Last updated 2026-07-24
TL;DR
A foster care home usually means a licensed family home caring for children or, in adult foster care, a small number of adults needing daily supervision. It's distinct from a group home (larger, staffed, often for IDD or behavioral health populations) and from assisted living (a senior-focused facility license). Rules, caps, and terminology vary by state.
What is a foster care home?
A foster care home is a private residence licensed by a state agency to provide care, supervision, and a family-style living environment for people who can't live independently or with their birth family right now. Most people hear "foster care" and think of children removed from unsafe homes, and that's the largest and oldest use of the term. Child welfare foster homes are licensed under state child welfare codes and monitored by the state's Department of Children and Families, Department of Human Services, or equivalent agency, and federal oversight runs through Title IV-E of the Social Security Act, administered by the Administration for Children and Families [1]. But "foster care" isn't only about kids. Most states also license adult foster care (AFC) homes, sometimes called adult family homes or family care homes, where a caregiver takes in a small number of adults (often 1 to 5, though caps vary a lot by state) who need help with daily living but not hospital-level care. Michigan, for example, licenses Adult Foster Care Facilities under the Adult Foster Care Facility Licensing Act, and defines them as places providing supervision and personal care for adults who need it because of age, physical disability, or developmental disability [2]. The common thread across child and adult foster homes: a small number of residents, a family-style setting (often the caregiver's own home), and a state license that comes with background checks, home inspections, and an ongoing care plan requirement. That's very different from a licensed group home or an assisted living facility, both of which are usually larger, staffed by rotating employees rather than a resident caregiver, and licensed under a separate set of rules. If you're comparing paths for a business, read this section next to assisted living facility, because a lot of people searching "foster care homes" are actually trying to figure out which license type fits the population they want to serve.
What is a group home?
A group home is a licensed residential setting, usually a house or small facility, where a small group of unrelated people live together and receive shared staff support. Group homes exist for a lot of different populations: adults with intellectual or developmental disabilities (IDD), people in mental health or substance use recovery, and, in the child welfare world, older youth or youth with higher behavioral needs who don't fit a traditional foster home. The biggest practical difference from a foster home is staffing structure. A foster home usually has one licensed caregiver (sometimes a couple) who lives in the home or is on-site as the primary provider. A group home has paid direct care staff working shifts, sometimes around the clock, with a program administrator or house manager overseeing operations. Group homes for IDD populations are often licensed under a state's intellectual/developmental disabilities agency, and if the home bills Medicaid, it typically has to meet the CMS Home and Community-Based Services (HCBS) settings rule, which requires the setting to be integrated in the community and give residents choice over daily activities, roommates, and visitors [3]. Group homes are also generally larger than foster homes. Where a foster home might cap out at 4 to 6 residents, a licensed group home can run anywhere from 6 to 15 or more, depending on the state and the specific license category. Confirm the resident cap and staffing ratio with your state licensing agency, because these numbers are set state by state and change more often than people expect. For a deeper comparison of group home types by population served, see assisted living facilities.
What is an assisted living facility?
An assisted living facility (ALF) is a licensed residential setting for adults, usually seniors, who need help with activities of daily living (bathing, dressing, medication management, mobility) but don't need the 24-hour skilled nursing care of a nursing home. ALFs sit on the care spectrum between independent living and a nursing facility. Every state has its own assisted living licensing category and its own name for it: California calls them Residential Care Facilities for the Elderly (RCFE), Florida calls them Assisted Living Facilities, and other states use terms like Personal Care Homes or Residential Care Homes. According to the National Center for Health Statistics, there were about 30,600 residential care communities in the U.S. with roughly 1.2 million licensed beds as of 2022 [4]. Average size varies enormously, from small homes with under 10 beds to large communities with over 100. Because "assisted living facility" is a state-defined license category, not a federal one, the rules on staffing ratios, medication administration, memory care add-ons, and move-out criteria differ from state to state. If you're building out a license application, start with your state's specific licensing guide rather than a generic checklist. See assisted living and facility assisted living for state-by-state breakdowns.
What is assisted living vs nursing home?
| Federal certification | None (state-licensed only) | Medicare/Medicaid certified, 42 CFR 483 |
|---|---|---|
| Staffing | Aides, medication techs, no RN required in most states | Licensed nurses required, RN coverage rules |
| Typical resident need | Help with ADLs, some supervision | Daily skilled nursing or rehab care |
| 2023 median annual cost | $64,200 (Genworth) [6] | $104,025 semi-private (Genworth) [6] |
Assisted living and nursing homes serve overlapping but different populations, and the regulatory difference matters a lot if you're deciding which license to pursue. Assisted living is for people who need help with daily tasks but are largely mobile and don't need continuous medical monitoring. Nursing homes (skilled nursing facilities) are for people who need daily medical care, rehabilitation, or 24-hour licensed nursing supervision. The federal distinction shows up clearly in Medicare and Medicaid rules. Nursing homes that participate in Medicare and Medicaid must meet federal Requirements of Participation under 42 CFR Part 483, which cover things like RN coverage, care planning, and resident rights, and they're surveyed regularly by state agencies on behalf of CMS [5]. Assisted living facilities have no equivalent federal certification; they're licensed entirely at the state level, which is why the standards (staff-to-resident ratios, nurse delegation rules, allowed medical acuity) vary so much by state. Cost reflects the acuity gap too. Genworth's 2023 Cost of Care Survey put the median annual cost of assisted living at $64,200 nationally, while a semi-private room in a nursing home ran a median of $104,025 per year [6]. Those are national medians; your state and even your county will differ, sometimes by a lot. | Feature | Assisted living | Nursing home |
What does assisted living provide?
Assisted living typically provides a private or semi-private room or apartment, meals, housekeeping, laundry, help with activities of daily living, medication management or reminders, social and recreational programming, and 24-hour staff availability for emergencies. It is not a medical facility, and most states specifically prohibit ALFs from providing skilled nursing care beyond a defined scope. What counts as "help with ADLs" is spelled out differently by state. Some states let ALF staff administer medications directly; others require a licensed nurse to delegate that task or require residents to self-administer with reminders only. Memory care is usually a separate license add-on or endorsement, with its own staffing ratios and secured-unit requirements, not something bundled automatically into a standard ALF license. A reasonable rule of thumb: if a prospective resident needs a ventilator, IV therapy, wound care beyond a stage 1-2 pressure ulcer, or has behaviors that pose a safety risk staff can't manage, most states require discharge to a higher level of care. Admission and retention criteria like this are usually written directly into your state's assisted living regulations, so pull that document before you draft your own admission policy.
Does Medicare cover assisted living facilities?
No. Medicare does not cover the cost of room and board at 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 care you need," which is exactly the kind of care most assisted living residents receive [7]. Medicare Part A can cover a short-term skilled nursing facility stay after a qualifying hospital stay, and Part B can cover medically necessary services delivered to someone who happens to live in assisted living (like a doctor visit or physical therapy), but it never pays the facility's monthly rent or care fee. Medicaid is a different story, and this is where confusion is common. Many states use Medicaid Home and Community-Based Services (HCBS) waivers to help cover the cost of personal care services in assisted living settings, though Medicaid generally still can't pay for room and board itself under federal rules; states structure waiver programs around that limit . Whether a specific ALF accepts these waivers, and what income and asset limits apply, depends entirely on your state Medicaid agency's waiver design. Check your state's HCBS waiver list on Medicaid.gov or your state Medicaid agency site before assuming coverage exists. For group homes and foster homes, Medicaid can also fund services through the state's IDD waiver or behavioral health waiver, again as service payments layered on top of room and board, not a payment for the roof over someone's head.
How to start a group home
Starting a group home (or a foster care home, or an assisted living facility) follows a similar backbone across states even though the paperwork and agency names differ. Here's the general sequence: 1. Pick your population and license type. IDD, mental health, substance use recovery, and senior assisted living are usually separate license categories with separate rules, even in the same state. Decide this first; it drives everything else. 2. Confirm zoning. Group homes for people with disabilities are generally protected under the federal Fair Housing Act, which prohibits municipalities from using zoning to exclude them the way they might exclude an ordinary boarding house, but local occupancy limits, fire code, and spacing requirements between group homes still apply and vary by city . Confirm zoning with your local planning department before you sign a lease or purchase a property. 3. Get your business structure and EIN in place, then apply for the state license itself through your state's licensing agency (Department of Social Services, Department of Health, or equivalent, depending on population and state). 4. Pass a life-safety and building inspection. Most states require a fire marshal inspection and a health/safety inspection tied to the specific occupancy classification for a residential care home, which is usually different from a standard single-family residential inspection. 5. Write your policy and procedure manual: admission/discharge criteria, medication management, incident reporting, staff training, emergency and evacuation plans, resident rights. States generally require this manual as part of the application packet, not as an afterthought once you're licensed. 6. Hire and background-check staff according to your state's ratio and qualification rules (these differ by population; a mental health group home's staffing rule looks nothing like a senior ALF's). 7. Schedule your pre-licensing inspection, get your license issued, then plan for ongoing renewal inspections, typically annual or biennial depending on the state. Building this packet from scratch, state statute by state statute, eats weeks. That's the actual reason GroupHomePath built the $299 State Group Home Licensing Kit: state-specific application checklists, a policy manual template, and a staffing plan template you adapt to your state's rules rather than writing from a blank page. It doesn't replace your state's official application or guarantee approval; only your licensing agency issues the license. Start at /licensing-kit-builder.
How do I start a group home in my state specifically?
Every state assigns group home and residential care licensing to a different agency, sometimes more than one depending on the population. Adult foster care might sit with the Department of Health in one state and the Department of Human Services in another. Children's group homes are usually under child welfare, IDD group homes under a developmental disabilities agency or division, and senior assisted living under the state health department or its own bureau of assisted living. Before you spend money on a property or a business plan, call your state licensing agency and ask three questions: which license category fits your intended population, what the current application fee and timeline are, and whether there's a moratorium or cap on new licenses in your area (some states pause new group home licensing in certain counties when bed capacity outpaces demand). None of this information stays the same for long, so don't rely on a blog post, including this one, for the current fee schedule. Go to the primary source. The practical workflow that saves the most time: read your state's statute and administrative code section for your license category first, then build your policy manual and staffing plan around what that code actually requires, not around a generic template. States audit against their own code language during inspection, so matching your manual's wording to the code matters more than people expect.
What is the difference between a foster care home, a group home, and an assisted living facility?
| Foster care home | Live-in or on-site family caregiver | Children (child welfare) or adults (AFC) | 1-6 residents | |
|---|---|---|---|---|
| Group home | Shift-based paid staff | IDD, mental health, recovery, some youth | 6-15+ residents | |
| Assisted living facility | Shift-based paid staff, may include licensed nurse delegation | Seniors needing ADL help | Varies widely, small homes to 100+ bed communities | The licensing agency, application form, staffing ratio, and inspection checklist are different for each, even within the same state. Don't assume a form or fee schedule from one category transfers to another. |
The three overlap in purpose (all provide supervised residential care) but differ in scale, staffing model, and the population each is licensed to serve. A foster care home is typically a family-style home with one primary caregiver, a small resident cap (often under 6), and a license tied to child welfare or adult foster care statutes. A group home is larger, staffed by rotating paid employees rather than a resident caregiver, and usually licensed for IDD, mental health, or substance use recovery populations, sometimes for older youth in child welfare. An assisted living facility is licensed specifically for adults, usually seniors, needing ADL support, and can range from a small residential home to a large multi-building community. | Setting | Typical caregiver model | Typical population | Typical size |
What should go in a foster care or group home policy and procedure manual?
Every state licensing application for a foster care home, group home, or assisted living facility requires a written policy and procedure manual, and reviewers check it line by line against the state code. At minimum, plan on covering: admission and discharge criteria, medication management and storage, incident and injury reporting timelines, staff qualifications and training hours, resident rights and grievance procedures, emergency preparedness and evacuation plans, infection control, and financial/billing practices if you accept Medicaid waiver payments. The manual isn't paperwork theater. Inspectors use it as the yardstick during your licensing survey and every renewal survey after that; if your practice doesn't match what your manual says, that's a citation regardless of whether the actual care was fine. Write policies you can actually follow with your real staffing level, not aspirational ones copied from a state model policy that assumes more staff than you'll have on a Tuesday night shift. For populations with any Medicaid-funded services, also build in HCBS settings rule language around resident choice, community access, and lease-like protections, since CMS requires states to demonstrate compliance with the settings rule for any HCBS-funded residential setting [3].
What do inspections look for in these homes?
Inspections for foster care homes, group homes, and assisted living facilities generally check life safety (fire extinguishers, smoke detectors, egress routes, sprinkler compliance where required), sanitation, medication storage and administration records, staff files (background checks, training certificates, TB tests where required), resident records and care plans, and physical plant condition (bedroom square footage per resident, bathroom ratios, accessibility). The frequency and rigor differ by license type and by state. Assisted living facilities in most states get an annual licensing survey plus complaint-triggered inspections. Group homes tied to Medicaid HCBS funding may also get periodic CMS-linked reviews related to settings rule compliance. Foster homes typically get both an initial home study and ongoing periodic visits from a caseworker or licensing specialist, separate from a formal annual survey. The single most common citation across all three license types, anecdotally reported by state ombudsman and licensing boards in their public annual reports, tends to involve medication management errors and incomplete documentation, not dramatic safety failures. Build your medication administration record (MAR) process and your staff training log before your first inspection, not after.
Frequently asked questions
What is assisted living?
Assisted living is a state-licensed residential care setting for adults, usually seniors, who need help with daily activities like bathing, dressing, or medication management but don't need 24-hour skilled nursing care. It's licensed and regulated at the state level under names that vary by state, such as Residential Care Facility for the Elderly in California or Assisted Living Facility in Florida.
What is a group home?
A group home is a licensed residential setting where a small group of unrelated people, often adults with intellectual/developmental disabilities or behavioral health needs, live together and receive support from paid shift-based staff rather than a single resident caregiver. Resident caps, staffing ratios, and the licensing agency all vary by state and by the population served.
What is an assisted living facility?
An assisted living facility (ALF) is a licensed building or home where seniors or adults needing daily living support live and receive meals, housekeeping, medication management, and staff supervision, without the medical intensity of a nursing home. Each state defines its own ALF license category, staffing requirements, and admission/discharge rules.
What is assisted living facility care actually like day to day?
Residents typically have a private or semi-private room, get help with bathing, dressing, and medication reminders, eat meals in a common dining area, and have access to social activities and 24-hour staff for emergencies. It is not medical care; residents needing daily skilled nursing or rehab generally need a nursing home instead.
What is the difference between assisted living and a nursing home?
Assisted living serves people who need help with daily tasks but not continuous medical care, and it's licensed only at the state level. Nursing homes serve people needing daily skilled nursing care and must meet federal Medicare/Medicaid Requirements of Participation under 42 CFR Part 483, with regular state surveys tied to that federal certification.
Does Medicare cover assisted living facilities?
No. Medicare.gov states Medicare doesn't cover long-term custodial care, which is the core service assisted living provides. Medicare can cover short-term skilled nursing stays after a qualifying hospital admission and medically necessary services delivered to someone living in assisted living, but never the facility's room-and-board or monthly care fee.
How do I start a group home?
Pick your population and license type, confirm local zoning (group homes for people with disabilities have Fair Housing Act protections but still face fire code and occupancy rules), apply through your state's licensing agency, pass a life-safety inspection, write a policy and procedure manual matching your state's code, hire and background-check staff to meet ratio requirements, then schedule your pre-licensing survey.
What is a foster care home, exactly?
A foster care home is a licensed private residence, usually with one primary caregiver, that provides supervised care for children (child welfare foster care) or adults needing daily support (adult foster care). It's smaller and more family-style than a group home, typically capped at a handful of residents depending on state rules.
Is adult foster care the same as assisted living?
No. Adult foster care usually means a small family-style home with one primary caregiver and a low resident cap, licensed under adult foster care statutes. Assisted living is typically larger, staffed by rotating paid employees, and licensed under a separate senior care category with its own rules on staffing and admission criteria.
Does Medicaid pay for group homes or foster care homes?
Medicaid generally doesn't pay for room and board directly, but many states use Medicaid Home and Community-Based Services (HCBS) waivers to cover personal care and support services delivered inside group homes and some adult foster care settings. Eligibility, waiver availability, and what's covered depend entirely on your state Medicaid agency's specific waiver programs.
How many residents can a group home or foster home have?
It depends entirely on the state and license category. Foster care homes often cap out around 4 to 6 residents, while licensed group homes can range from 6 to 15 or more depending on the population served and state rules. Confirm the exact cap for your license type with your state licensing agency before finalizing a property.
What license do I need to open a home for people with disabilities?
It depends on the population and level of care. Homes for people with intellectual/developmental disabilities are usually licensed by a state IDD agency, adult foster homes by a separate adult foster care statute, and homes for mental health or substance use recovery under yet another behavioral health license category. Call your state licensing agency to confirm which category fits before applying.
Do group homes need to follow the Fair Housing Act for zoning?
Yes, largely. The federal Fair Housing Act generally prohibits local governments from using zoning to exclude group homes for people with disabilities the way they might restrict an ordinary rental. Local governments can still enforce neutral rules like fire code, occupancy limits, and spacing requirements between group homes, so confirm specifics with your local planning department.
Sources
- Administration for Children and Families, Title IV-E Foster Care Program: Federal oversight of child welfare foster care runs through Title IV-E of the Social Security Act
- Medicaid.gov, Home and Community Based Services: CMS requires HCBS-funded residential settings to meet the HCBS settings rule around community integration and resident choice
- CDC/National Center for Health Statistics, Residential Care Community data: About 30,600 residential care communities with roughly 1.2 million licensed beds existed in the U.S. as of 2022
- eCFR, Title 42 Part 483, Requirements for States and Long Term Care Facilities: Medicare/Medicaid certified nursing homes must meet federal Requirements of Participation under 42 CFR Part 483
- Genworth, Cost of Care Survey 2023: Median annual cost of assisted living was $64,200 and semi-private nursing home room was $104,025 in 2023
- Medicare.gov, Long-term care coverage: 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 fund personal care services in community residential settings, generally without covering room and board