Last updated 2026-07-26
TL;DR
Assisted living facilities and residential care homes both provide housing, meals, and help with daily activities without skilled nursing. The main differences are size (residential care homes serve fewer residents, often under 10, in a house setting) and licensing category. Neither is covered by Medicare for room and board; Medicaid may help through state waiver programs.
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 meals but don't need round-the-clock skilled nursing care. Most assisted living facilities (ALFs) look like apartment buildings or campuses with private or semi-private units, a dining hall, common areas, and staff on site. The federal government doesn't regulate assisted living directly. Each state sets its own licensing category, rules, staffing ratios, and inspection schedule. That's why the same building type might be called an "assisted living facility" in Florida, a "residential care facility for the elderly" in California, or an "assisted living residence" in New York. The Centers for Medicare & Medicaid Services (CMS) confirms there's no single federal assisted living license: states run their own oversight programs [1]. Assisted living usually costs more than a residential care home because of scale, amenities, and staffing. The median national cost for assisted living was $70,800 per year in 2023, according to Genworth's Cost of Care Survey, which is still the most widely cited industry benchmark for long-term care pricing [2].
What is a group home?
A group home is a licensed residence, usually a single-family house or converted small building, where a small number of unrelated people live together and receive support based on shared needs. Group homes serve seniors who need help with daily living, adults with intellectual or developmental disabilities (IDD), people in mental health recovery, and those transitioning out of addiction treatment. The defining feature isn't the population served, it's the scale and setting. Group homes typically house somewhere between 2 and 15 residents (state caps vary widely), operate out of a residential-style building, and rely on direct care staff rather than large clinical teams. Zoning treats them differently too. Many states require group homes serving people with disabilities to be treated like any other single-family residence under the Fair Housing Act, which prohibits municipalities from using zoning to exclude them [3]. For operators comparing housing types before choosing a model, our guide on assisted living breaks down the licensing tiers most states use to separate small group homes from larger ALFs.
What is an assisted living facility?
An assisted living facility (ALF) is the licensed business entity that operates an assisted living residence. It holds the state license, employs the administrator and care staff, and is the entity inspectors cite if something's out of compliance. The physical building and the ALF license are connected but not identical; a single license can sometimes cover multiple buildings on a campus, depending on the state. ALFs generally must maintain a written policy and procedure manual, a staffing plan that meets minimum ratios, a life safety/fire plan, and a resident agreement that spells out services and fees. States like Florida require ALFs to maintain specific staffing based on resident count and acuity, verified during unannounced inspections [4]. If you're building out your own facility's documentation, the assisted living facility guide walks through what a licensing agency actually wants to see in that manual before your first survey.
What is assisted living facility care actually like day to day?
Assisted living facility care centers on daily living support, not medical treatment. Staff help residents get out of bed, get dressed, take showers, get to meals, and take medications on schedule. Nurses may be on staff or on call depending on state licensing tier, but assisted living is not equipped to manage complex medical conditions, ventilators, feeding tubes, or IV therapy in most states. Meals are typically served in a communal dining room three times a day, with snacks available between meals. Housekeeping, laundry, and transportation to appointments are usually included in the base rate or offered as an add-on. Activities programming (games, outings, religious services, exercise classes) is a selling point most ALFs advertise heavily, and state licensing rules often require a minimum amount of structured activity time per week. States set specific limits on what assisted living can and cannot do. Some cap the level of care an ALF resident can require before they must transfer to a nursing home, often tied to whether the person needs hands-on assistance with two or more activities of daily living versus needing skilled nursing intervention.
What does assisted living provide, specifically?
| Meals (3/day + snacks) | Yes | - |
|---|---|---|
| ADL assistance (bathing, dressing) | Yes | - |
| Medication reminders | Yes | - |
| Skilled nursing (IV, wound care) | No | Extra, or must transfer out |
| Memory care programming | Varies by license tier | Separate license/wing in many states |
| Physical/occupational therapy | No | Billed through outside provider or Medicare Part B |
| Transportation to appointments | Often included | Sometimes capped at X trips/month |
Assisted living provides a defined package of non-medical services, and the exact list is usually spelled out in state regulation, not left to the facility's discretion. Core services almost always include: three meals a day, help with activities of daily living (bathing, dressing, toileting, transferring, eating), medication management or reminders, 24-hour staff availability, housekeeping, laundry, and some level of social or recreational programming. What's often NOT included, and billed separately or simply unavailable: skilled nursing care, physical therapy, wound care beyond basic first aid, memory care for advanced dementia (many states require a separate license tier for this), and hospice-level care (though hospice can often be brought in as an outside service). Here's a simple side-by-side of what a typical resident agreement covers versus what usually costs extra or isn't offered at all. | Service | Usually included | Usually extra or unavailable |
What is the difference between assisted living and a nursing home?
The core difference is medical intensity. Nursing homes (also called skilled nursing facilities, or SNFs) provide 24-hour skilled nursing care, physician oversight, and rehabilitation services for people recovering from surgery, managing complex chronic illness, or needing hands-on nursing intervention. Assisted living provides help with daily living for people who are largely independent but need support and supervision. CMS requires nursing homes to have a registered nurse on duty at least eight consecutive hours a day, seven days a week, and a licensed nurse (RN or LPN) on duty 24 hours a day, under federal nursing home requirements tied to Medicare and Medicaid certification [5]. Assisted living has no equivalent federal staffing mandate; staffing minimums come entirely from state law and vary a great deal. Cost reflects that difference in intensity. The Genworth 2023 survey put the median annual cost of a semi-private nursing home room at $104,025, compared to $70,800 for assisted living [2]. Medicare's coverage rules differ sharply too, which trips up a lot of families: Medicare pays for short-term skilled nursing stays after a qualifying hospital stay, but does not pay for long-term custodial care in either setting [6].
Does Medicare cover assisted living facilities?
No. Medicare does not cover the cost of room, board, or personal care in an assisted living facility. Medicare.gov states plainly that Medicare "doesn't cover ... long-term care (also called custodial care)" including help with daily activities like bathing and dressing when that's the only care needed [6]. What Medicare will cover, regardless of where someone lives, is medically necessary services: doctor visits, physical therapy, durable medical equipment, and short-term skilled nursing care after a qualifying 3-day inpatient hospital stay (though the 3-day rule has exceptions under some Medicare Advantage plans). None of that pays the facility's monthly rent or care fee. Medicaid is a different story, and it's the program most families actually rely on for long-term help. Medicaid does not pay for room and board in assisted living directly in most states, but many states run Home and Community-Based Services (HCBS) waivers under Section 1915(c) of the Social Security Act that cover personal care services, case management, and other supports for people living in assisted living or residential care settings [7]. Coverage, waiting lists, and eligibility income limits vary enormously by state, so confirm current waiver availability with your state Medicaid agency.
How do I start a group home?
Starting a group home means working through five stages that every state requires in some form: entity formation, licensure application, staffing and policy documentation, facility/zoning approval, and a pre-licensing inspection. The order and paperwork names differ state to state, but the sequence is fairly consistent nationally. First, decide your population and license category. A group home for adults with IDD is licensed under a different chapter than one for seniors needing personal care, or one for mental health recovery. Check with your state's Medicaid or health and human services agency to confirm which license type matches the population you intend to serve, because applying under the wrong category wastes months. Second, form your business entity and get an EIN, then start the zoning and property side early. Many jurisdictions require a certificate of occupancy or a specific use permit before licensing will even review your application, and this step alone can take longer than the license review itself. Our zoning guidance (browse by state) covers how single-family zoning exemptions typically apply to small group homes under fair housing law. Third, build your policy and procedure manual: admission/discharge criteria, medication management protocol, emergency and fire evacuation plan, staff training curriculum, resident rights disclosure, and grievance procedure. Licensing agencies review this document line by line, and an incomplete manual is one of the most common reasons applications get sent back for revision. Fourth, hire and document staffing before you apply. Most states require you to submit a staffing plan showing coverage ratios by shift, along with background check clearances (often through a state criminal history repository and the federal FBI fingerprint system for certain populations) before your license is issued. Fifth, pass the pre-licensing inspection. An inspector will walk the physical building checking fire safety (smoke detectors, sprinklers, egress routes), sanitation, resident living space square footage per person, and posted emergency procedures. Only after this inspection does the state typically issue the initial license, and it's usually valid for one to two years before renewal inspection is required.
How do I start a group home if I've never run a business before?
You don't need a healthcare background to open a group home, but you do need to prove operational competence to your state licensing agency, and that's the part most first-time operators underestimate. Many states require an administrator or program director to hold a specific credential (a state-issued Residential Care Administrator certificate, a background in social work, or completed hours of state-approved training) before the license can be issued. Budget realistically for startup costs beyond the license fee itself. Property acquisition or lease-hold improvements to meet fire code, liability insurance, staff wages before you have residents generating income, background check fees per employee, and the licensing application fee itself all add up fast, and amounts vary by state and population served, so confirm the current fee schedule with your state licensing agency. A lot of first-time applicants get tripped up submitting the license application before the policy manual, staffing plan, and facility inspection pieces are actually ready to move together. Building all four in parallel, rather than sequentially, tends to shave real time off the process. This is exactly the gap our $299 State Group Home Licensing Kit is built to close: state-specific application checklists, policy manual templates, and staffing plan templates you can adapt rather than write from scratch.
How does licensing differ between assisted living facilities and residential care homes?
The licensing category usually depends on resident capacity, not the services provided. Many states use a tiered system: a small residential care home (often capped somewhere between 6 and 15 residents, depending on the state) falls under a separate, generally less complex regulatory chapter than a large assisted living facility housing 50, 100, or more residents. Smaller homes usually face lighter staffing documentation requirements and simpler physical plant rules (a converted single-family house can often qualify), while large ALFs must meet commercial building code, ADA accessibility standards for common areas, and more detailed fire suppression requirements (sprinkler systems are commonly mandated above a certain resident threshold). Inspection frequency also tends to scale with size and risk level, not name. A facility serving residents with heavier care needs, regardless of whether it's called a "residential care home" or an "assisted living facility," usually gets inspected more often. Confirm your state's specific capacity thresholds and inspection schedule directly with your licensing agency before assuming either label tells you the full story; our assisted living facilities index links out to state-specific rule pages.
Which model costs less to start, assisted living or a residential care home?
Residential care homes generally cost less to start because the physical footprint is smaller and often uses an existing single-family house rather than new commercial construction. A 6- to 10-bed home in an existing residential structure typically needs fire and life-safety retrofits (sprinklers if required, egress widening, smoke/CO detection) rather than a ground-up commercial build. A large assisted living facility, by contrast, usually requires new or heavily renovated commercial construction meeting full ADA and commercial fire code, a commercial kitchen, and enough units to make the operating model work at scale. That's a materially larger capital project before a single resident moves in. Neither path is cheap, and neither guarantees profitability; construction costs, insurance premiums, staffing wages, and licensing fees all vary heavily by state and local market, so treat any specific dollar figure you see online with caution unless it's sourced to your own local contractors, insurers, and state fee schedule.
Frequently asked questions
What is assisted living in simple terms?
Assisted living is licensed housing for adults who need help with daily activities like bathing, dressing, or medication reminders, but don't need 24-hour skilled nursing care. It typically includes meals, housekeeping, and staff support in an apartment-style or house setting, licensed and regulated entirely at the state level rather than federally.
What is a group home in plain terms?
A group home is a small licensed residence, often a house, where a limited number of unrelated residents live together and receive support based on shared needs, whether that's seniors, adults with disabilities, or people in mental health or recovery programs. The small scale and residential setting are what separate it from a larger institutional facility.
What is an assisted living facility?
An assisted living facility (ALF) is the licensed business entity operating an assisted living residence. It holds the state license, employs staff, and must maintain policy manuals, staffing plans, and resident agreements that meet the state's specific regulatory requirements for that license category.
What is the difference between assisted living and a nursing home?
Nursing homes provide 24-hour skilled nursing care and are federally required to have a licensed nurse on duty around the clock and an RN for at least 8 hours daily, per CMS rules. Assisted living provides non-medical help with daily living and has no equivalent federal staffing mandate; requirements come from state law alone.
Does Medicare cover assisted living facilities?
No. Medicare.gov states Medicare doesn't cover long-term custodial care, which includes assisted living room, board, and personal care assistance. Medicare will pay for medically necessary services like doctor visits or short-term skilled nursing after a qualifying hospital stay, regardless of where the person lives, but not the facility's monthly cost.
How do I start a group home?
Pick your population and license category, form your business entity, secure zoning and property approval, build a policy and procedure manual with a staffing plan, and pass a pre-licensing inspection covering fire safety and sanitation. Confirm each specific requirement and fee with your state's licensing agency, since the process varies by state.
What does assisted living provide that a nursing home doesn't?
Assisted living generally offers more independence and a homelike environment; residents typically have private or semi-private apartments, choose their own schedule, and receive help rather than hands-on medical treatment. Nursing homes focus on medical care and rehabilitation for people who need skilled nursing intervention around the clock.
Is a residential care home the same as assisted living?
Not exactly. Both provide non-medical daily living support, but residential care homes are typically smaller (often under 10-15 residents) and operate out of a house-style setting, while assisted living facilities can range from small homes to large campuses with dozens or hundreds of residents. The regulatory tier usually depends on capacity.
How much does assisted living cost compared to a nursing home?
Genworth's 2023 Cost of Care Survey put the median annual cost of assisted living at $70,800 nationally, compared to $104,025 for a semi-private nursing home room. Costs vary heavily by state and market, and neither figure includes add-on fees common in resident agreements.
Will Medicaid pay for assisted living or a group home?
Medicaid generally doesn't pay for room and board directly, but many states offer Home and Community-Based Services (HCBS) waivers under Section 1915(c) of the Social Security Act that cover personal care and support services for people living in assisted living or group home settings. Eligibility and availability vary by state and often involve waiting lists.
What license do I need to open a group home for adults with disabilities?
Most states require a license specific to intellectual/developmental disability (IDD) group homes, separate from senior assisted living licenses. Check with your state's developmental disabilities or health and human services agency to confirm the exact chapter and application requirements for the population you plan to serve.
How long does it take to get a group home license?
Timelines vary widely by state and license type, and depend heavily on how complete your application, staffing plan, and facility inspection paperwork are when submitted together. There's no universal guarantee on processing time; confirm current review timelines directly with your state licensing agency before setting an opening date.
Sources
- CMS.gov, Nursing Home Data Compendium / State Operations Manual overview: There is no single federal assisted living license; states run their own oversight programs
- Genworth, Cost of Care Survey 2023: Median annual assisted living cost of $70,800 and nursing home semi-private cost of $104,025
- U.S. Department of Justice, Fair Housing Act Group Homes Statement of Policy: Zoning cannot be used to exclude group homes for people with disabilities under the Fair Housing Act
- Florida Statutes, Chapter 429, Part I, Assisted Living Facilities: Florida ALFs must maintain staffing based on resident count and acuity, verified during inspections
- 42 CFR 483.35, Nursing Services requirements for long-term care facilities: Nursing homes must have a licensed nurse on duty 24 hours a day and an RN for 8 consecutive hours daily
- Medicare.gov, Long-term Care coverage: Medicare does not cover long-term custodial care including assisted living room and board
- Medicaid.gov, Home & Community-Based Services 1915(c): States use Section 1915(c) HCBS waivers to cover personal care and support services in assisted living or residential settings