Last updated 2026-07-26
TL;DR
Assisted living and group homes are both licensed residential care, but assisted living is usually larger and senior-focused, while group homes are smaller and serve seniors, IDD, mental health, or recovery populations. Medicare does not pay for room and board in either; Medicaid may cover services through state waivers. Licensing runs through your state health or social services agency, not a federal one.
what is assisted living
Assisted living is a licensed residential care option for adults, usually seniors, who need help with daily activities like bathing, dressing, medication management, and meals but don't need the round-the-clock skilled nursing care a nursing home provides. Every state licenses assisted living separately, and the rules differ enough that a facility legal in Ohio might not meet Florida's staffing ratios or vice versa. The Centers for Medicare & Medicaid Services (CMS) describes assisted living as part of a broader category of home and community-based services meant to help people "live as independently as possible" rather than in an institutional setting [1]. States license these homes under names that vary wildly: "assisted living facility," "residential care facility," "personal care home," "adult foster care." The label matters less than the license type, because that license dictates staffing, admission criteria, and what level of care the home can legally provide. Most assisted living residents pay privately or through long-term care insurance. A shrinking number of states let Medicaid cover some services in assisted living through a Home and Community Based Services (HCBS) waiver under Section 1915(c) of the Social Security Act, but even then Medicaid typically pays only for the care, not the room and board [2].
what is a group home
A group home is a licensed residential setting, usually smaller than an assisted living facility, where a group of unrelated people live together and receive support based on a shared need: intellectual or developmental disability (IDD), mental illness, substance use recovery, or in some states, aging in place. Group homes typically house somewhere between 2 and 10 residents, though the exact cap is set by your state's licensing code and by local zoning. The legal foundation for group homes as a housing model in ordinary neighborhoods traces back to the Fair Housing Act's protections for people with disabilities and to Olmstead v. L.C., the 1999 Supreme Court decision holding that unnecessary institutionalization of people with disabilities is a form of discrimination under the Americans with Disabilities Act. That ruling pushed states hard toward community-based small group settings instead of large institutions, which is a big part of why group homes exist at the scale they do today. Operationally, a group home license usually sits under a state's department of health, department of social services, or a disability-specific agency (sometimes called the IDD or developmental disabilities agency). If you're comparing options, our guides on assisted living facilities and assisted living at home cover how smaller residential models differ from the larger campus-style facilities.
what is an assisted living facility
An assisted living facility is the licensed building and the legal entity operating it, more than the level of care. Licensing agencies define it by resident capacity, physical plant requirements (private or semi-private rooms, common areas, fire and life-safety code), and staffing minimums, not by what the marketing brochure calls itself. Most states set at least three thresholds an operator has to hit before they'll issue a license: a facility inspection against building and fire code, a criminal background check on the owner and administrator, and a staffing plan that names a qualified administrator (often requiring a specific certification or a state exam). Confirm the exact thresholds with your state licensing agency, because a facility with 6 beds may face a different inspection cycle than one with 60. Size matters a lot here. A facility with 100+ beds functions more like a hotel with a nursing station; a facility with 8 beds functions more like a large family home. Both can carry an "assisted living facility" license in the same state, just under different capacity tiers with different staff-to-resident ratios required.
what is assisted living facility (small vs large models)
People often ask this as a follow-up because the term gets used for both a 200-bed campus and an 8-bed converted house. Functionally, "assisted living facility" just means state-licensed housing plus personal care services for adults who need help with activities of daily living (ADLs): bathing, dressing, toileting, transferring, and eating. Smaller assisted living homes (sometimes licensed as "residential care homes" or "adult family homes" depending on the state) tend to have lower staff-to-resident ratios required by regulation but also lower fixed overhead, since you're not running an industrial kitchen or a full activities department. Larger facilities can spread fixed costs (nursing staff, dietary staff, activities coordinator) across more residents, but they also face heavier inspection scrutiny and more detailed physical plant code because of higher occupancy and fire-life-safety classification. If you're weighing which model fits your market and your capital, read through assisted living facility and facility assisted living for the licensing tier breakdowns state by state.
what is assisted living vs nursing home
| Regulator | State agency only | State + federal (CMS) |
|---|---|---|
| Typical resident need | Help with ADLs | Skilled medical/rehab care |
| Medicare coverage | Generally none | Up to 100 days per benefit period, conditions apply [4] |
| 24-hour licensed nurse | Not usually required | Required |
| Setting | Apartment-style or house-style | Clinical, hospital-adjacent |
The short version: assisted living is for people who need help with daily activities but not constant medical monitoring; a nursing home (skilled nursing facility) is for people who need daily medical or rehabilitative care from licensed nurses. Nursing homes are federally regulated under Medicare and Medicaid conditions of participation (42 CFR Part 483); assisted living facilities are not federally regulated at all, only by the state [3]. That federal/state split matters a lot for money. Because nursing homes participate in Medicare, short-term skilled nursing stays (after a qualifying hospital stay) can be covered for up to 100 days per benefit period under Medicare Part A, with a daily coinsurance kicking in after day 20 [4]. Assisted living has no equivalent Medicare pathway, period. Staffing is the other big divider. Nursing homes are required to have licensed nursing staff on site around the clock and must meet federal minimum staffing standards CMS finalized in 2024 (phased in through 2026 for most facilities, with rural exemptions) [5]. Assisted living staffing is set entirely by the state and varies from "awake staff person on site" to specific licensed-nurse-hour requirements depending on resident acuity. | Feature | Assisted living | Nursing home (SNF) |
what does assisted living provide
Assisted living provides help with activities of daily living, medication management or reminders, meals, housekeeping, laundry, social and recreational activities, and 24-hour supervision or awake staff. It does not typically provide skilled nursing care, IV therapy, or ventilator management, those fall under nursing home or hospice licensure. A useful way to think about it: assisted living covers the gap between full independence and full medical dependency. Most states require a written service plan or care plan for each resident, reassessed periodically (commonly every 6 to 12 months, or after a significant health change, though the interval is set by your state code, so confirm with your state licensing agency). States also cap what assisted living can handle. Many license categories explicitly bar residents who need continuous skilled nursing, have unmanaged behavioral health crises, or need two-person transfer assistance beyond a certain point, those residents are supposed to transition to a nursing home or a higher-acuity group home license. If your business model depends on aging residents in place as their needs increase, check your state's "negotiated risk" or "aging in place" provisions before you build a program around it.
how to start a group home
Starting a licensed group home generally means five things happen in roughly this order: pick your population and license type, form your business entity, secure a compliant property, build your staffing and policy manuals, and pass a pre-licensing inspection. Skipping the order (buying a house before confirming zoning, for example) is the single most common reason operators lose months and money. 1. Choose your population and license category. IDD, mental health, adult foster care, and senior residential care are usually licensed under different chapters of state code, sometimes by different agencies entirely. Your state's department of health or department of social services website will list the license types; call and ask which one fits your intended population before you draft anything else. 2. Form the business entity and get your EIN. Most states require the applicant to be a specific legal entity (LLC or corporation), not an individual, before they'll even accept a licensing application. 3. Secure a property that meets zoning and fire code for group care. This is where most first-time operators get tripped up. A single-family zoned lot might allow a small group home as a matter of right under fair housing law, but a larger facility may need a conditional use permit or a zoning variance. Check local zoning code and your state's fire marshal requirements for board and care occupancy before signing a lease. 4. Write your policy and procedures manual, staffing plan, and emergency/disaster plan. Licensing agencies want to see these in writing before they'll schedule an inspection: medication administration policy, resident rights policy, abuse/neglect reporting procedure, staff training plan, and a fire evacuation plan specific to your building. 5. Pass the pre-licensing inspection and background checks. This covers the physical building (exits, smoke detectors, sprinklers depending on occupancy classification), plus criminal background checks on owners, administrators, and often all direct care staff. Budget both time and money generously. Licensing timelines commonly run 3 to 9 months from application to opening depending on the state, the population served, and how fast your property passes inspection on the first try. If your manuals are already built and your staffing plan matches what your state inspector expects to see, you cut weeks off that timeline; if you're improvising the policy manual from scratch while the inspector is already scheduled, expect delays.
how do i start a group home (funding and startup costs)
Funding a group home startup usually comes from a mix of personal capital, a small business loan, and sometimes state provider grants tied to Medicaid HCBS waiver slots (more common in the IDD space than in senior or mental health group homes). There's no dedicated federal startup grant program for private group home operators; Medicaid dollars flow to reimburse services delivered to enrolled residents, not to fund construction or startup costs directly [2]. Realistic first-year costs include: property acquisition or lease-up, fire and life-safety retrofits (sprinklers, exit signage, fire doors, depending on occupancy classification), liability and property insurance specific to residential care, background check fees, staff training and certification costs, and the license application fee itself (states charge this per bed or as a flat fee, confirm the current amount with your state licensing agency since it changes and varies widely by state and facility size). A lot of first-time operators underbudget the policy and procedures manual step, treating it as paperwork rather than a real cost center. It isn't optional filler: inspectors check it against what they observe on-site, and a manual that doesn't match your actual medication administration practice, staffing schedule, or emergency plan is a common reason for a citation on the first inspection. Building your own compliant manual set from scratch, state by state, easily eats 40 to 80 hours of unpaid founder time; that's the gap our $299 State Group Home Licensing Kit is built to close, with state-specific policy templates, staffing plan frameworks, and application checklists so you're not reinventing the manual from a blank document.
what is the difference between assisted living and nursing home (cost and payer differences)
Beyond the care-level difference already covered, the cost and payer structure is where families and operators feel the gap most. Nursing home stays can be covered by Medicare Part A for a limited period after a qualifying hospital stay, and Medicaid covers long-term nursing home care for eligible low-income residents in every state, this is one of Medicaid's largest cost categories nationally. Assisted living has neither a broad Medicare pathway nor guaranteed Medicaid coverage; some states fund a limited number of assisted living Medicaid waiver slots, but availability and waitlists vary enormously by state, so this is not something to assume you'll have access to as an operator. CMS's own guidance is direct about the distinction in coverage: Medicare.gov states plainly that "Medicare doesn't cover room and board when the primary reason you need help is for non-skilled personal care" [6], which is exactly the kind of care assisted living and most group homes provide. That single sentence explains why so many families are surprised when they learn assisted living isn't covered the way a hospital stay or a short-term rehab stay is. For operators, this difference shapes your entire revenue model from day one: nursing homes can build a Medicaid/Medicare billing operation, assisted living and most group homes are largely private-pay or state-waiver-dependent, and your intake process needs to be honest with families about that up front.
does medicare cover assisted living facilities
No, Medicare does not cover the room and board costs of assisted living facilities. Medicare Part A and Part B can cover specific medical services a resident receives while living in assisted living, doctor visits, physical therapy, durable medical equipment, but not the monthly cost of the residence itself or personal care assistance [6]. This is one of the most common points of confusion for families and new operators alike. Medicare.gov's official coverage guidance separates "custodial care" (help with bathing, dressing, using the bathroom) from "skilled care," and states that Medicare generally doesn't pay for custodial care alone [6]. Since the bulk of what assisted living provides is custodial care, it falls outside Medicare's coverage almost entirely. Medicaid is a different story, but only partially. Through Section 1915(c) Home and Community-Based Services waivers, a majority of states now cover some assisted living services (not room and board) for Medicaid-eligible residents, but slots are limited, waitlists exist in many states, and eligibility rules (income and asset limits) are state-specific [2] [7]. If your business plan assumes Medicaid revenue, verify current waiver availability and reimbursement rates directly with your state Medicaid agency before you build pro formas around it.
what license type fits my group home population
| Seniors, ADL support | Assisted living / residential care | State health department | |
|---|---|---|---|
| Intellectual/developmental disability | IDD group home / ICF-IID | State disability services agency | |
| Mental health | Community residential mental health facility | State behavioral health agency | |
| Substance use recovery | Recovery residence / sober living | State behavioral health agency, sometimes voluntary certification only | |
| Adult foster care | Adult foster care home | State health or aging services agency | Sober living / recovery residences are worth a special note: in many states these are not licensed at all, but voluntarily certified through a state-recognized recovery residence association, which is a very different compliance structure than a licensed group home. Confirm with your state which model applies before assuming "licensing kit" advice built for IDD or senior group homes transfers directly. |
The population you serve determines your license category more than anything else, and mismatching the two is the fastest way to fail an inspection or get shut down after opening. Below is a general map of common categories; the actual agency names and chapter numbers differ by state, so treat this as a starting framework, not a citation. | Population | Common license category | Typical regulator |
what inspections and ongoing compliance should i expect
Once licensed, expect recurring inspections, typically annual, sometimes unannounced, covering fire and life safety, medication storage and administration records, staff training files, resident rights postings, and incident reports. States also investigate complaints on a rolling basis outside the normal inspection cycle, so a single complaint call can trigger a surprise visit. Common citation categories nationally include incomplete or outdated resident care plans, missing or expired staff background checks, medication administration records that don't match the medication cart, and fire drill documentation gaps. None of these are exotic; they're the boring paperwork items that get skipped when an operator is focused on resident care day-to-day and treats compliance paperwork as an afterthought. Build your compliance calendar before you open, not after your first citation. That means: a recurring schedule for staff training renewals, background check expirations, fire drills, and care plan reviews, tracked somewhere you actually check weekly. Our guides on senior assisted living facilities near me and assisted living walk through state-specific inspection cadences in more depth.
Frequently asked questions
What is assisted living?
Assisted living is licensed residential housing for adults, usually seniors, who need help with daily activities like bathing, dressing, and medication but don't need round-the-clock skilled nursing care. It's regulated entirely at the state level, not federally, so rules on staffing, admission, and services differ from state to state.
What is a group home?
A group home is a small licensed residential setting where unrelated people with a shared support need (IDD, mental health, recovery, or sometimes seniors) live together with staff support. Group homes typically house 2 to 10 residents and are licensed under a state health, social services, or disability agency depending on the population served.
What is an assisted living facility?
An assisted living facility is the licensed building and operating entity that provides housing plus personal care services (help with bathing, dressing, medication) for adults who don't need full skilled nursing care. States license these under varying names, and requirements for staffing and physical plant depend on the facility's resident capacity.
What is the difference between assisted living and a nursing home?
Assisted living helps with daily activities but doesn't provide constant medical care; nursing homes provide skilled nursing and medical care around the clock and are federally regulated under Medicare/Medicaid rules (42 CFR Part 483). Medicare can cover up to 100 days of a qualifying nursing home stay per benefit period; it generally doesn't cover assisted living room and board at all.
Does Medicare cover assisted living facilities?
No. Medicare.gov states Medicare doesn't cover room and board when the main need is non-skilled personal care, which is most of what assisted living provides. Medicare may cover specific medical services (doctor visits, therapy) delivered while a resident lives in assisted living, but not the facility cost itself.
Does Medicaid pay for assisted living or group homes?
Sometimes, through state Section 1915(c) Home and Community-Based Services waivers, which can cover some assisted living or group home services for Medicaid-eligible residents. Room and board is usually excluded, and waiver slots are limited with waitlists in many states, so check current availability with your state Medicaid agency.
How do I start a group home?
Choose your population and license category, form a business entity, secure a property that passes zoning and fire code for residential care, write your policy manuals and staffing plan, then pass your state's pre-licensing inspection and background checks. Timelines commonly run 3 to 9 months depending on the state and population served.
How much does it cost to start a licensed group home?
Costs vary hugely by state, population, and property, covering the license application fee, property acquisition or lease, fire/life-safety upgrades, insurance, staff training, and background checks. There's no single national number; confirm current fee schedules with your state licensing agency before building a budget.
What does assisted living provide that a group home doesn't, or vice versa?
Both provide housing, supervision, and help with daily activities; the real difference is population focus and scale. Assisted living skews toward larger, senior-focused facilities with amenity-style common areas, while group homes are smaller and often organized around a specific population like IDD, mental health, or recovery.
Who regulates assisted living facilities and group homes?
State agencies regulate both, most commonly a department of health, department of social services, or a disability-specific agency, not a federal one. There is no single federal licensing standard for assisted living or group homes the way there is for Medicare-certified nursing homes under 42 CFR Part 483.
Can a group home operate without a state license?
Generally no, if it provides personal care or supervision to unrelated adults for compensation, it needs a state license under some category. The exception is certain recovery residences (sober living homes), which in many states use voluntary certification through a recognized recovery housing association instead of formal licensure; confirm which model applies in your state.
What's the biggest reason group home licensing applications get delayed?
Zoning and property issues are the most common delay, followed by incomplete policy and procedures manuals that don't match the state's expected format. Building your manuals and confirming zoning before signing a lease or purchase agreement avoids the most expensive and time-consuming mistakes.
Sources
- Medicaid.gov, Home & Community Based Services: HCBS programs are designed to help people live as independently as possible rather than in institutional settings
- Medicaid.gov, Home & Community-Based Services 1915(c): Section 1915(c) waivers allow states to cover home and community-based services, sometimes including assisted living services, for Medicaid-eligible individuals
- eCFR, 42 CFR Part 483: Nursing homes are federally regulated under Medicare and Medicaid conditions of participation; assisted living facilities have no equivalent federal regulation
- Medicare.gov, Skilled Nursing Facility Care Coverage: Medicare Part A can cover up to 100 days of skilled nursing facility care per benefit period, with coinsurance after day 20, after a qualifying hospital stay
- CMS, Minimum Staffing Standards for Long-Term Care Facilities Final Rule: CMS finalized minimum nurse staffing standards for nursing homes in 2024, phased in through 2026 with rural exemptions
- Medicare.gov, Long-Term Care Coverage: Medicare doesn't cover room and board when the primary need is non-skilled personal care, which excludes most assisted living costs
- Medicaid.gov, Assisted Living and Medicaid: State Medicaid programs vary in whether and how they cover assisted living services, with eligibility and waitlists differing by state