Last updated 2026-07-25
TL;DR
Nationally, assisted living costs a median of $70,800 a year, or about $5,900 a month, per Genworth's 2024 Cost of Care Survey. Costs vary by state, room type, and care level. Medicare does not pay for room and board in assisted living. Medicaid may help through state waiver programs, but rules vary a lot by state.
what is assisted living, exactly?
Assisted living is a type of residential care for people who need help with daily activities like bathing, dressing, medication management, and meals, but who don't need the round-the-clock medical care a nursing home provides. Residents usually live in private or semi-private rooms or apartments, eat in a shared dining room, and get help from staff on a schedule that fits their needs. The federal government does not license or directly define assisted living. Each state writes its own rules through its health department or social services agency, so "assisted living" can mean something slightly different depending on where you are. Some states use the term "residential care facility," others say "personal care home," and some fold assisted living into a broader adult care licensing category. The Centers for Medicare & Medicaid Services (CMS) explains that assisted living is generally state-regulated and "is not a defined Medicare benefit" [1]. What ties all these models together is the mix of housing plus non-medical personal care. That's the core product. Everything else, memory care wings, medication administration by licensed staff, extra amenities, is built on top of that base.
what is a group home, and how is it different from assisted living?
A group home is a smaller residential setting, usually a house in a regular neighborhood, where a small number of residents (often 4 to 10, though state caps vary) live together with paid staff support. Group homes serve a wider range of populations than assisted living: people with intellectual and developmental disabilities (IDD), mental health conditions, substance use recovery needs, and seniors who want a smaller, more home-like setting than a large assisted living building. The practical difference is scale and licensing category. Assisted living facilities are often licensed under a state's aging or health department rules and can range from a 6-bed home to a 200-unit building. Group homes are almost always licensed under smaller-capacity rules, sometimes through a state's disability services agency instead of (or in addition to) its health department. If you're comparing the two models for your own business plan, read our breakdown of assisted living facilities alongside your state's group home statute, because the paperwork and staffing ratios genuinely differ. Cost-wise, a small group home usually has a lower overhead per building than a large assisted living campus, but it also serves fewer residents, so the economics per bed can look similar once you run the numbers.
what is an assisted living facility and what does it actually provide?
An assisted living facility (ALF) is the licensed building or program where assisted living services happen. States define minimum services in their licensing codes, and they almost always include: help with activities of daily living (bathing, dressing, toileting, transferring), medication reminders or administration, three meals a day plus snacks, housekeeping and laundry, 24-hour staff availability, and some level of social or recreational programming. What it does not typically include, unless specifically licensed for it, is skilled nursing care, IV therapy, wound care beyond basic first aid, or ventilator support. Once a resident's needs cross that line, most states require either a higher license tier or a move to a nursing facility. Florida's ALF statute, for example, spells out three license types (standard, limited nursing services, and extended congregate care) precisely because service scope changes the licensing requirement [2]. For a state-by-state look at how these service tiers get defined, our guide to assisted living facility licensing categories breaks down the common tier structures operators run into.
how much does assisted living actually cost? the national numbers
| Assisted living facility | $70,800 | $5,900 | |
|---|---|---|---|
| Nursing home, semi-private room | $104,025 | $8,669 | |
| Nursing home, private room | $127,750 | $10,646 | |
| Home health aide (44 hrs/week) | $75,504 | $6,292 | Source: Genworth Cost of Care Survey, 2024 [3] These are resident-facing rates, what a family pays. They're not the same as what it costs an operator to run the building, which we cover next. |
The most commonly cited national benchmark comes from Genworth's Cost of Care Survey, last published in full in 2024 (Genworth has since scaled back the survey, so 2024 remains the most recent full dataset). Genworth put the median national cost of assisted living at $70,800 per year, or $5,900 per month, in 2024 [3]. That's a median, not a floor or ceiling. Costs run from under $4,000 a month in lower-cost states to well over $7,000 a month in high-cost markets like the Northeast and West Coast. Genworth also tracks nursing home costs for comparison: a semi-private nursing home room ran a median of $104,025 a year in 2024, and a private room ran $127,750 [3]. That gap, roughly $30,000 to $57,000 a year cheaper for assisted living, is the main reason families choose it when a resident doesn't need skilled nursing care. | Care setting | Median annual cost (2024) | Median monthly cost |
what drives cost differences between states and facilities?
Five factors explain most of the variation you'll see between a $3,800/month facility and an $8,000/month one in the same state. Room type is the biggest lever. A shared room costs less than a private room, and a private room in a smaller residential-style home often costs less than a private apartment in a large campus with a full amenity package. Level of care is the second factor: a resident who needs two-person transfer assistance or complex medication management usually pays a "care level" fee on top of the base rate, and these add-ons can run anywhere from $200 to $2,000+ a month depending on the state and provider. Location matters enormously. Genworth's state-level data shows assisted living costs in states like Washington D.C., Massachusetts, and Alaska running well above the national median, while states in the South and parts of the Midwest often come in below it [3]. Labor costs drive most of this difference, since staffing is the single largest operating expense for any residential care business. License type and services offered also move the price. A facility licensed for memory care or higher acuity residents has to staff more heavily and often carries specialized construction requirements (secured exits, specific staff-to-resident ratios overnight), and those costs get passed to the resident rate. Finally, whether the facility accepts Medicaid waiver residents changes its rate structure entirely, since Medicaid reimbursement rates are usually set by the state and tend to run below private-pay rates.
what does it cost to start and run a residential assisted living home as an operator?
This is the number aspiring operators actually need, and it's harder to pin down because it varies so much by state, home size, and whether you're buying real estate or leasing. Start-up costs generally fall into these buckets: licensing and application fees (often a few hundred to a few thousand dollars, confirm the exact amount with your state licensing agency), property acquisition or lease-up and renovation to meet fire and life-safety code, furniture and medical equipment, background checks and staff onboarding, insurance (general liability, professional liability, workers' comp), and working capital to cover payroll and expenses before the home fills up. Small, house-based group homes (4 to 10 beds) tend to have lower total start-up costs than purpose-built assisted living buildings, mainly because renovation of an existing residential structure is cheaper than new construction or converting a commercial building. But renovation costs to meet fire marshal and ADA requirements can still run into six figures depending on the home's condition and your state's building code triggers for licensed care facilities. Ongoing costs break down roughly into: staffing (usually the largest line item, often 50-65% of operating costs in residential care settings, though nobody has a single authoritative national figure for this because staffing models vary so much by state acuity rules), food and dietary, utilities, insurance, maintenance, and administrative or compliance costs tied to your state's inspection and reporting requirements. If you want a structured way to work through the state-specific application fees, floor plan requirements, and staffing plan documents before you commit capital, GroupHomePath's $299 State Group Home Licensing Kit organizes the state-specific checklist and paperwork so you're not hunting through agency PDFs one at a time. It's a paperwork tool, not a guarantee of approval; every state licensing agency makes its own approval decisions.
how to start a group home: the licensing and cost sequence
Starting a group home follows roughly the same sequence in every state, even though the specific forms and fees differ. First, identify which population and license category fits your plan: IDD, mental health, substance use recovery, or senior residential care, since this determines which state agency you apply through. Second, check zoning. Many states have laws (often modeled on the federal Fair Housing Act) that require group homes for people with disabilities to be treated like any other residential use in a neighborhood, but local zoning disputes still happen often enough that this step needs real attention before you sign a lease. Third, secure a property that meets your state's physical plant requirements, which usually cover minimum square footage per resident, bedroom occupancy limits, fire suppression or alarm systems, and accessibility features. Fourth, write your policy and procedure manual, covering resident rights, medication management, emergency procedures, staffing plans, and abuse/neglect reporting, since most states require this as part of the license application packet. Fifth, complete background checks and required training for yourself and staff (many states require specific hours of orientation training before a facility can open). Sixth, submit your license application with the required fee (confirm the current amount with your state licensing agency, since these fees change and vary widely by state and bed capacity) and schedule your pre-licensing inspection. For operators comparing group home models against larger assisted living licensure, our guide to facility assisted living requirements walks through how larger facility categories differ in staffing ratio and physical plant rules from smaller group homes.
does medicare cover assisted living facilities?
No. Medicare does not cover the room and board costs of assisted living. Medicare.gov states plainly that Medicare does not pay for "custodial care" (help with daily activities like bathing and dressing) when that's the only care a person needs, and that's essentially what assisted living provides [1]. Medicare will pay for specific medical services a resident receives, like doctor visits, physical therapy, or a short skilled nursing stay after a hospitalization, regardless of where the person lives. But it will not pay the facility's monthly rate for housing, meals, and personal care assistance. This is one of the most common points of confusion for families and new operators alike: Medicare Part A covers up to 100 days of skilled nursing facility care under specific conditions (and even then, days 21-100 require a daily coinsurance amount, $209.50 per day in 2025) [4], but that's a nursing home benefit tied to a qualifying hospital stay, not an assisted living benefit. So if your business plan or marketing assumes Medicare will fund resident stays, that assumption is wrong and needs to be corrected before you build a pro forma.
does medicaid pay for assisted living, and how does that work?
Sometimes, and it depends heavily on your state. Medicaid does not pay for room and board in assisted living the way it does in a nursing home. But most states use Medicaid Home and Community-Based Services (HCBS) waivers, authorized under Section 1915(c) of the Social Security Act, to cover the personal care and service component of assisted living for eligible low-income residents [5]. Medicaid.gov describes HCBS waivers as a way for states to "furnish an array of home and community-based services that assist Medicaid beneficiaries to live in the community and avoid institutionalization" [5]. In practice, this means a resident might pay room and board out of pocket (often from Social Security income) while the state Medicaid waiver pays the facility or a separate provider for personal care services. Not every state offers this option, not every assisted living facility accepts waiver residents, and waiting lists for these waivers exist in many states. If your business model depends on Medicaid waiver residents, confirm your state's specific waiver program name, reimbursement rate, and facility enrollment requirements with your state Medicaid agency before you finalize your budget. These details vary too much state to state to generalize safely.
what is the difference between assisted living and a nursing home?
The core difference is medical acuity. Assisted living serves people who need help with daily living activities but are otherwise medically stable. Nursing homes (also called skilled nursing facilities) serve people who need ongoing medical care and supervision from licensed nurses, including things like wound care, IV therapy, rehabilitation after surgery, or management of complex chronic conditions. Staffing reflects this difference. Nursing homes are federally required to have a registered nurse on duty for at least 8 consecutive hours a day, 7 days a week, and licensed nursing staff (RN or LPN) on duty 24 hours a day, under federal nursing home requirements at 42 CFR 483.35 [6]. Assisted living facilities have no equivalent federal staffing mandate since they're state-regulated, not federally regulated the way nursing homes are through Medicare/Medicaid certification. Cost reflects the difference too, as shown in the table above: nursing home care runs $30,000 to $57,000 more per year than assisted living, according to Genworth's 2024 data [3], largely because of the higher staffing ratios and clinical services required. For readers comparing the two models directly for a parent or client, it's worth reading our assisted living overview alongside your state nursing home ombudsman's guidance, since the right choice depends on the individual's actual care needs, more than cost.
how do rate structures work, and why do assisted living bills vary so much month to month?
Most assisted living facilities use a tiered pricing model: a base rate that covers room, meals, and standard services, plus a care level fee that increases if a resident needs more hands-on assistance. Some facilities re-assess care levels monthly or quarterly, which means a resident's bill can go up even if they haven't moved rooms, simply because their care needs increased. Additional common add-on charges include a one-time community fee or move-in fee (sometimes $1,000 to $5,000, though this varies enormously and some states regulate what can be charged as non-refundable), medication management fees, incontinence supply fees, and transportation fees for medical appointments. Some states require these fees to be disclosed in a resident admission agreement, and some states cap or regulate specific fee types. This is exactly the kind of detail that should live in your facility's policy manual and admission agreement template, not get improvised. For families budgeting for a loved one, the practical advice is to ask for the full fee schedule in writing before signing anything, more than the advertised base rate, because the base rate alone often understates the real monthly cost by several hundred dollars once care level fees apply.
how does home size affect the cost model (small group home vs. large facility)?
Smaller residential-style homes (think 6 to 10 beds in a converted house) generally have lower total facility costs but also lower total revenue capacity, since there are fewer beds to fill. Larger assisted living buildings (50, 100, 200+ units) spread fixed costs like a full-time administrator, kitchen staff, and building maintenance across more residents, which can lower the cost per bed for overhead but requires much more capital to build or acquire in the first place. The staffing ratio question matters here too. Many states set minimum staff-to-resident ratios that don't scale in a straight line. A small home might need 1 staff member per 6-8 residents during the day, and larger buildings often need proportionally more staff at night for the same ratio because certain safety functions (like a required awake overnight staff member) don't shrink just because the building is smaller. Confirm your specific state's staffing ratio rules with your licensing agency, since these numbers differ by population served (IDD vs. senior vs. mental health) and by shift. For operators sizing up their first project, the honest advice is: smaller homes are usually more forgiving for a first-time operator because the total dollars at risk are lower, but they also have less room to absorb a slow lease-up period since a single empty bed represents a bigger percentage of your revenue.
Frequently asked questions
what is assisted living?
Assisted living is state-regulated residential care for people who need help with daily activities like bathing, dressing, and medication management, but not full-time nursing care. Residents live in private or shared rooms, eat meals in a shared dining area, and receive staff support on a scheduled basis. Rules and terminology vary by state; some call it residential care or personal care.
what is a group home?
A group home is a smaller residential care setting, typically a house, where a limited number of residents live together with paid staff support. Group homes serve people with intellectual/developmental disabilities, mental health conditions, substance use recovery needs, or seniors wanting a smaller, home-like setting. Licensing usually falls under a state's disability services or health agency depending on the population served.
what is an assisted living facility?
An assisted living facility (ALF) is the licensed building or program providing assisted living services: help with daily activities, medication reminders, meals, housekeeping, and 24-hour staff availability. States define specific service tiers and license categories, and facilities that provide higher levels of medical care usually need an upgraded license, like Florida's extended congregate care designation.
what does assisted living provide?
Assisted living typically provides help with bathing, dressing, toileting, and mobility; medication reminders or administration; three daily meals plus snacks; housekeeping and laundry; 24-hour staff availability; and social or recreational activities. It generally does not include skilled nursing care, IV therapy, or complex wound care unless the facility holds a specialized license tier for that service level.
what is the difference between assisted living and nursing home?
Assisted living serves medically stable people who need help with daily activities; nursing homes serve people needing ongoing medical care from licensed nurses. Nursing homes must have licensed nursing staff on duty 24 hours a day under federal rules (42 CFR 483.35). Nursing home care also costs significantly more: a semi-private room ran $104,025/year versus $70,800/year for assisted living in 2024, per Genworth.
does medicare cover assisted living facilities?
No. Medicare does not pay for the room, board, or custodial care costs of assisted living. Medicare.gov confirms it does not cover custodial care when that's the only type of care a person needs. Medicare may still cover specific medical services, like doctor visits or short-term skilled nursing after a hospital stay, regardless of where a person lives.
how do i start a group home?
Identify your target population and correct license category, check zoning compliance, secure a property meeting physical plant and fire safety codes, write required policy and procedure manuals, complete staff background checks and training, and submit your license application with the required fee to your state licensing agency. Requirements and fees vary significantly by state, so confirm specifics before budgeting.
how to start a group home with limited capital?
Start by confirming your state's minimum bed capacity and licensing fees, since smaller homes (often 4-10 beds) usually cost less to renovate than large facilities. Consider leasing an existing residential property that already meets most fire and building code requirements rather than buying and renovating from scratch, which significantly reduces upfront capital needs.
what is the average monthly cost of assisted living?
The national median was $5,900 per month ($70,800 annually) in 2024, according to Genworth's Cost of Care Survey. Actual costs range from under $4,000/month in lower-cost states to over $7,000/month in high-cost markets, depending on location, room type, and the resident's level of care needs.
does medicaid pay for assisted living?
Medicaid doesn't cover room and board in assisted living directly, but most states use Home and Community-Based Services (HCBS) waivers under Section 1915(c) of the Social Security Act to cover personal care services for eligible low-income residents. Availability, reimbursement rates, and facility participation vary by state, so confirm details with your state Medicaid agency.
why do assisted living costs vary so much between facilities?
Room type (private vs. shared), level of care needed, geographic location, license type, and whether the facility serves Medicaid waiver residents all drive cost differences. Care level fees added to a base rate can add hundreds to thousands of dollars a month depending on a resident's assistance needs, which is why two facilities in the same city can price very differently.
what does it cost to open a residential assisted living home?
Start-up costs include state licensing fees, property acquisition or lease and renovation to meet fire/life-safety code, furniture and equipment, staff background checks, and insurance. Total costs vary enormously by state, home size, and property condition, so there's no single reliable national figure; confirm fee schedules and renovation code triggers with your state licensing agency before budgeting.
is a group home cheaper to start than a full assisted living facility?
Usually, yes, since a small residential-style group home (often 4-10 beds) requires converting an existing house rather than building or buying a large commercial facility. But smaller homes also have less revenue capacity per building, so the per-bed economics can end up similar once staffing and compliance costs are factored in.
Sources
- CMS, Nursing Home Care & Assisted Living overview: Assisted living is generally state-regulated and not a defined Medicare benefit
- Florida Statutes, Chapter 429 (Assisted Living Facilities): Florida's ALF statute defines multiple license types based on service scope, including standard, limited nursing services, and extended congregate care
- Genworth, Cost of Care Survey 2024: National median assisted living cost of $70,800/year ($5,900/month) and nursing home cost comparisons for 2024
- Medicare.gov, Skilled nursing facility care costs: Medicare Part A skilled nursing facility coinsurance is $209.50 per day for days 21-100 in 2025
- Medicaid.gov, Home & Community-Based Services 1915(c): States use HCBS waivers to furnish services that help Medicaid beneficiaries live in the community and avoid institutionalization
- eCFR, 42 CFR 483.35 (Nursing services): Federal nursing home requirements mandate an RN on duty at least 8 consecutive hours a day, 7 days a week, and licensed nursing staff 24 hours a day