Last updated 2026-07-25
TL;DR
Assisted living residential care homes are licensed non-medical housing that provide help with daily activities (bathing, meals, medication reminders) but not skilled nursing care. Medicare generally does not pay for room and board in these settings. Costs, staffing rules, and licensing categories vary by state, so confirm specifics with your state licensing agency before you open one.
What is assisted living?
Assisted living is a licensed, non-medical residential setting where people who need help with daily activities, but not full-time nursing care, can live with support. Staff help with bathing, dressing, mobility, meals, medication reminders, and housekeeping. Residents typically have their own room or apartment and share common spaces. The federal government does not run a single national assisted living program. Each state writes its own licensing rules, so "assisted living" can mean something slightly different depending on where you're standing. Some states call these homes "residential care facilities," "personal care homes," "adult care homes," or "assisted living residences." The core idea holds across state lines: help with activities of daily living (ADLs), not medical treatment. The National Center for Health Statistics, part of the CDC, tracks these facilities under the umbrella term "residential care communities," and its most recent national survey counted roughly 31,400 residential care communities in the United States with about 995,100 licensed beds [1]. That gives you a sense of scale: this is a large, fragmented industry made almost entirely of state-regulated small businesses, not a single federal system.
What is a group home?
A group home is a small residential setting, usually a single-family style house, where a limited number of unrelated residents live together and receive support services. Group homes serve different populations depending on the state and the license type: people with intellectual or developmental disabilities (IDD), people in mental health recovery, people in substance use recovery, and in some states, seniors who need a lower level of care than assisted living. Group homes are typically smaller than assisted living facilities. Many states cap group homes at somewhere between 4 and 10 residents, while assisted living facilities can range from a handful of residents in a converted house up to 100+ in a large purpose-built community. The regulatory line between "group home" and "assisted living facility" is drawn by the state, not by a universal definition, so a 6-bed adult foster care home in one state might be licensed under the same rules as an assisted living home in another. If you're comparing the two paths for a business, read our breakdown on assisted living facilities and how bed count, staffing ratios, and license categories change the compliance burden.
What is an assisted living facility?
An assisted living facility (ALF) is the licensed building or program itself, the physical home or community plus the staff, policies, and services operating under a state license. The license is issued by a state agency, usually the department of health, department of social services, or a dedicated office of aging or long-term care, and it authorizes the operator to provide personal care services to residents in exchange for payment. Most state ALF statutes define the facility by what it is not allowed to do as much as what it can do: no ongoing skilled nursing care, no ventilator management, often a cap on the level of cognitive or physical impairment a resident can have before they need to move to a nursing home. States enforce this through resident assessment tools completed at admission and periodically afterward. Licensing requirements generally cover the same core categories everywhere, even though the specific numbers differ by state: minimum square footage per resident, staff-to-resident ratios (often heavier on evening and night shifts than people expect), background check requirements for staff, medication management training, fire and life safety inspections, and administrator licensing or certification. For the state-specific version of this checklist, see assisted living facility licensing steps.
What is assisted living facility care actually like day to day?
On a normal day, staff help residents get up, get dressed, get to meals, and take medications on schedule. Housekeeping and laundry are typically included. Activities programming (games, outings, exercise classes) is common, and most states require a minimum amount of structured activity time as part of licensing. Meals matter more than people expect in licensing terms. States generally require three meals a day plus snacks, a certain number of days between repeat menu items, and accommodation for therapeutic diets (diabetic, low-sodium, pureed) when a resident's care plan calls for it. Kitchen staff often need food handler certification, and the kitchen itself gets inspected separately from the residential license. Medication management is the single biggest liability area in assisted living. Depending on the state, staff may be limited to "medication reminders" (pointing out that it's time to take medication and reading the label) versus "medication administration" (actually handing over or administering the dose), and the license level, staff training, and even staff job title can hinge on that distinction. Get this wrong and it's one of the fastest ways to draw a licensing violation.
What is assisted living vs. nursing home?
| Care type | Non-medical, ADL support | Skilled nursing, medical care |
|---|---|---|
| RN staffing | State-set, often part-time or on-call | 8 hrs/day RN minimum, federal rule [2] |
| Typical setting | Apartment or private room, home-like | Hospital-like, shared or private rooms |
| Medicare coverage | Generally not covered | Short-term rehab stays can be covered |
| Medicaid coverage | Sometimes via HCBS waiver | Core Medicaid long-term care benefit |
Assisted living provides help with daily living activities in a home-like, non-medical setting. Nursing homes (also called skilled nursing facilities) provide 24-hour medical care, including care from licensed nurses and often on-site physician oversight, for people who need more intensive treatment, wound care, IV therapy, or rehabilitation after a hospital stay. The practical difference shows up in staffing. Federal law requires Medicare- and Medicaid-certified nursing homes to have a registered nurse on duty at least 8 hours a day, seven days a week, and licensed nursing services available 24 hours a day, per the Code of Federal Regulations governing skilled nursing facility requirements [2]. Assisted living facilities have no equivalent federal staffing mandate, and even state-level nurse requirements are usually much lighter, often just a requirement for an RN or LPN to be available on call or to visit periodically rather than staff the building around the clock. Cost and payer mix differ too. Nursing home care is frequently paid through Medicare (for short, post-hospital rehab stays) or Medicaid (for long-term custodial care for people who qualify financially), while assisted living is overwhelmingly private-pay or, in some states, funded through Medicaid home and community-based services (HCBS) waivers rather than the core Medicaid nursing home benefit. | Feature | Assisted living | Nursing home |
Does Medicare cover assisted living facilities?
No. Medicare does not cover the cost of room and board or personal care services in an assisted living facility. Medicare.gov states plainly that Medicare "doesn't cover long-term care (also called custodial care)" if that's the only kind of care needed, and that long-term care includes non-skilled personal care assistance such as help with daily activities [3]. Medicare will still pay for medical services a resident receives while living in assisted living, things like doctor visits, physical therapy ordered by a doctor, or durable medical equipment, the same way it would for anyone living at home. What it won't pay for is the facility's monthly rent or its personal care fees. Medicaid is a different story, but it's not simple either. Medicaid does not pay for room and board in assisted living in most states, but many states run Medicaid Home and Community-Based Services (HCBS) waivers under Section 1915(c) of the Social Security Act that can pay for the personal care, case management, and supportive services delivered inside an assisted living setting, while the resident (or their family) still covers room and board separately [4][5]. Medicaid.gov's HCBS page confirms that these waiver programs let states offer services "in home and community-based settings" as an alternative to institutional care [4]. Whether a given state's waiver covers assisted living rooms, and which facilities are approved as waiver providers, is entirely state-specific. Confirm with your state Medicaid agency and your state licensing agency before you count on this as a payer source.
What does assisted living provide, specifically?
Assisted living provides housing plus a defined package of personal care and supportive services, laid out in each state's licensing regulations and each resident's individual service plan. The exact list varies by state license type, but the common core includes: - Help with activities of daily living: bathing, dressing, grooming, toileting, transferring (getting in and out of bed or a chair), and eating
- Medication management or reminders, depending on state rules and staff training level
- Three meals a day plus snacks, often with therapeutic diet options
- Housekeeping and laundry
- 24-hour staff availability and an emergency call system
- Social and recreational activities
- Coordination with outside medical providers (but not the medical care itself) What it generally does not provide, at least not without add-on services or a different license type: skilled nursing care, IV therapy, ventilator care, or heavy rehabilitation therapy. Some states allow "assisted living with a nursing overlay" or a higher acuity license tier, which lets a facility keep residents longer as their needs increase, but that's a state-by-state licensing category, not a universal rule. For a closer look at what a specific state requires in its service plan and staffing rules, our guide on assisted living walks through the common documentation states expect to see during an inspection.
How to start a group home
Starting a group home is a licensing project first and a real estate project second. Skipping steps in that order is the single most common reason first-time operators lose months waiting on a state agency. 1. Pick your population and license type. Decide whether you're serving people with IDD, mental health needs, substance use recovery, or seniors needing lower-acuity care. This determines which state agency licenses you (health department, social services, or a disability-specific agency) and which staffing and training rules apply. 2. Confirm zoning before you sign a lease or make an offer. Group homes for people with disabilities are generally protected under the Fair Housing Act, and courts have repeatedly held that local governments cannot apply land use rules that treat group homes for people with disabilities less favorably than other residential uses [6]. That protection doesn't mean zoning is a non-issue: you still need to confirm occupancy limits, parking requirements, and whether your specific bed count triggers a different building or fire code classification. Confirm with your state licensing agency and your local zoning office before committing to a property. 3. Write your policy and procedure manual. States expect written policies covering admissions and discharge criteria, medication management, emergency procedures, resident rights, staff training, abuse and neglect reporting, and infection control, among others. This document gets reviewed line by line during your initial licensing survey. 4. Build your staffing plan. Map out staff-to-resident ratios by shift, required certifications (CPR, first aid, medication administration training, background checks), and your administrator's qualifications. Many states require the administrator to hold a specific license or complete a state-approved training course before the facility can open. 5. Pass your fire, health, and building inspections. These are usually separate from your licensing survey and are done by the fire marshal, local health department, and building inspector respectively. Budget real time for corrections; almost nobody passes every inspection clean on the first try. 6. Submit your license application with your policies, staffing plan, floor plan, and required fees. Application fees, timelines, and required documentation differ by state and by license type, so confirm the current fee schedule and processing time with your state licensing agency rather than relying on a number you saw somewhere else. 7. Prepare for your pre-licensing survey. A state inspector will walk the physical building and review your files before issuing the initial license. If you want a structured way to organize the paperwork side of this (policy templates, staffing plan worksheets, application checklists organized by state), that's exactly what our $299 one-time State Group Home Licensing Kit is built to do. It won't get you approved faster and it's not a substitute for your state's actual requirements, but it saves you from building every document from a blank page.
How do I start a group home if I've never run a facility before?
You start the same way as anyone else: by reading your state's actual licensing regulations before you spend money on a property. Every state posts its group home or residential care licensing rules publicly, usually through the department that licenses adult foster care, IDD group homes, or assisted living. Read the regulation, not a summary of the regulation, because the summary won't tell you the specific staff ratio or square footage number your inspector will check. Most states require an administrator or operator to complete a training program or hold a specific credential before the license is issued, and some require documented experience working in a licensed care setting first. This isn't universal, so confirm with your state licensing agency whether your state has an experience or education prerequisite for the license holder, and whether that requirement applies to you personally or to a hired administrator instead. A realistic first move for someone with no facility experience: work or volunteer in a licensed home for a few months before applying for your own license. It's not required everywhere, but it teaches you the parts no manual can, like how fast a shift can go sideways with two residents needing help at once, or how much documentation a state surveyor actually wants to see versus what you assumed they'd want.
What's the difference between a residential care home and a nursing home license?
A residential care home license authorizes non-medical personal care in a home-like setting. A nursing home (skilled nursing facility) license authorizes medical care delivered by licensed nurses under physician orders, with federal certification requirements attached if the facility wants to bill Medicare or Medicaid. The practical trigger that moves someone from residential care to a nursing home is usually a change in medical acuity: needing a feeding tube, IV medications, wound care beyond simple dressing changes, or 24-hour skilled nursing monitoring. States use a resident assessment or level-of-care tool to make this determination, and residential care licenses generally include a "negotiated risk" or discharge policy for when a resident's needs exceed what the home is licensed to provide. From a business standpoint, nursing homes carry heavier federal compliance requirements (Medicare/Medicaid Conditions of Participation under 42 CFR Part 483) [2], higher staffing costs, and higher liability exposure, but also access to Medicare and Medicaid as payers. Residential care homes have lighter federal oversight but a payer base that's mostly private-pay, which changes the financial risk profile in the opposite direction: fewer compliance costs, but a smaller, more price-sensitive customer pool.
What should I check before choosing a property for a residential care home?
Before you sign anything, verify four things with your state licensing agency and local zoning office: allowable bed count for the property's zoning classification, minimum square footage per resident under your state's licensing code, fire and building code requirements tied to your specific occupant load, and whether the property needs a change of use permit if it wasn't previously operating as a care facility. Many states set different physical plant requirements depending on resident mobility and cognitive status. A home licensed for ambulatory residents who can self-evacuate in an emergency often has lighter fire code requirements than one licensed for residents who need help evacuating, and that distinction can change your sprinkler, alarm, and exit requirements substantially. Don't assume a house that "looks big enough" clears these thresholds. Get the fire marshal's read early, before you're financially committed. If you're weighing a residential neighborhood house against a purpose-built facility, our guide to assisted living at home covers what changes when the setting is a converted single-family home rather than a licensed commercial building from day one.
How much does it cost to start and run one of these homes?
Costs vary too much by state, license type, and property to give one honest national number, and any site that gives you a single flat figure is guessing. What you can budget for with more confidence: state licensing application fees (often a few hundred to a few thousand dollars depending on state and facility size), background check fees per staff member, fire and health inspection fees, liability insurance, and the buildout or renovation cost to meet your state's physical plant requirements. On the revenue side, we're not going to give you an earnings projection here, and you should be skeptical of anyone who does. Reimbursement rates, private-pay rates, occupancy assumptions, and state Medicaid waiver rates differ enormously by region and change year to year. Build your own financial model using your state's actual current fee schedule, your local market's private-pay rate research, and a conservative occupancy assumption, ideally reviewed by an accountant familiar with licensed care facilities in your state.
How does inspection and ongoing compliance work after I'm licensed?
Once licensed, expect periodic unannounced inspections (often annually, sometimes more often depending on your state and any prior violation history) plus a complaint-driven inspection any time a resident, family member, or staff member files a complaint with the licensing agency. Inspectors typically review resident files, medication administration records, staff training documentation, incident reports, and the physical building. Common violation categories across states include incomplete medication administration records, staff files missing required background checks or training documentation, inadequate staffing ratios during specific shifts, and expired fire inspection certificates. Most states publish a public inspection or violation history for licensed facilities, so it's worth checking your state agency's public database periodically to see what inspectors in your area are actually citing operators for; it tells you where to focus your own internal audits.
Frequently asked questions
What is assisted living?
Assisted living is a licensed, non-medical residential setting for people who need help with daily activities like bathing, dressing, and medication reminders but don't need full-time nursing care. Residents usually have a private or semi-private room, receive meals and housekeeping, and get 24-hour staff support. Rules and terminology vary by state; confirm the exact definition with your state licensing agency.
What is a group home?
A group home is a small residential setting, typically a house, where a limited number of unrelated residents live and receive support services, often for IDD, mental health, or recovery populations. States usually cap group homes at a lower resident count than assisted living facilities, and license them under a different state agency depending on the population served.
What is an assisted living facility?
An assisted living facility is the licensed building and program providing non-medical personal care to residents in exchange for payment, under a license issued by a state agency (health department, social services, or aging office). It covers help with daily activities, meals, medication management or reminders, and 24-hour staff availability, but not ongoing skilled nursing care.
What does assisted living provide?
Assisted living provides housing plus help with activities of daily living: bathing, dressing, mobility, medication reminders, meals, housekeeping, laundry, and social activities, delivered by staff available 24 hours a day. It generally does not provide skilled nursing care, IV therapy, or heavy rehabilitation unless the state license includes a higher-acuity tier.
What is the difference between assisted living and a nursing home?
Assisted living offers non-medical personal care in a home-like setting with lighter staffing requirements. Nursing homes provide skilled medical care with federally mandated nurse staffing of at least 8 hours a day of RN coverage under 42 CFR Part 483. Nursing homes also have more direct access to Medicare and Medicaid as payers for care.
Does Medicare cover assisted living facilities?
No. Medicare does not cover room and board or custodial personal care in assisted living, per Medicare.gov's guidance on long-term care coverage. Medicare will still pay for separate medical services a resident receives, like doctor visits or physical therapy, the same as it would anywhere else.
Does Medicaid pay for assisted living?
Usually not for room and board, but many states use Medicaid Home and Community-Based Services (HCBS) waivers under Section 1915(c) to pay for personal care and case management delivered inside assisted living, while the resident covers rent separately. Waiver availability, covered services, and approved facilities are state-specific; confirm with your state Medicaid agency.
How do I start a group home?
Pick your population and license type, confirm zoning and property requirements, write your policy and procedure manual, build a staffing plan with required certifications, pass fire and health inspections, and submit your license application with the required fees to your state licensing agency. Timelines and fees vary significantly by state and license type.
How much does it cost to open an assisted living or group home?
There's no single honest national figure; costs depend on your state's licensing fees, background check requirements, insurance, and property buildout costs to meet physical plant rules. Budget for state application fees, per-staff background checks, and renovation costs, and confirm current fee amounts directly with your state licensing agency rather than relying on outside estimates.
What's the difference between assisted living and residential care homes?
In most states these terms describe the same type of non-medical, personal-care licensed setting, though some states use "residential care home" for smaller facilities and "assisted living facility" for larger ones with more services. The exact terminology and bed-count thresholds are set by each state's licensing statute.
Can a group home evict or discharge a resident whose needs increase?
Yes, most state licenses include discharge criteria for when a resident's medical or behavioral needs exceed what the facility is licensed to provide, often tied to a required assessment tool. Facilities typically must give written notice and help arrange an appropriate transfer; specific notice periods and procedures are set by state regulation.
Is a nurse required to be on staff in assisted living?
Not usually on a 24-hour basis. Federal law requires 8 hours a day of RN coverage in Medicare/Medicaid-certified nursing homes under 42 CFR 483.35, but assisted living has no equivalent federal nurse-staffing mandate. State rules vary from an on-call nurse requirement to periodic nurse visits; confirm specifics with your state licensing agency.
Do group homes need to comply with the Fair Housing Act for zoning?
Generally yes. The Fair Housing Act prohibits local governments from applying zoning or land use rules to exclude group homes for people with disabilities in ways that treat them differently from other residential households. That protection doesn't eliminate local zoning review; you still need to confirm occupancy limits and permit requirements before purchasing or leasing a property.
Sources
- CDC National Center for Health Statistics, Long-Term Care Providers and Services Users in the United States, 2020: Roughly 31,400 residential care communities with about 995,100 licensed beds nationally
- eCFR, 42 CFR 483.35 (Nursing services): Federal requirement for RN coverage at least 8 hours a day, 7 days a week in certified nursing homes
- Medicare.gov, Long-term care coverage: Medicare does not cover long-term custodial care, including personal care assistance in assisted living
- Medicaid.gov, Home & Community-Based Services 1915(c): States can use 1915(c) HCBS waivers to fund personal care and supportive services in community settings as an alternative to institutional care
- 42 U.S.C. 3604, Fair Housing Act (discriminatory housing practices, disability provisions): Local governments cannot apply zoning or land use rules to group homes for people with disabilities in ways that treat them less favorably than other residential uses
- Social Security Administration, Section 1915(c) of the Social Security Act (Home and Community-Based Services waivers): Section 1915(c) authorizes states to waive certain Medicaid rules to cover home and community-based services as an alternative to institutional care