How to start a residential group home in mn

Last updated 2026-07-25

what is a group home

A group home is a licensed residence where a small number of people who need support with daily living, whether from a disability, mental illness, age-related decline, or recovery from substance use, live together and get staff support around the clock or on a scheduled basis. It's not a hospital and it's not independent living. It sits in the middle: real housing, with real staff, following a state-approved plan of care for each resident. In Minnesota, what most people call a "group home" usually falls under one of two regulatory buckets at the Department of Human Services (DHS): a 245D home and community-based services license for people with disabilities or mental illness, or a 245A adult foster care / community residential setting license, which 245D providers often layer on top of. Which one applies to you depends entirely on who you plan to serve and where they'll live ^[1]. The practical difference matters a lot for your application. A four-bed home serving adults with intellectual and developmental disabilities (IDD) has different staffing ratios, physical plant rules, and background study requirements than a home serving adults in mental health recovery. Get this classification wrong at the start and you'll redo half your paperwork.

what is assisted living and how is it different from a group home

Assisted living is licensed senior housing where residents get help with things like bathing, medication management, and meals, but keep their own apartment or room and a degree of independence. A group home, by contrast, usually houses a smaller number of residents in a single shared house and provides more hands-on, continuous support tied to a specific disability or behavioral health need. Minnesota actually restructured this whole area in 2021. As of August 1, 2021, Minnesota no longer licenses standalone "assisted living facilities" and "assisted living facilities with dementia care" as separate categories from what used to be called supervised living facilities; instead the state created a unified assisted living license under Minnesota Statutes Chapter 144G, administered by the Minnesota Department of Health (MDH), not DHS ^[2]. If you're picturing senior residential care with private units, you're looking at MDH's Chapter 144G license. If you're picturing a small shared home for adults with IDD, mental illness, or substance use disorders, you're looking at DHS's Chapter 245D/245A licenses. These are two different state agencies with two different applications, so figure out which population you're serving before you file anything. For background on assisted living licensing generally (outside Minnesota specifics), see assisted living and assisted living facility.

what is an assisted living facility (and does minnesota still call it that)

An assisted living facility is a licensed residential setting, typically for older adults, that provides housing plus supportive services like help with activities of daily living, medication administration, and 24-hour staff availability, without the medical intensity of a nursing home. The label varies by state; some states still use "assisted living facility" as the official license name. Minnesota technically retired the old term. Under the 2021 law, MDH issues an "assisted living facility license" and an optional "assisted living facility with dementia care" designation, both under Chapter 144G, replacing the older patchwork of housing with services registration plus separate home care licenses ^[2]. So if you search "what is an assisted living facility" in a Minnesota context, the honest answer is: it's now a single, unified MDH license, not the old dual-license system many other states still use. If your target population is seniors needing daily support, this is the license track to research, not DHS's 245D program. See also assisted living facilities and facility assisted living for how other states structure this differently.

what does assisted living provide day to day

Assisted living typically provides help with activities of daily living (bathing, dressing, toileting, mobility), medication management, meals, housekeeping, social and recreational programming, and 24-hour staff availability for emergencies. It does not typically provide the level of skilled nursing care you'd get in a nursing home. Under Minnesota's Chapter 144G, licensees must provide, at minimum, an assessment of each resident's needs, a resident record, and a service plan built around that assessment before delivering services ^[2]. Facilities can offer additional services (medication administration, dementia care, therapies) but those trigger additional licensing requirements and staffing qualifications. If your business model depends on offering memory care specifically, you need the dementia care designation, which comes with its own staff training hours and physical plant requirements under Minnesota law ^[2]. Group homes under 245D work differently: services are built around an individualized Coordinated Service and Support Plan created with the person's case manager, not a generic facility service menu ^[1]. That's a meaningful operational difference if you're building policy manuals: 245D providers write person-specific plans, MDH-licensed assisted living writes facility-wide service agreements plus individual assessments.

what is the difference between assisted living and a nursing home

Licensing agency	MDH	MDH (state) + CMS (federal certification)	DHS
Typical resident	Older adult needing daily support	Medically complex, needs skilled nursing	Adult with disability, mental illness, or SUD
Nursing staff required 24/7	Not required by default	Yes, RN coverage required	Depends on service type
Medicare coverage	Generally no [4]	Yes, for short-term skilled stays [4]	Generally no (Medicaid HCBS funds services)
Typical unit size	Private/semi-private apartment	Semi-private or private room	Shared house, 4-6 beds common	If your business plan mixes up these categories, an investor or a licensor will catch it fast. Pick your lane before you write a single policy.

Assisted living is residential and supportive; a nursing home (skilled nursing facility) is a medical facility providing 24-hour skilled nursing care, rehabilitation, and treatment for people with significant medical needs. Nursing homes are licensed under different federal and state rules and are subject to Medicare/Medicaid Conditions of Participation for Skilled Nursing Facilities under 42 CFR Part 483, Subpart B, because they bill Medicare Part A for skilled care; most assisted living is not ^[3]. Here's a comparison that's genuinely useful when you're deciding what to build: | Feature | Assisted Living (MN Ch. 144G) | Nursing Home (Skilled Nursing) | Group Home (245D/245A) |

does medicare cover assisted living facilities

No, in almost all cases Medicare does not cover the cost of assisted living, including room, board, and personal care services. Medicare.gov states plainly that "Medicare doesn't cover long-term care (also called custodial care)" if that's the only care you need, and assisted living falls into that custodial category ^[4]. Medicare Part A can cover a short-term stay in a skilled nursing facility after a qualifying hospital stay, and Medicare Part B can cover doctor visits, physical therapy, and some medical equipment for someone living in assisted living, but it does not pay the facility's monthly rent or personal care fees ^[4]. Families typically pay privately, use long-term care insurance, or, if income-eligible, tap into state Medicaid waiver programs. This is a critical point for your Minnesota business plan: Medicaid, run jointly by states and the federal government under CMS, can help fund home and community-based services for people in group home settings through waivers (like Minnesota's Elderly Waiver or CADI/DD waivers), but that's Medicaid, not Medicare, and it flows through the Medicaid Home and Community-Based Services rules under 42 CFR Part 441, Subpart G ^[5]. Get comfortable with that distinction; families and referral sources will ask you about it constantly.

how to start a group home in minnesota, step by step

Starting a licensed group home in Minnesota takes roughly six steps: form your business entity, identify which license track fits your population (DHS 245D/245A or MDH 144G), secure a compliant property, write your policies and staffing plan, submit the license application with fees, and pass your pre-licensing inspection. Step 1: Form your legal entity. Register an LLC or corporation with the Minnesota Secretary of State before you apply for any license; DHS and MDH both require a legal business name and entity documentation as part of the application packet. Step 2: Decide your license type and population. This is the single most consequential decision. DHS licenses Home and Community-Based Services providers under Minnesota Statutes Chapter 245D for people with disabilities and mental illness, and licenses adult foster care / community residential settings under Chapter 245A ^[1]. MDH licenses assisted living for seniors under Chapter 144G ^[2]. Call the relevant agency's licensing division before you sign a lease; a five-minute phone call here saves months later. Step 3: Secure and prepare the property. You'll need a location that meets zoning requirements (confirm with your local zoning or planning department, since group homes often qualify for reasonable-accommodation protections under the Fair Housing Act but local rules still vary), passes a fire marshal inspection, and meets DHS or MDH's physical environment standards (bedroom size, egress, bathroom ratios). Budget real time here; fire code corrections are the most common delay operators report. Step 4: Write your policies, procedures, and staffing plan. DHS requires 245D license holders to have written policies covering service delivery, rights protection, incident reporting, medication administration, and emergency procedures, tailored to the population served ^[1]. This is also where background studies come in: Minnesota law requires background studies on anyone providing direct contact services in a licensed program, run through the DHS NETStudy 2.0 system. Step 5: Submit your application and fees. Applications go through DHS's Licensing Division (or MDH for assisted living) with the required fee (confirm current fee amounts with your state licensing agency, since these are set by statute and rule and change periodically). Step 6: Pass your licensing inspection and get your license. A licensor reviews your physical site, your files, and your policies before issuing the license. Only after that inspection clears do you get approval to open and accept residents.

who regulates group homes in minnesota and where do i apply

The Minnesota Department of Human Services Licensing Division regulates most group homes serving people with disabilities, mental illness, or substance use disorders, primarily under Minnesota Statutes Chapters 245A (general licensing) and 245D (home and community-based services standards) ^[1]. The Minnesota Department of Health regulates assisted living for seniors under Chapter 144G ^[2]. If you're not sure which agency governs your planned program, don't guess. DHS's licensing framework statute lays out who needs a 245A license at all (any program providing services that fall within DHS's licensable categories), and 245D lays out the specific service standards for home and community-based services programs once you're under that umbrella ^[1]. Counties also matter here: many DHS-licensed programs are administered locally by county human services agencies for referrals, case management, and rate setting, even though the license itself comes from the state. One honest caveat: statute numbers, fee schedules, and specific program categories get amended by the Minnesota Legislature almost every session. Always confirm the current chapter and section numbers, and current fee amounts, directly with DHS's Licensing Division or MDH's Health Regulation Division before you build your budget around them.

what does it cost and how long does licensing take

Nobody has a single clean number for this because it depends heavily on your license type, your county's zoning review timeline, whether your building needs fire code retrofits, and how quickly your background studies clear. What we can say honestly: expect the process to take several months from application submission to license issuance, not weeks, and expect meaningful upfront costs for property prep, insurance, and staff hiring before you generate a dollar of revenue. Application and licensing fees themselves are set by Minnesota statute and rule and are periodically updated, so treat any specific dollar figure you read elsewhere with suspicion unless it links to a current DHS or MDH fee schedule. Confirm exact current fees with DHS Licensing or MDH's Health Regulation Division directly before budgeting. Bigger cost drivers than the license fee itself: building or retrofitting a property to meet fire and life-safety code, liability and property insurance, staff wages while you're getting licensed but not yet full, and background study processing fees per employee through NETStudy 2.0. Budget for all of these, more than the application fee, or your runway estimate will be wrong.

what staffing and policy documents does dhs actually require

DHS requires 245D license holders to maintain written policies covering, at minimum, service delivery consistent with each person's coordinated service and support plan, protection of client rights, staff qualifications and training, medication administration procedures, incident and emergency reporting, and behavior intervention procedures if applicable ^[1]. You also need documented orientation and annual training for direct support staff, and a designated program manager who meets the qualification standards in the statute. Staffing ratios aren't one-size-fits-all; they're built around each resident's individual support plan and acuity level, which is different from a fixed nurse-to-patient ratio you'd see in a nursing home. That means your staffing plan document has to show how you'll cover awake overnight staff if residents need it, how you'll handle staff call-outs without falling below coverage minimums, and how you train new hires before they work unsupervised. This is also where a lot of first-time operators underbudget their time. Writing a full 245D-compliant policy manual from scratch, covering rights protection, incident reporting protocols, medication management, and behavior support, easily takes weeks of dedicated work if you're building it from zero, longer if you're doing it around a full-time job. A prebuilt, state-specific starting framework (our $299 State Group Home Licensing Kit at /licensing-kit-builder is built around exactly this problem) can cut that drafting time down significantly, but you still need to customize every policy to your specific service type, population, and county before you submit anything to DHS.

how do zoning and property requirements affect where i can open

Zoning is one of the most misunderstood parts of opening a group home. Under the federal Fair Housing Act, group homes for people with disabilities generally get "reasonable accommodation" protection from local zoning rules that would otherwise treat them like a business or a boarding house, meaning cities often can't flatly ban a small group home from a residential zone just because it houses unrelated adults with disabilities. HUD's guidance describes reasonable accommodation as a change to a rule, policy, or practice necessary to give a person with a disability equal opportunity to use housing ^[6]. That said, reasonable accommodation is a legal process, not an automatic exemption, and local occupancy limits, spacing requirements between group homes, and fire code still apply. Practically, before you sign a lease or purchase agreement, call your city or county zoning or planning office and ask directly: is a licensed adult foster care or 245D residential home a permitted use at this address, and if not, what's the reasonable accommodation request process? Get the answer in writing if you can. This single phone call prevents the worst outcome in this business: a fully licensed program that a city later tries to shut down over a zoning dispute. Your building also has to clear a fire marshal inspection tied to occupancy type, egress width, smoke detection, and sprinkler requirements depending on resident mobility and building size. Older houses converted into group homes frequently need electrical and fire system upgrades; budget for this before you fall in love with a cheap property.

what happens during the licensing inspection

Before DHS or MDH issues your license, a licensor visits the property to confirm it matches what's in your application: correct bedroom sizes and occupancy counts, working smoke and fire systems, accessible bathrooms, posted emergency procedures, and a physical environment that matches your written policies. They'll also review your personnel files (background study clearances, training documentation) and your policy manual for completeness. Expect the licensor to ask questions like: where's your medication storage, how do you document incidents, what's your evacuation plan, and how do new staff get oriented before working alone with a resident. If anything's missing or doesn't match your written plan, you'll get a correction order with a deadline to fix it, not an automatic denial, but you won't get your license until corrections clear. After your initial license, expect ongoing periodic inspections (routine and complaint-driven) for as long as you operate. Keep your policy manual as a living document, not something you write once and file away; licensors check whether your actual practice matches your paper.

Frequently asked questions

What is assisted living in simple terms?

Assisted living is licensed housing for people, usually older adults, who need help with daily activities like bathing, dressing, and medication but don't need the intensive medical care of a nursing home. Residents typically have their own room or apartment plus access to staff support around the clock.

What is a group home exactly?

A group home is a licensed residential setting where a small number of people needing support (due to disability, mental illness, or recovery needs) live together with staff support. In Minnesota, this usually falls under DHS licensing (Chapter 245D or 245A) rather than the senior-focused assisted living license.

What is an assisted living facility called in Minnesota now?

Minnesota no longer uses separate old terms; since August 1, 2021, MDH issues a single unified 'assisted living facility license' under Minnesota Statutes Chapter 144G, with an optional dementia care designation, replacing the prior housing-with-services and home care license structure ^[2].

What's the difference between assisted living and a nursing home?

Assisted living provides residential housing plus help with daily activities; nursing homes provide 24-hour skilled nursing and medical care for people with significant medical needs. Nursing homes are federally certified for Medicare/Medicaid skilled care under 42 CFR Part 483, Subpart B; most assisted living is not ^[5].

Does Medicare cover assisted living facilities?

No. Medicare.gov states Medicare doesn't cover long-term custodial care, which includes most assisted living costs. Medicare can cover related medical services (doctor visits, therapy) for someone living there, and can cover short-term skilled nursing stays, but not the facility's room, board, or personal care fees ^[3].

How do I start a group home in Minnesota?

Form a business entity, decide which license applies (DHS 245D/245A for disability or mental health populations, or MDH 144G for senior assisted living), secure a compliant and zoning-approved property, write your policies and staffing plan, submit your application with required fees, and pass your pre-licensing inspection before accepting residents.

How long does it take to get a group home license in Minnesota?

There's no fixed statewide timeline; expect several months from application to license issuance once you account for property prep, fire marshal review, background study processing, and DHS or MDH's review of your policies. Confirm current expected processing times directly with your assigned licensor.

Do I need a special zoning permit for a group home in Minnesota?

Often local zoning treats a small licensed group home as a permitted residential use, and federal Fair Housing Act reasonable accommodation protections can apply, but this varies by city and isn't automatic. Call your local zoning or planning office before signing a lease or purchase agreement to confirm.

What's the difference between DHS 245D and 245A licenses in Minnesota?

Chapter 245A is Minnesota's general human services licensing framework covering who needs a license at all. Chapter 245D sets the specific program standards for home and community-based services providers, like staffing, service planning, and rights protection, once you're operating under DHS's licensing umbrella ^[1].

Can Medicaid pay for group home services in Minnesota?

Medicaid home and community-based services waivers (administered under federal rules at 42 CFR Part 441, Subpart G) can fund services for eligible people with disabilities or older adults in group home or waivered settings, but this is Medicaid, not Medicare, and eligibility and coverage vary by waiver program ^[4].

What background checks are required for group home staff in Minnesota?

Minnesota law requires background studies on anyone providing direct contact services in a DHS-licensed program, processed through the state's NETStudy 2.0 system, before that person can work unsupervised with residents. This applies to owners, employees, and certain volunteers.

What policies does DHS require in a group home policy manual?

At minimum, DHS requires written policies on service delivery tied to each resident's individual plan, protection of client rights, staff qualifications and training, medication administration, incident and emergency reporting, and behavior support procedures where applicable, under Chapter 245D standards ^[1].

Sources

1. Minnesota Office of the Revisor of Statutes, Chapter 245D: Minnesota's home and community-based services licensing standards for group home providers
2. Minnesota Office of the Revisor of Statutes, Chapter 144G: Minnesota's unified assisted living facility licensing law effective August 1, 2021, including the dementia care designation
3. Medicare.gov, Long-Term Care coverage: Medicare does not cover long-term custodial care, which includes most assisted living costs
4. Electronic Code of Federal Regulations, 42 CFR Part 441 Subpart G: Federal rules governing Medicaid home and community-based services waivers
5. Electronic Code of Federal Regulations, 42 CFR Part 483 Subpart B: Federal requirements for skilled nursing facilities participating in Medicare and Medicaid
6. U.S. Department of Housing and Urban Development, Reasonable Accommodations Under the Fair Housing Act (joint statement with DOJ): Federal Fair Housing Act reasonable accommodation standard for group homes facing local zoning restrictions