLC or corporation), not an individual. 3. Secure a property that meets zoning and life-safety rules. Group homes for people with disabilities are generally protected under the Fair Housing Act from zoning ordinances that single them out, but you still need to meet building and fire code for occupancy type and resident count [3]. Confirm local zoning classification with your city or county planning department before signing a lease. 4. Write your policies and procedures manual and staffing plan. This should cover admission/discharge criteria, medication management, emergency and evacuation procedures, resident rights, staff training hours, and background check protocols. Most states require this document as part of the license application, not as an afterthought. 5. Submit your license application to your state agency. This usually includes the business documents, floor plans, staffing plan, policy manual, proof of insurance, and an application fee. Fees and processing timelines vary by state, confirm current amounts and turnaround times with your state licensing agency. 6. Pass your fire marshal, health, and licensing inspections. These typically happen before the license is issued and then on a recurring basis (often annually) after you're operating. This is the point where a lot of first-time operators either overspend on a consultant or underprepare and get bounced back for missing documents. A $299 State Group Home Licensing Kit (available through our licensing kit builder) gives you the state-specific checklist and policy templates so you're not building the packet from scratch, but the state agency review and inspection process itself is something only your state can approve. No kit, consultant, or service can guarantee approval or speed up a state's timeline.
How do I start a group home for a specific population?
The core licensing steps are similar across populations, but the regulator and required program elements differ. For seniors and adult foster care, you'll typically apply through your state's department of health or aging services division, and staffing plans focus on ADL support, medication management, and fall prevention protocols. For IDD group homes, the license usually runs through the state's developmental disabilities or Medicaid HCBS agency, and you'll need person-centered service plans that align with CMS's home and community-based services rules [5]. For mental health or substance use recovery homes, licensure often runs through the state behavioral health or substance abuse services agency, and staff credentialing requirements (peer support certification, clinical supervision) tend to be more specific. One detail that trips people up: recovery residences (sober living homes) are sometimes not licensed at all in a given state, but instead certified by a state-recognized recovery residence association. Confirm whether your state requires licensure, certification, or neither for the specific population you plan to serve, because operating an unlicensed facility that should be licensed is a fast way to get shut down.
Does Medicare cover assisted living facilities?
No. Medicare does not cover the cost of room and board at an assisted living facility, and it does not cover long-term custodial care in general. Medicare.gov states plainly that Medicare "doesn't cover room and board when the primary reason you need help is with custodial care (help with activities of daily living, like bathing, dressing, using the bathroom, and eating)" [6]. Medicare Part A may cover a short-term stay in a skilled nursing facility after a qualifying hospital stay, but that's a nursing home benefit, not an assisted living benefit, and it's capped: Medicare covers up to 100 days per benefit period, with a daily coinsurance kicking in after day 20 ($209.50/day in 2025) [7]. It does not extend to ongoing assisted living residency. Medicare Advantage plans have gained some flexibility since 2019 to cover limited non-medical supplemental benefits (like some in-home support), but this is plan-specific and does not equate to covering assisted living rent. If you're advising families or building your own admissions materials, be precise here: Medicare pays for medical care, not for the housing and personal care model that defines assisted living.
Does Medicaid cover assisted living or group homes?
Sometimes, through state-specific waiver programs, but Medicaid generally still won't cover room and board. Medicaid can pay for the personal care, health-related services, and case management delivered inside an assisted living or group home setting through Home and Community-Based Services (HCBS) waivers authorized under Section 1915(c) of the Social Security Act . CMS describes HCBS waivers as allowing states to "furnish an array of home and community-based services that assist Medicaid beneficiaries to live in the community and avoid institutionalization" . In practice, this means a state Medicaid program might pay a per-diem rate for personal care services delivered in an assisted living residence, while the resident (or their family, or their Supplemental Security Income) covers the room and board portion separately. Coverage design differs enormously by state: some states have well-developed assisted living waiver programs, others have very limited slots and long waitlists, and a few states don't cover assisted living services through Medicaid at all. If your business model depends on Medicaid waiver residents, confirm with your state Medicaid agency what services are covered, what the reimbursement rate is, and whether there's a waitlist before you build your financial projections around it.
What's the difference between assisted living, a group home, and a nursing home in practice?
Assisted living and group homes both focus on helping with daily living activities in a residential setting; a nursing home focuses on medical and skilled nursing care. The practical differences show up in scale, staffing, and regulation. Assisted living facilities tend to be larger, apartment-style communities with dozens to hundreds of residents, more amenities (dining rooms, activity programs, sometimes memory care wings), and higher staff-to-resident ratios during the day than overnight. Group homes tend to be smaller, often literally a house, with a handful of residents and a more consistent, familiar staff presence. Nursing homes are licensed medical facilities with round-the-clock nursing staff, required under federal rule to have a registered nurse on site at least 8 hours a day and licensed nursing coverage 24 hours a day [4]. For an operator, the choice between these models isn't just philosophical, it changes your entire compliance burden. A nursing home license brings federal CMS certification requirements on top of state licensing if you want to accept Medicare or Medicaid patients. A group home or assisted living license is state-only, generally has lower minimum staffing requirements, and usually costs less to build out because you're not installing the same level of medical infrastructure. If you're deciding between models, our comparison guide on facility assisted living options walks through licensing tiers state by state.
What should I budget for staffing and inspections before I open?
Every state sets its own minimum staffing ratios, training hour requirements, and inspection cadence, so there's no single national number to budget against. What's consistent across states is the type of inspection you'll face: a life-safety/fire marshal review, a health and sanitation review, and a licensing compliance review of your policies, staff files, and resident records. Most states also require initial and ongoing staff training in areas like medication administration, first aid/CPR, abuse and neglect reporting, and infection control, often with a minimum number of hours per year (commonly in the 8 to 12 hour range per staff member annually, though this varies by state and role, confirm with your licensing agency). Background checks against your state's abuse and neglect registry, and sometimes an FBI fingerprint check, are standard for anyone with direct resident contact. Build your staffing plan and budget around the strictest interpretation of your state's rules, not the minimum. Inspectors have discretion, and a facility that's barely meeting the minimum ratio on paper is the first one cited when a staff member calls in sick. If you want a structured way to build this out state by state rather than piecing it together from scattered PDFs, that's exactly the gap our $299 State Group Home Licensing Kit is built to close, it's a reference tool for assembling your application packet, not a guarantee of approval.
Frequently asked questions
What is assisted living?
Assisted living is a licensed residential option for adults, usually seniors, who need help with daily activities like bathing, dressing, or medication reminders but don't need the ongoing skilled nursing care a nursing home provides. It bundles housing, meals, and personal care services, and every state regulates it under its own licensing category and rules.
What is a group home?
A group home is a smaller residential setting, often a single house, where a limited number of residents live together and receive staff support. Group homes serve seniors, adults with intellectual or developmental disabilities, people in mental health recovery, or people recovering from substance use, and licensing runs through different state agencies depending on the population.
What is an assisted living facility?
An assisted living facility is the licensed building or program where assisted living services are delivered. States require a specific license covering staffing plans, resident assessments, medication management rules, and physical plant standards, and this license is separate from a nursing home or skilled nursing facility license.
What is the difference between assisted living and a nursing home?
Assisted living helps with daily living activities; nursing homes provide skilled medical and nursing care. Nursing homes must have a registered nurse on duty at least 8 hours a day and licensed nursing coverage 24/7 under federal rule (42 CFR 483), while assisted living facilities are licensed at the state level with lower minimum nursing requirements.
What does assisted living provide?
Assisted living typically provides housing, three meals a day, help with bathing/dressing/toileting, medication administration or reminders, housekeeping, 24-hour staff availability for emergencies, transportation to appointments, and social activities. It does not typically include skilled nursing care, rehab-level therapy, or 24/7 RN coverage.
Does Medicare cover assisted living facilities?
No. Medicare does not pay for room and board or custodial care at assisted living facilities. Medicare.gov confirms Medicare doesn't cover room and board when the primary need is help with daily activities. Medicare may cover a short skilled nursing facility stay after a qualifying hospitalization, but that's a separate nursing home benefit, capped at 100 days per benefit period.
Does Medicaid pay for assisted living or group homes?
Sometimes, through state Home and Community-Based Services (HCBS) waivers authorized under Section 1915(c), Medicaid can cover personal care and health-related services delivered in assisted living or group home settings. Room and board usually isn't covered by Medicaid. Waiver availability, covered services, and waitlists vary significantly by state, so confirm with your state Medicaid agency.
How do I start a group home?
Choose your population and state, form a business entity, secure a property that meets zoning and fire code, write your policies and staffing plan, submit your license application to the relevant state agency, and pass your pre-opening fire, health, and licensing inspections. Requirements and fees vary by state; confirm specifics with your state licensing agency before committing to a property.
How much does it cost to open a group home?
There's no single national figure; startup costs depend on property, renovation needs, licensing fees, insurance, and staffing, all of which vary by state and population served. Rather than estimate a number that won't apply to your market, build your budget from your specific state's fee schedule, local real estate costs, and staffing plan requirements.
What license do I need to open an assisted living facility?
You need a state-issued assisted living or residential care license, typically from your state's department of health, social services, or a dedicated long-term care licensing division. The exact license name and category (assisted living facility, residential care home, adult family home) differs by state, so confirm the correct category with your state licensing agency.
Is a group home the same as a nursing home?
No. A group home focuses on daily living support and supervision in a home-like residential setting, while a nursing home is a licensed medical facility providing skilled nursing care with required registered nurse coverage. A group home license and a nursing home license come from different regulatory frameworks and carry very different staffing requirements.
Can Medicaid pay for a group home for adults with disabilities?
Often yes, through state HCBS waivers designed for people with intellectual or developmental disabilities, which can fund personal care, day programs, and case management delivered in a group home. Coverage details, provider enrollment steps, and reimbursement rates are set by each state's Medicaid agency, so confirm current rules directly with them.
What's the difference between assisted living and residential care homes?
In many states these terms describe overlapping or identical licensing categories; some states use "residential care home" for smaller facilities and "assisted living facility" for larger ones with more amenities. The terminology is state-specific, so the safest approach is to look up your exact state's licensing statute rather than assume based on the name alone.
Sources
- National Center for Assisted Living, Assisted Living State Regulatory Review: All 50 states regulate assisted living but definitions and requirements vary widely
- Genworth, Cost of Care Survey 2023: Median national assisted living cost was $70,800/year ($5,900/month) in 2023
- eCFR, 42 CFR 483.35 Nursing Services: 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
- CMS, Home and Community-Based Services: IDD group home services align with CMS home and community-based services program rules
- Medicare.gov, Long-Term Care Coverage: Medicare doesn't cover room and board when the primary need is custodial care help with daily activities
- Medicare.gov, Skilled Nursing Facility Care Costs: Medicare covers up to 100 days per benefit period in a skilled nursing facility, with daily coinsurance after day 20 ($209.50/day in 2025)
- CMS, 1915(c) Home and Community-Based Services Waivers: Section 1915(c) HCBS waivers let states furnish home and community-based services to help Medicaid beneficiaries avoid institutionalization