Last updated 2026-07-26
TL;DR
Adult foster care places a small number of adults (often 1 to 6) in a private home with a caregiver who lives there or is on-site around the clock. It sits between assisted living and family caregiving: less medical than a nursing home, more personal than a large facility. Rules, terms, and payment (including Medicaid waivers) vary heavily by state.
What is adult foster care?
Adult foster care (also called adult family homes, adult family care, or family care homes depending on the state) is a licensed living arrangement where a small number of adults, usually people who are elderly, have a disability, or have a mental illness, live in a private home with a caregiver who provides room, board, supervision, and help with daily activities. It's not a hospital and it's not a big facility. It's a house. Most states cap the number of residents somewhere between 2 and 6, though a few allow up to 10 or more with additional licensing tiers. Oregon, for example, licenses adult foster homes for 1 to 5 residents under its Department of Human Services rules [1]. Washington State's adult family homes are capped similarly, typically 2 to 6 residents per home under state law [2]. The caregiver (sometimes called a provider or resident manager) usually lives in the home or is present overnight. That's the core difference from a staffed group home that rotates shifts. This live-in model is why adult foster care tends to feel more like family care and less like institutional care. It's also why licensing agencies scrutinize the caregiver's background, training, and the physical home itself so closely. Terminology is the first trap for new operators. 'Adult foster care' in one state might be called 'adult family home,' 'adult foster home,' 'family care home,' or 'community residential facility' in another, and the licensing category, staffing ratios, and reimbursement rules attached to each name are different. Always confirm the exact program name with your state licensing agency before you build a business plan around assumptions from another state.
What is a group home?
A group home is a licensed residential setting where a small group of unrelated people, often with disabilities, mental illness, or in recovery, live together with paid staff support. Unlike adult foster care, group homes usually run on staff shifts rather than a single live-in caregiver, and they can range from 4 residents to 15 or more depending on the state and population served. The line between 'group home' and 'adult foster care' blurs in practice. Some states use the terms almost interchangeably; others draw a hard line based on staffing model (live-in caregiver vs. shift staff) or the population served (IDD group homes vs. elderly adult foster homes). If you're comparing options, read our assisted living facility guide alongside this one, since many states license these categories under overlapping or adjacent rules. Group homes for people with intellectual and developmental disabilities (IDD) are often licensed separately from adult foster care for seniors, with different staffing ratios, training hour requirements, and Medicaid billing codes. If you plan to serve IDD adults specifically, check whether your state routes that licensing through its developmental disabilities agency rather than its aging or health department, because the paperwork and inspection standards can be entirely different from senior-focused adult foster care.
What is an assisted living facility, and how is it different from adult foster care?
An assisted living facility (ALF) is a licensed residential setting, usually larger than an adult foster home, that provides housing, meals, and help with activities of daily living (bathing, dressing, medication reminders) but not skilled nursing care. Assisted living facilities can range from small buildings with a handful of residents to large campuses housing 100 or more, and they operate on paid staff shifts around the clock rather than a single caregiver living in the home. Adult foster care is essentially a scaled-down, home-based version of the same concept. The resident count is smaller (often single digits vs. dozens or hundreds), the physical setting is a real house instead of a purpose-built facility, and staffing is usually one or two caregivers rather than a rotating shift schedule. Regulatory requirements, like fire safety, staff-to-resident ratios, and administrator licensing, scale down accordingly, though they don't disappear. CMS describes assisted living as part of the broader category of home and community-based services that Medicaid can help fund in some states, distinct from nursing facility care [3]. Adult foster care often qualifies for similar Medicaid waiver funding, but the specific waiver name and covered services differ by state. This is a confirm-with-your-state-agency item, not a national standard. If you're deciding which license track fits your goals, our assisted living overview walks through the larger-facility path in more depth.
What does assisted living provide that adult foster care doesn't (and vice versa)?
| Typical resident count | 1 to 6 (some states higher) | 10 to 100+ | |
|---|---|---|---|
| Setting | Private home | Purpose-built or converted building | |
| Staffing model | Live-in or on-site caregiver | Shift-based staff | |
| Licensing agency | Often aging/social services dept. | Often health department | |
| Medical care level | Non-medical, ADL support | Non-medical, ADL support, some medication management | |
| Common funding | Private pay, Medicaid waiver (state-specific) | Private pay, some Medicaid waiver, rarely Medicare | Both models sit below nursing home level of care. Neither is licensed to provide ongoing skilled nursing, IV therapy, or ventilator care in most states, though a handful of states allow limited nursing tasks with additional endorsements or waivers. |
Assisted living facilities typically provide 24-hour staff coverage in shifts, on-site activity programming, larger dining and common spaces, and sometimes a memory care wing or specialized unit. Adult foster care typically provides a home environment, a consistent one-on-one or low-ratio caregiver relationship, and integration into a neighborhood rather than a campus. Neither is 'better' in any universal sense. Some families want the structure, staff redundancy, and amenities of a larger ALF. Others want the intimacy of a home with 3 or 4 other residents and a caregiver who knows every resident by name and routine. The right fit depends heavily on the resident's needs, cognitive status, and personality, plus what's actually licensed and available in that county. Here's a rough comparison of the two models as commonly regulated: | Feature | Adult foster care | Assisted living facility |
What is the difference between assisted living and a nursing home?
Assisted living provides help with daily living activities, meals, and supervision, but not skilled medical or nursing care. A nursing home (skilled nursing facility) provides 24-hour licensed nursing care for people with significant medical needs, recovering from surgery or illness, or requiring rehabilitation. CMS defines skilled nursing facilities as providing 'skilled nursing care and related services' along with rehabilitation for injury or illness [4], which is a categorically different service level than assisted living or adult foster care. If a resident needs wound care, IV medication, ventilator support, or intensive rehab, that's a nursing home or skilled nursing unit conversation, not an assisted living or adult foster care one. The practical difference for an operator: nursing homes require a much heavier license (often called a skilled nursing facility license), a medical director, licensed nursing staff around the clock, and far more intensive state and federal oversight, including routine surveys tied to Medicare and Medicaid certification. Adult foster care and assisted living licenses are generally issued by state agencies with lighter federal involvement, since Medicare doesn't cover room and board in either setting.
Does Medicare cover assisted living facilities or adult foster care?
No. Medicare does not cover the cost of room and board in assisted living facilities or adult foster care homes, and this is one of the most consistently misunderstood facts in senior care planning. CMS states plainly that Medicare does not cover long-term care (also called custodial care) if that's the only kind of care a person needs [5], and room-and-board style residential care falls squarely into that category. Medicare Part A can cover a short stay in a skilled nursing facility after a qualifying hospital stay, and Medicare can cover home health services delivered wherever someone lives, including an adult foster home. But the monthly cost of living in the home itself, the rent-and-care package, is not a Medicare-covered expense. Medicaid is different. Many states use a Medicaid Home and Community-Based Services (HCBS) waiver to help cover the cost of adult foster care or assisted living services (not room and board, which Medicaid usually excludes too) for people who qualify financially and medically [6]. The waiver name, income limits, and covered services vary by state, so this is genuinely a confirm-with-your-state-Medicaid-agency situation, not something with one national answer. For operators, this means your funding conversation with families needs to be honest and specific: ask which waiver program applies in your state, what it actually pays for, and what the family will pay out of pocket regardless.
How do I start a group home or adult foster care business?
Starting an adult foster care or group home business generally follows six steps, though the order and specific requirements shift by state: research your state's licensing category and population focus, meet the caregiver/administrator qualification requirements, secure a compliant property, pass a fire and safety inspection, submit your license application with required policies, and pass a pre-licensing survey. Step one is figuring out exactly which license you need. States often split adult foster care from IDD group homes from mental health residential programs from senior assisted living, each with its own agency, application, and rulebook. Calling your state licensing agency directly and asking 'which license covers a home caring for [specific population] with [specific number] of residents' saves weeks of wasted research. Step two is the caregiver or administrator qualification. Many states require a background check, a minimum age (often 21), specific training hours (first aid, CPR, medication administration, sometimes 40 or more hours of population-specific training), and sometimes a criminal history clearance through a state or federal database. Step three is the property. Most states have detailed physical requirements: minimum square footage per resident, egress and fire code compliance, sprinkler or smoke detector requirements, accessible bathrooms, and sometimes a maximum distance from emergency services. Zoning matters too. Some jurisdictions treat a small adult foster home as a permitted residential use, while others require a conditional use permit or special zoning review, especially as resident counts climb. Step four is inspection. Fire marshal sign-off and a licensing agency site visit are standard almost everywhere before a license is issued. Step five is paperwork: your license application, a policy and procedure manual covering medication management, emergency preparedness, resident rights, admission and discharge criteria, staffing plans, and often a sample resident contract. Step six is the actual licensing survey, sometimes combined with the pre-opening inspection, where the state confirms the home matches what you submitted on paper. Building all of this from scratch, state rule by state rule, easily eats 60 to 100+ hours of research and drafting time even for an organized operator. That's the exact gap our $299 State Group Home Licensing Kit is built to close: state-specific application checklists and policy manual templates so you're not starting from a blank page. It doesn't replace your state's own forms or guarantee approval, but it does mean you walk into the process with the right documents already drafted.
How do I know if adult foster care or a larger facility is the right license for me?
Ask yourself three questions: how many residents do you want to serve, what's your staffing model (live-in caregiver vs. shift staff), and what population do you want to serve. A live-in caregiver model with 2 to 6 residents in a residential home points toward adult foster care licensing. A shift-staffed model with more residents and a larger physical footprint points toward assisted living or group home licensing. Property and zoning constraints often make this decision for you before preference does. A single-family home in a residential zone may only support the smaller adult foster care resident count under local zoning rules, while a larger converted commercial building might be required (and zoned) for a bigger assisted living license. Check our zoning and property considerations early, before you sign a lease or purchase agreement. A property that looks perfect on Zillow can be legally unusable for your intended license type, and finding that out after signing is an expensive lesson. Financing and startup capital also scale with facility size. A 4-bed adult foster home in an existing house is a dramatically smaller lift than a 40-bed assisted living build-out, both in renovation cost and in the complexity of the licensing application itself.
What paperwork and policies does an adult foster care license require?
Nearly every state requires, at minimum, a policy and procedure manual covering medication management, emergency and disaster preparedness, resident rights and grievance procedures, admission and discharge criteria, infection control, staff training records, and incident reporting. Some states provide a template; many just tell you what topics must be covered and leave the drafting to you. A medication management policy typically has to spell out who can administer or assist with medications, how medications are stored and logged, and what happens with controlled substances or PRN (as-needed) medications. States vary widely on whether an unlicensed caregiver can administer medication at all versus only 'assist' with self-administration, and that single distinction can change your staffing costs significantly. Emergency preparedness plans generally need to address fire evacuation, severe weather, extended power outages, and a plan for relocating residents if the home becomes uninhabitable. Some states require a signed agreement with a receiving facility as part of this plan. Staffing plans need to show adequate coverage for the number and acuity of residents, including a backup plan if the primary caregiver is sick or on leave. This is often where new operators get tripped up: a solo live-in caregiver model looks fine on paper until you realize there's no licensed backup for the day that caregiver has a medical emergency of their own.
How much does it cost to start an adult foster care home?
Startup costs vary enormously by state, resident count, and whether you're buying, leasing, or already own the property, so there's no single honest national number. Licensing application fees alone can run from under $100 to several hundred dollars depending on the state and resident capacity, and that's before any facility renovation, fire safety upgrades, staff training costs, or liability insurance. The biggest cost variable is almost always the property. Bringing an existing home up to fire and life-safety code for licensed care, wider doorways, grab bars, sprinkler systems in some jurisdictions, accessible egress, can range from a few thousand dollars in cosmetic fixes to well over $50,000 in structural work for an older home. Get a fire marshal walk-through early, before you sign a lease, so you're not surprised by a required sprinkler retrofit after you've already committed to a property. Because exact fee schedules change and vary by state and county, confirm current application and licensing fees directly with your state licensing agency rather than relying on a number found online, including this article.
Frequently asked questions
What is assisted living?
Assisted living is a licensed residential care option that provides housing, meals, and help with daily activities like bathing, dressing, and medication reminders, but not skilled nursing care. It sits between independent living and a nursing home in terms of care intensity, and it's typically staffed in shifts rather than by a live-in caregiver.
What is a group home?
A group home is a licensed residence where a small number of unrelated people, often with disabilities, mental illness, or in recovery, live together with paid staff support. Staffing usually runs on shifts rather than a single live-in caregiver, and resident counts, staffing ratios, and licensing agency vary significantly by state and population served.
What is an assisted living facility?
An assisted living facility is a licensed building, ranging from small homes to large campuses, where residents receive housing, meals, and help with daily activities but not skilled medical care. It's regulated at the state level, with rules on staffing, resident rights, and physical safety, and Medicare does not cover its room-and-board costs.
What is assisted living vs nursing home?
Assisted living provides non-medical help with daily activities and meals; a nursing home provides 24-hour skilled nursing care for people recovering from illness, surgery, or managing significant medical conditions. CMS defines skilled nursing facilities as providing skilled nursing and rehabilitation services, a categorically higher level of medical care than assisted living offers.
What does assisted living provide?
Assisted living typically provides a private or shared room, meals, help with bathing and dressing, medication reminders, housekeeping, and some organized activities. It does not typically provide skilled nursing care, IV therapy, or the intensive medical monitoring found in a nursing home or hospital setting.
How do I start a group home?
Start by confirming which specific license category your state uses for the population and resident count you plan to serve, since terms and rules vary by state. Then meet caregiver qualification requirements, secure a zoning-compliant property, pass fire and safety inspection, submit your license application with required policies, and pass the pre-licensing survey.
What is the difference between assisted living and nursing home?
Assisted living is non-medical residential care with help for daily activities; a nursing home provides licensed, 24-hour skilled nursing care for people with significant medical or rehabilitation needs. CMS distinguishes them clearly, and the licensing, staffing, and federal oversight requirements differ substantially between the two.
Does Medicare cover assisted living facilities?
No. Medicare does not cover the cost of room and board in assisted living facilities or adult foster care homes because CMS classifies this as custodial or long-term care, which Medicare excludes. Medicare can cover short skilled nursing stays after hospitalization and home health services delivered in these settings, but not the ongoing living cost itself.
How do I start a group home in my state?
Call your state's licensing agency directly and ask which specific license applies to the population and resident count you want to serve, since terminology and requirements differ by state. From there, requirements typically cover caregiver qualifications, property and zoning compliance, fire safety inspection, a policy manual, and a pre-licensing survey.
What is adult foster care exactly?
Adult foster care is a licensed residential arrangement where a small number of adults, often 2 to 6, live in a private home with a caregiver who lives in or stays on-site, receiving room, board, supervision, and help with daily activities. It's sometimes called an adult family home or family care home depending on the state.
Is adult foster care the same as a group home?
They overlap but aren't always identical. Adult foster care usually means a live-in caregiver model in a private home with a small resident cap; group homes often run on shift-based staffing and can house more residents. Some states use the terms interchangeably, so check your specific state's licensing definitions.
How much does adult foster care cost to start?
There's no single national figure because it depends on the state, resident capacity, and property condition. Licensing application fees can range from under $100 to several hundred dollars, and property upgrades for fire and life safety code can range from a few thousand dollars to over $50,000 depending on the home's condition.
Can a family caregiver run an adult foster home from their own house?
In many states, yes, this is the core model: a caregiver lives in their own home and becomes licensed to care for a small number of residents there. Requirements around zoning, fire safety, background checks, and training still apply, so confirm specifics with your state licensing agency before assuming your home qualifies.
Sources
- Oregon Department of Human Services, Adult Foster Home Program: Oregon licenses adult foster homes for 1 to 5 residents under DHS rules
- Washington Administrative Code 388-76, Adult Family Home Minimum Licensing Requirements: Washington's adult family homes are capped, typically 2 to 6 residents per home
- Medicaid.gov, Home & Community-Based Services: Medicaid HCBS programs help fund assisted living and residential services in some states, distinct from nursing facility care
- Medicare.gov, Skilled Nursing Facility Care: Skilled nursing facilities provide skilled nursing care and rehabilitation services, a higher medical level than assisted living
- Medicare.gov, Long-Term Care: Medicare does not cover long-term custodial care if that is the only care needed
- Medicaid.gov, Home and Community Based Services 1915(c) waivers: States use HCBS waivers to help cover residential and adult foster care services for qualifying individuals