Assisted living vs residential care home: what's different

Last updated 2026-07-26

What is assisted living?

Assisted living is a licensed housing option for people who need help with daily activities like bathing, dressing, medication reminders, and meals, but who don't need the round-the-clock skilled nursing care a nursing home provides. Most assisted living communities look like apartment buildings, with private or semi-private units, a dining room, common areas, and staff on site 24 hours a day. There is no single federal definition of assisted living. Medicaid.gov's HCBS guidance treats assisted living as a state-defined residential setting where personal care services can be delivered, and each state sets its own licensing category, staffing rules, and services list ^[1]. That's why a facility called "assisted living" in Ohio might look very different from one in Texas or California. Generally, assisted living includes help with what providers call activities of daily living (ADLs): bathing, dressing, toileting, transferring, and eating. It does not typically include the level of medical care a hospital or skilled nursing facility gives, though many states allow assisted living communities to have licensed nurses on staff for medication management and health monitoring. If you're comparing options for a licensing category to open, read our breakdown of what an assisted living facility actually requires in most states before you assume the term covers what you're planning to build.

What is a group home?

A group home is a smaller residential setting, usually a single-family style house, where a small number of unrelated residents live together and receive support from paid staff. Group homes serve several different populations. Think adults 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 personal care than assisted living. Group homes are typically licensed for far fewer beds than assisted living communities. Many states cap group homes at 6, 8, or sometimes up to 16 residents, though this varies widely by state and by license type. The physical setting matters a lot to regulators: group homes are meant to feel like an actual home, not an institution, and zoning rules often reflect that intent by treating small group homes similarly to single-family residences. Staffing in a group home tends to be leaner than in assisted living. A typical IDD or mental health group home might have one or two direct care staff on shift, rather than a rotating team of nursing aides, dietary staff, and activities staff you'd see in a 60-bed assisted living building. If your plan is a small residential model rather than a large community, it helps to understand upfront how assisted living facilities differ from smaller adult foster care or group home licenses in your state, because the application paperwork, inspection checklist, and staffing plan are not interchangeable.

What is an assisted living facility?

An assisted living facility is the licensed building or program itself, the physical structure plus the state license that allows it to provide personal care services to residents who live there. The term "facility" in state statutes usually triggers a specific set of rules: minimum square footage per resident, fire and life safety codes, staff-to-resident ratios, admission and discharge criteria, and required policies for medication management. Most states require a facility to hold a specific assisted living license (sometimes called "residential care facility for the elderly," "personal care home," or "assisted living residence" depending on the state) before it can advertise or operate as assisted living. Operating without that license is a licensing violation in every state that regulates the category, and can bring fines or forced closure. The facility license usually spells out a maximum resident capacity, required staff certifications, and a list of services the facility must offer at minimum: meals, housekeeping, laundry, medication assistance, and an emergency call system in each resident's room. Anything beyond that (memory care, higher acuity nursing services) usually requires an added endorsement or a separate license tier. Before you file anything, pull your state's actual application and fee schedule. Requirements and costs vary enough state to state that guessing at them wastes real time. Our guide to the assisted living licensing process walks through what to expect.

What is assisted living vs nursing home?

Typical care level	Help with ADLs, medication reminders	24-hour skilled nursing, rehab
Federal Medicare/Medicaid certification	Not federally certified as a category	Certified under 42 CFR Part 483 [2]
Staffing requirement	State-set, varies widely	RN on duty 8 hrs/day min. (federal) [2]
Medicare pays room & board?	No [3]	Short-term skilled stay only, not long-term [3]
Typical setting	Apartment-style building	Clinical, hospital-adjacent building

The core difference is the level of medical care and the license type. Assisted living provides help with daily living activities and some health monitoring; a nursing home (also called a skilled nursing facility) provides 24-hour skilled nursing care, rehabilitation therapy, and medical treatment for people with serious or complex health needs. Nursing homes are certified by CMS to participate in Medicare and Medicaid and must meet federal requirements under 42 CFR Part 483, including a registered nurse on duty at least 8 consecutive hours a day, 7 days a week ^[2]. Assisted living communities are not subject to that federal nursing home rule because they are licensed at the state level as a different category entirely, not as a Medicare or Medicaid skilled nursing provider. Cost and payer mix differ sharply too. Medicare's own coverage page states plainly that the program does not pay for "long-term care (also called custodial care)" if that's the only kind of care a person needs, whether delivered in a nursing home or an assisted living community ^[3]. Medicaid, by contrast, does pay for nursing home care for eligible low-income residents in every state, and many states also cover some assisted living services (not room and board) through a Medicaid HCBS waiver. | Feature | Assisted living | Nursing home |

What does assisted living provide?

Assisted living provides housing plus a defined package of personal care and support services, usually including help with bathing, dressing, grooming, mobility, and medication reminders. Most communities also provide three meals a day, housekeeping, laundry, transportation to appointments, and organized activities. What's included beyond that baseline depends heavily on the state license and the individual community's service agreement. Some states require assisted living to offer a written service plan for each resident, updated at set intervals, that documents exactly what care the resident needs and receives. Many facilities charge a base rate for housing and add tiered fees for higher levels of care, so a resident who needs two-person transfer assistance pays more than one who's largely independent. What assisted living does not typically provide: ventilator care, IV therapy, wound care beyond basic dressing changes, or 24-hour skilled nursing supervision. If a resident's needs exceed what the state license allows the facility to handle, most states require the facility to either bring in additional licensed services or discharge the resident to a higher level of care, like a nursing home.

How to start a group home

Starting a group home means working through your state's specific license category, a business structure, a physical property that meets zoning and building code, a staffing plan, and a policy and procedure manual, roughly in that order. Here's the general sequence most states follow, though your state licensing agency's own checklist is the only authoritative source: 1. Identify the right license category for the population you plan to serve (IDD, mental health, adult foster care, senior residential care) with your state licensing agency, since group homes are regulated differently depending on who lives there. 2. Form your business entity and get an EIN, then check local zoning to confirm the property you want is allowed to operate as a group home; many states have "fair housing" style laws that limit how a city can zone small group homes differently from single-family homes. 3. Meet the physical plant requirements: fire marshal sign-off, minimum bedroom square footage per resident, accessible bathrooms, and a working sprinkler or smoke detection system depending on your state's fire code. 4. Write your policy and procedure manual covering admissions, medication management, staff training, incident reporting, resident rights, and emergency procedures. Most states require this before they'll schedule a licensing inspection. 5. Hire and train staff to meet your state's minimum ratios and required certifications (CPR, first aid, medication administration training, and often a criminal background check and abuse registry clearance for every employee). 6. Submit your license application with the required fee (this varies by state, confirm the current amount with your state licensing agency) and schedule your pre-licensing inspection. 7. Pass the inspection, get your license, and set up your admission and Medicaid billing processes if you plan to accept Medicaid waiver residents. Building all of that from scratch, state by state, is where most first-time operators lose weeks. That's the exact gap our $299 State Group Home Licensing Kit is built to close: state-specific checklists, policy manual templates, and staffing plan starting points so you're not drafting a fire safety policy from a blank page.

How do I start a group home (state-by-state differences)

The honest answer is that "how do I start a group home" doesn't have one answer, because every state runs its own licensing agency, its own application, and its own fee schedule. What's true in one state (say, a requirement for a licensed administrator with a specific certification) may not apply at all in a neighboring state. That said, a few things are close to universal across states: you'll need a criminal background check for every staff member and often every adult in the household, a fire and safety inspection before your license is issued, a written policy manual, and proof of financial capacity to operate (some states require a surety bond or minimum operating reserve). The population you serve also changes which state agency handles your license. IDD group homes are often licensed through a state's developmental disabilities agency, mental health group homes through the behavioral health agency, and adult foster care or senior residential care through the aging or human services department. Confirm the correct agency with your state before you draft anything, since submitting to the wrong division can cost you months. Our state-by-state guides to assisted living facility licensing and the smaller-scale group home path are a starting point, but always cross-check the current application and fee on your state agency's own site before you file.

What is the difference between assisted living and a residential care home?

The practical differences come down to size, setting, staffing, and license category, even though the two terms overlap a lot in everyday conversation and some states use them almost interchangeably. Assisted living is usually a purpose-built or converted apartment-style building, licensed for a larger number of residents (often 20 to 100+ beds), with a dedicated staff structure that includes an administrator, care aides, dietary staff, and often an on-site or on-call nurse. Residential care homes (sometimes called board and care homes, adult family homes, or residential care facilities for the elderly depending on the state) are typically a converted single-family house licensed for a small number of residents, commonly in the range of 3 to 6 in many states, though some states allow up to 15 or 16 in a "residential care home" or "community residential facility" license. Staffing ratios reflect that size gap. A large assisted living building might run a ratio like one caregiver per 10 to 15 residents during the day; a small residential care home often has one caregiver on shift for the entire home, sometimes the owner-operator themselves living on site. Cost also tends to track size and service level, though there's no reliable national dataset comparing residential care home rates to assisted living rates directly. Costs vary too much by state, market, and level of care to quote a single national figure with confidence. Check your state's Medicaid waiver rate schedule and local market rate surveys for real numbers in your area rather than relying on a national average.

Does Medicare cover assisted living facilities?

No. Medicare's coverage page states directly that Medicare and Medicaid "generally don't pay for non-skilled assistance with daily activities" outside of specific limited circumstances, and that includes room and board or personal care in an assisted living facility ^[3]. Medicare Part A can cover a short-term stay in a certified skilled nursing facility after a qualifying hospital admission, and Medicare Part B can cover doctor visits, therapy, and some medical equipment for a person who happens to live in assisted living, but it does not pay the facility's monthly rate. Medicaid is a different program with different rules. Medicaid does not typically pay for room and board in assisted living either, but many states use a Medicaid Home and Community-Based Services (HCBS) waiver, authorized under Section 1915(c) of the Social Security Act, to pay for the personal care and health-related services delivered inside an assisted living or residential care setting ^[1]. The resident (or their family) usually still pays the room and board portion out of pocket, private long-term care insurance, or through a state supplemental payment program like an SSI state supplement. If you're building a business model around Medicaid waiver residents, confirm the current waiver name, reimbursement rate, and covered services list with your state Medicaid agency; these details change from state to state and change over time as waivers get renewed.

How much does assisted living cost compared to a residential care home?

There's no single trustworthy national number comparing the two directly, and anyone quoting one flat figure for both categories nationwide is guessing. Costs depend on state, region, level of care, and whether the resident pays privately or through a Medicaid waiver. Genuinely useful cost research (like Genworth's Cost of Care survey methodology, which some industry groups still cite) has been discontinued in recent years, so operators and families researching current costs should check state-specific market rate surveys published by their state's aging or Medicaid agency, or aggregate cost data from state long-term care ombudsman offices, rather than older national survey figures that may no longer reflect the market.

What questions should I ask before choosing (or licensing) either model?

If you're a family choosing a placement, ask a few blunt questions. What is the staff-to-resident ratio during day and night shifts? What is the facility's license type and what does that license legally allow the facility to do? Is a nurse on staff, on call, or absent entirely? What's included in the base rate versus billed as an add-on? If you're an operator deciding which license to pursue, ask: Which population do I want to serve, and which state agency licenses homes for that population? What size property can I realistically buy or lease, and does that size fit a group home license or a larger assisted living license? What staffing ratio and certification requirements come with each license type, and can I realistically staff and afford that model? Answering those questions honestly before you sign a lease or make an offer on a property saves a lot of wasted licensing paperwork later. A property zoned and sized for a 6-bed group home is not a shortcut to a 40-bed assisted living license; the building code, fire code, and staffing plan requirements diverge fast once you cross most states' bed-count thresholds.

Frequently asked questions

What is assisted living?

Assisted living is a state-licensed housing option where residents live in private or shared apartments and get help with daily activities like bathing, dressing, and medication reminders, plus meals and housekeeping. It's not a hospital or nursing home; it's meant for people who need some support but not 24-hour skilled nursing care. Rules and license names vary by state.

What is a group home?

A group home is a small residential setting, usually a house, where a limited number of unrelated residents live together with paid staff support. Group homes serve people with intellectual or developmental disabilities, mental health conditions, substance use recovery needs, or in some states, seniors needing a lower level of care than assisted living. Bed counts and staffing rules vary widely by state.

What is an assisted living facility?

An assisted living facility is the licensed building and program that provides personal care services (help with bathing, dressing, medication, meals) to residents who live there. States regulate the license under names like "assisted living residence" or "personal care home," each with its own capacity limits, staffing rules, and required services.

What is assisted living facility, in plain terms?

In plain terms, it's a place that's part apartment building, part care provider: residents have their own room or unit, and staff on site help with daily tasks and medications. It sits between fully independent senior housing and a nursing home on the care-intensity spectrum, and it's licensed by the state, not certified by Medicare as a facility type.

What is assisted living vs nursing home?

Assisted living helps with daily activities and light health monitoring; a nursing home provides 24-hour skilled nursing care and is certified under federal rules (42 CFR Part 483) requiring an RN on duty at least 8 hours daily. Nursing homes accept Medicare for short-term skilled stays and Medicaid for long-term care; assisted living generally does not bill Medicare or Medicaid for room and board.

What does assisted living provide?

Assisted living typically provides a private or shared living space, three meals a day, housekeeping, laundry, help with bathing/dressing/mobility, medication reminders, transportation, and activities. It does not typically provide ventilator care, IV therapy, or 24-hour skilled nursing; residents needing that level of care usually transition to a nursing home.

How to start a group home?

Identify the right state license category for your target population, confirm zoning allows the property, meet fire and building code, write a policy and procedure manual, hire staff meeting state ratios and certifications, then submit your application and pass a pre-licensing inspection. Every step's specifics vary by state, so confirm each requirement with your state licensing agency.

What is the difference between assisted living and a nursing home?

Assisted living is for people who need help with daily tasks but not medical care; a nursing home is for people who need 24-hour skilled nursing and medical treatment. Nursing homes are federally certified under CMS rules; assisted living is regulated only at the state level, with no single federal license category.

Does Medicare cover assisted living facilities?

No. Medicare does not cover room and board or personal care in assisted living under any circumstance. It may cover doctor visits, therapy, or short-term skilled nursing stays elsewhere, but not the assisted living facility's monthly charge. Medicaid, through state HCBS waivers, sometimes covers care services (not room and board) in assisted living.

How do I start a group home if I've never operated one before?

Start by contacting your state's licensing agency for the population you want to serve (IDD, mental health, or senior care agencies each license differently) and request their current application packet. First-time operators typically need a business entity, a zoning-compliant property, a policy manual, trained staff, and a passed inspection before a license is issued.

Is a residential care home the same as assisted living?

Not exactly. Both provide housing plus personal care, but residential care homes are usually smaller (often 3 to 16 beds, house-style settings) with leaner staffing, while assisted living is typically a larger, apartment-style building with more staff structure. Some states use overlapping or state-specific terms, so check your state's actual license categories.

Can a residential care home accept Medicaid residents?

In many states, yes, through a Medicaid Home and Community-Based Services waiver authorized under Section 1915(c) of the Social Security Act, which can pay for personal care services in the home. Room and board is usually still paid separately by the resident. Availability and covered services depend entirely on your state's Medicaid waiver program.

What size property do I need for a group home versus assisted living?

A group home typically fits in a converted single-family house licensed for a small number of residents, often in the 3 to 16 bed range depending on the state. Assisted living usually requires a larger, purpose-built or heavily converted building, often licensed for 20 or more residents, with more common space and staff areas required by code.

Sources

1. Medicaid.gov, Home & Community-Based Services 1915(c): Assisted living is regulated at the state level with no single federal definition
2. eCFR, 42 CFR Part 483 Requirements for States and Long Term Care Facilities: Federal nursing home rules require an RN on duty at least 8 consecutive hours a day
3. Medicare.gov, Long-term care coverage: Medicare does not cover long-term custodial care or room and board in assisted living or nursing homes
4. Social Security Act Section 1915(c), via Social Security Administration: Section 1915(c) is the statutory authority for Medicaid HCBS waivers used to fund services in residential settings
5. 42 CFR 483.35, Nursing services requirements: Federal nursing home regulation sets specific nursing staff requirements including RN coverage