Last updated 2026-07-25
TL;DR
Starting a group home in Minnesota means picking a license category through the Department of Human Services (adult foster care, community residential setting, or licensed assisted living through MDH), passing background studies, meeting building and fire code, and completing a home study or licensing survey before you take a single resident.
What is a group home?
A group home is a licensed residence where a small number of people, usually four to six, live together and get help with daily activities, supervision, or treatment because of a disability, mental illness, age-related need, or recovery status. It's not a hospital and it's not an apartment complex; it sits in the middle, in a house or house-like building that's been licensed by a state agency to provide care. In Minnesota, the term "group home" isn't one single license. Depending on who lives there and what kind of care they need, the operation might be licensed as Adult Foster Care, a Community Residential Setting (CRS), a children's residential facility, or something else entirely under Minnesota Department of Human Services (DHS) rules. The people you serve determine the license category, and the license category determines almost everything else: staffing ratios, physical plant rules, and which statute chapter governs you. Minnesota Statutes Chapter 245D covers home and community-based services standards, including many of the services delivered in licensed foster care and CRS settings [1]. If you're planning to serve seniors instead of people with disabilities, you're likely looking at assisted living licensure through the Minnesota Department of Health (MDH) instead of DHS, which is a genuinely different track. See our overview of assisted living for how that license differs from a DHS-licensed group home.
What is assisted living?
Assisted living is a licensed housing option for older adults or adults with disabilities who need help with daily activities like bathing, dressing, or medication management, but who don't need the round-the-clock skilled nursing care a nursing home provides. Residents typically have their own apartment or room and pay for a bundle of housing plus services. Minnesota folded all senior residential care into a single licensing structure starting August 1, 2021, when the state's Assisted Living Licensure law took effect. Before that date, Minnesota was the only state with no assisted living license at all; providers operated under a patchwork of housing licenses and home care licenses. Now, under Minnesota Statutes Chapter 144G, any facility providing sleeping accommodations to five or more adults plus at least one "assisted living service" must hold an assisted living license issued by MDH [2]. There's also an "assisted living with dementia care" designation for facilities that market to or serve residents with dementia, which comes with extra staffing training requirements. If your business model centers on seniors who need daily support but not a locked psychiatric unit or DHS disability waiver services, this is your licensing lane, not the DHS group home track. For state-by-state comparisons, see assisted living facilities.
What is an assisted living facility?
An assisted living facility is the physical building and the licensed operation together: the property, the staff, the service plans, and the state license that lets it call itself "assisted living" and bill for those services. Under Minnesota law, you cannot use the term "assisted living" in your business name or advertising unless MDH has actually issued you the license [2]. Minnesota's law defines the facility broadly enough to include everything from a converted single-family home with five residents to a large campus with 150 units. The line that matters legally is the combination of (a) sleeping accommodations for compensation and (b) at least one covered assisted living service, such as help with two or more activities of daily living, medication management, or health-related monitoring. If you're only providing housing with no services, you likely don't need this license. If you're providing services without the license, MDH treats that as operating an unlicensed facility, which carries real enforcement risk. Search interest sometimes uses "facility assisted living" as a variant phrase; if that's how you got here, the concept is identical to what's described above. See facility assisted living for a plain-language rundown.
What is assisted living vs nursing home, and what's the real difference?
| Licensing agency | Minnesota Department of Health | Minnesota Department of Health | |
|---|---|---|---|
| 24-hour licensed nurse required | Not universally | Yes | |
| Typical resident need | ADLs, medication, monitoring | Skilled nursing, rehab, complex medical | |
| Primary payer | Private pay, Elderly Waiver | Medicare (short stays), Medicaid | |
| Living unit | Private apartment/room | Semi-private or private room, more clinical | If you're weighing which model fits your business plan, read the difference between assisted living and nursing facility licensure before you draft a floor plan; the two paths require completely different capital and staffing commitments. |
Assisted living gives residents help with daily living tasks and some health monitoring, while a nursing home (skilled nursing facility) provides 24-hour licensed nursing care for people with serious medical needs who can't be safely managed with lighter support. The practical difference shows up in staffing: nursing homes must have a registered nurse on site and licensed nursing staff around the clock; assisted living in Minnesota has no universal RN-on-site mandate, though facilities offering "assisted living with dementia care" or certain service levels have their own staffing rules under Chapter 144G [2]. Cost structure differs too. Nursing home care is billed largely through Medicaid and Medicare (short-term, post-hospital stays) using a per-diem, medically-driven rate. Assisted living is paid mostly out of pocket or through Medicaid waivers (in Minnesota, primarily the Elderly Waiver), with a separate housing charge and a services charge that residents or their families negotiate directly with the provider [3]. |Feature|Assisted living (MN, Ch. 144G)|Nursing home (skilled nursing)|
Does Medicare cover assisted living facilities?
No. Medicare does not pay for the room, board, or personal care services that make up the bulk of assisted living costs. CMS is explicit that Medicare covers medical care, not "custodial care" or long-term residential services: "Medicare doesn't cover long-term care (also called custodial care) if that's the only care you need" [4]. Medicare will pay for medically necessary services a resident receives while living in assisted living, things like doctor visits, physical therapy after a fall, or a short home health episode, but it will not pay the facility's monthly rate. Families and operators sometimes get this wrong at intake, so build clear payer-source language into your admission agreement so nobody assumes Medicare is footing the housing bill. Medicaid is different. Minnesota's Elderly Waiver and, for people with disabilities, waivers under 245D-licensed settings, can cover services (not the room and board) in some licensed settings, subject to eligibility and waiver slot availability [3][1]. If Medicaid reimbursement is part of your business model, you'll want to understand both DHS waiver enrollment and MDH licensure before you sign a lease. See our funding and Medicaid coverage for how waiver billing actually flows to a provider.
How do I start a group home in Minnesota, step by step?
Start by identifying your population and matching it to the correct license, because Minnesota does not have one universal "group home license." Adult foster care and Community Residential Setting licenses (for people with disabilities or mental illness) go through DHS; assisted living for seniors goes through MDH; children's residential programs have their own DHS licensing chapter. Get this wrong and you'll redo your whole application. Here's the general sequence most operators follow, though you should confirm the exact order and forms with your state licensing agency since counties handle parts of this too: 1. Decide your population and license type (DHS foster care/CRS, DHS children's residential, or MDH assisted living). 2. Check local zoning and get a certificate of occupancy or confirm your property qualifies as a licensed residential use; group homes for people with disabilities often get protection under the Fair Housing Act's reasonable accommodation provisions, but local zoning review still applies to code and safety items [5]. 3. Complete DHS or county background studies (Minnesota's background study system runs through DHS's NETStudy 2.0 for most disability and children's services staff and license holders) [6]. 4. Submit your license application with the applicable agency, along with your program policies, staffing plan, and floor plan. 5. Pass a licensing inspection or survey covering fire safety, physical plant, and program compliance. 6. Get your license issued, then complete any county contract or waiver enrollment steps needed before you can bill. For a broader walkthrough of paperwork sequencing across states, see assisted living at home, which covers smaller-scale residential models similar in spirit to Minnesota's adult foster care.
What license do I need: DHS foster care, CRS, or MDH assisted living?
If you're serving adults with disabilities, mental illness, or people needing supervised living outside a medical model, you're most likely looking at DHS licensure under adult foster care rules or the newer Community Residential Setting category, both of which sit alongside the 245D home and community-based services standards [1]. If you're serving seniors who need help with ADLs but not psychiatric-level supervision, you're in MDH's assisted living license under Chapter 144G [2]. Minnesota created Community Residential Setting licensure as part of a broader move (partly driven by federal Home and Community-Based Services settings rules) to shift disability services away from larger, more institutional adult foster care settings toward smaller, more integrated ones. If you're building a program specifically for people using DHS disability waivers, talk to your county case management unit and DHS licensing division before you commit to a property, because waiver funding eligibility and license category are linked. Don't guess on this. Call DHS Licensing (or MDH, for assisted living) directly and describe your intended population before you sign a lease or purchase agreement. Licensing staff will tell you which chapter applies; guessing wrong here is the single most expensive mistake new operators make, because a property built out for one license type often doesn't meet the physical plant rules for another.
What does the DHS or MDH application actually require?
Expect the application packet to require, at minimum: an organizational and ownership disclosure, a program description or policy manual, a staffing plan with qualifications and training records, a floor plan and fire marshal sign-off, proof of insurance, and background studies for every owner, staff member, and in many cases household member of the license holder [6]. For DHS-licensed disability and foster care programs, you'll also submit a plan showing compliance with the 245D service standards if you're providing home and community-based services, covering things like individual service plans, medication administration protocols, and incident reporting procedures [1]. For MDH assisted living, expect to submit resident rights policies, an emergency preparedness plan, and documentation of your assisted living director's qualifications, since Chapter 144G requires a designated director who meets specific training and experience thresholds [2]. Budget real time for this stage. Background studies alone can take weeks depending on volume and whether any subject has an out-of-state residence history requiring an FBI fingerprint check. Build your project timeline assuming the paperwork phase runs longer than your gut says it should; it almost always does.
What are the zoning and property requirements for a Minnesota group home?
Zoning rules for group homes in Minnesota vary heavily by city and county, so confirm with your local planning department and your state licensing agency before you buy or lease. Generally, small group homes serving six or fewer people with disabilities are treated as a permitted single-family residential use under Minnesota law and cannot be excluded by local zoning simply because it's a group home, a protection rooted in both state statute and the federal Fair Housing Act's group home provisions [5]. Beyond zoning classification, your building has to pass fire marshal review and meet applicable building code for the number and mobility level of residents; a home serving people who need help evacuating will trigger stricter fire and egress requirements than one serving fully mobile adults. Sprinkler requirements, means of egress, and smoke detector placement get reviewed at inspection, and retrofits on an older house can get expensive fast. Don't sign a purchase agreement contingent only on financing. Make it contingent on zoning confirmation and a preliminary fire marshal walkthrough too. A house that looks perfect on paper can fail on hallway width or a single interior stairwell that doesn't meet egress code, and that's a very expensive surprise to discover after closing.
What staffing and background check rules apply?
Minnesota requires background studies through DHS's centralized system for anyone with direct contact in a licensed program, including owners, employees, contractors, and in some settings, household members. NETStudy 2.0 is the platform DHS uses to process most of these studies for disability, children's, and related license types, and it flags disqualifying convictions under Minnesota Statutes Chapter 245C [6]. Staffing ratios themselves depend on your license type and the acuity of residents. DHS-licensed foster care and CRS settings typically require staff coverage based on individual service plans rather than a flat ratio, meaning a resident with higher support needs can require more staff hours even in a small home. MDH assisted living licensure requires a designated director and adequate staff to meet each resident's service plan, but doesn't set one universal numeric ratio across all facility sizes [2]. Plan your labor budget assuming overnight awake staff, more than on-call staff, if any resident has a behavioral health need, elopement risk, or a service plan requiring active overnight supervision. Skimping here is the fastest way to fail an inspection or, worse, have an incident that draws a licensing complaint.
How much does it cost and how long does licensing take?
Minnesota doesn't publish one flat statewide fee for every group home type, because DHS and MDH fee schedules differ by license category, capacity, and whether it's an initial application or a renewal; confirm current fee amounts directly with DHS Licensing or MDH's assisted living licensing division before budgeting [1][2]. Beyond the license fee itself, plan for background study fees per person, fire marshal inspection fees charged by your local jurisdiction, any required liability and property insurance, staff training costs (medication administration training, first aid/CPR, and any 245D-specific training for DHS-licensed programs), and the property costs of bringing an older building up to code. Timeline realistically runs several months from application submission to license issuance once you include background study processing, any requested corrections to your policy manual, and inspection scheduling. Rushing this by skipping the zoning confirmation step or submitting an incomplete policy manual is the single most common reason applications bounce back for revision, adding weeks you didn't plan for.
What written policies and procedures do I need before I apply?
Every Minnesota group home license, regardless of category, requires a written policy manual covering resident rights, medication management, emergency and disaster procedures, incident and maltreatment reporting, staff training, and grievance procedures. DHS-licensed programs providing home and community-based services must additionally document individual service plans and support strategies consistent with 245D standards [1]. Minnesota law requires mandated reporting of suspected maltreatment of vulnerable adults under the Vulnerable Adults Act, and your policy manual needs a clear internal procedure for staff to follow, including who reports to the Minnesota Adult Abuse Reporting Center and within what timeframe. Get this wrong in your written policy and it's an easy inspection finding. This is the point in the process where a lot of new operators either hire an expensive consultant or spend weeks reinventing policy language from scratch. If you want a starting template you can adapt to Minnesota's specific statute citations rather than writing 40 pages of policy from a blank page, GroupHomePath's $299 State Group Home Licensing Kit gives you a structured starting draft built around your state's licensing categories; you still customize it and get it reviewed against your county's actual requirements, but it saves the blank-page problem. Check the licensing kit builder for what's included.
What inspections and ongoing compliance should I expect after licensing?
After your license is issued, expect periodic re-inspections and unannounced visits tied to your license type, plus mandatory reporting obligations any time there's a serious incident, injury, or allegation of maltreatment. DHS and MDH both maintain complaint investigation systems, and a substantiated complaint can trigger a follow-up survey outside your normal renewal cycle. Renewal cycles and required documentation differ by license category, so track your specific renewal date and required annual filings (updated background studies, updated staff training records, fire inspection sign-off) well ahead of the deadline; letting a renewal lapse can force a full re-application in some categories. Build a compliance calendar the day you get licensed, not the month before renewal. Track background study expiration dates, fire inspection due dates, and staff training refresh dates in one place. Our inspections coverage walks through what surveyors actually check room by room, which is worth reading before your first unannounced visit, not after.
Frequently asked questions
What is assisted living?
Assisted living is licensed housing for adults, usually seniors, who need help with daily activities like bathing, dressing, or medication management but don't need round-the-clock skilled nursing care. In Minnesota it's regulated under Chapter 144G by the Department of Health, and providers must hold a license to use the term "assisted living" in their name or marketing.
What is a group home?
A group home is a licensed residence, usually a house, where a small number of people with disabilities, mental illness, or age-related needs live together and receive supervision or care. In Minnesota, depending on the population served, it's licensed under DHS as adult foster care or a Community Residential Setting, or under MDH as assisted living for seniors.
What is an assisted living facility?
An assisted living facility is a licensed building and operation providing housing plus at least one covered service, like help with daily activities or medication management, to residents in exchange for compensation. Minnesota requires MDH licensure under Chapter 144G before a facility can call itself "assisted living" or advertise using that term.
What is assisted living vs nursing home?
Assisted living helps residents with daily living tasks and light health monitoring in a home-like setting without 24-hour licensed nursing staff. A nursing home provides round-the-clock skilled nursing care for people with complex medical needs. Nursing homes accept short-term Medicare stays for rehab; assisted living is paid mostly out of pocket or through Medicaid waivers.
What does assisted living provide?
Assisted living typically provides a private room or apartment, meals, help with activities of daily living (bathing, dressing, mobility), medication management, housekeeping, social activities, and some health monitoring. It does not provide 24-hour skilled nursing care. Exact services vary by facility and by the individual service plan negotiated at admission.
How do I start a group home in Minnesota?
Identify your population and matching license (DHS adult foster care or CRS for disability/mental health, MDH assisted living for seniors), confirm zoning, complete background studies through DHS's NETStudy 2.0, submit your application with a policy manual and staffing plan, pass a fire and licensing inspection, then get your license issued before admitting residents.
What is the difference between assisted living and nursing home care in cost and payer source?
Assisted living is paid mostly through private funds or Medicaid waivers like Minnesota's Elderly Waiver, with separate housing and service charges. Nursing home care is billed through Medicare for short post-hospital stays and Medicaid for longer-term coverage, using a medically-driven per-diem rate tied to a resident's clinical acuity level.
Does Medicare cover assisted living facilities?
No. CMS states Medicare doesn't cover long-term custodial care, which is what assisted living primarily provides. Medicare may cover specific medical services a resident receives while living in assisted living, like physical therapy or doctor visits, but it never covers the facility's room and board or personal care charges.
How do I start a group home if I want to serve people with disabilities specifically?
You'll likely apply through Minnesota DHS for adult foster care or Community Residential Setting licensure, and if you're providing home and community-based services, you'll need to meet Chapter 245D standards too. Talk to your county's disability services case management unit early, since waiver funding eligibility is tied to your license category.
How much does it cost to license a group home in Minnesota?
There's no single statewide flat fee; DHS and MDH fee schedules vary by license category, facility capacity, and whether it's an initial application or renewal. Confirm current fee amounts directly with DHS Licensing or MDH's assisted living division, and budget separately for background study fees, fire inspections, and staff training costs.
Can I convert an existing house into a licensed group home?
Often yes, but confirm zoning classification and get a fire marshal walkthrough before you buy. Minnesota law generally treats small group homes serving six or fewer people with disabilities as a permitted residential use, but the building still must pass fire code and egress requirements for the resident population you intend to serve.
How long does Minnesota group home licensing take from application to opening?
Realistically several months once you account for background study processing, any requested corrections to your policy manual and floor plan, and inspection scheduling. Applications with zoning issues or incomplete policy manuals get sent back for revision, which adds weeks; confirm current processing estimates with DHS or MDH directly.
Do I need a special license to call my business assisted living in Minnesota?
Yes. Minnesota Statutes Chapter 144G prohibits using the term "assisted living" in a facility's name or advertising unless the Minnesota Department of Health has issued that facility an assisted living license. Operating without it, while providing covered services, exposes you to licensing enforcement action.
Sources
- Minnesota Office of the Revisor of Statutes, Chapter 245D: 245D sets home and community-based services standards applicable to many DHS-licensed foster care and CRS settings
- Minnesota Office of the Revisor of Statutes, Chapter 144G: Minnesota's assisted living licensure law, effective August 1, 2021, requires MDH licensure and restricts use of the term assisted living
- Minnesota Department of Human Services, Elderly Waiver: Minnesota's Elderly Waiver can cover services for eligible seniors in certain licensed settings
- Medicare.gov, Long-Term Care coverage: Medicare does not cover long-term custodial care, which is the basis of assisted living services
- 42 U.S.C. 3604, Fair Housing Act discrimination in sale or rental of housing: Group homes for people with disabilities receive protection from exclusionary local zoning under the Fair Housing Act
- Minnesota Office of the Revisor of Statutes, Chapter 245C (Background Studies): DHS uses the NETStudy 2.0 system to process background studies for licensed program staff and license holders under the disqualifying conviction standards set in Chapter 245C