Last updated 2026-07-25
TL;DR
A non-profit group home is a residential care facility run by a tax-exempt organization instead of a private owner. It still needs the same state license as a for-profit home, but it can also apply for grants, accept tax-deductible donations, and pursue Medicaid contracts that require charitable status. Licensing, staffing, and inspection rules come from your state, not the IRS.
What is a group home?
A group home is a licensed residential setting where a small number of people (usually somewhere between 4 and 16, depending on the state and the population served) live together and receive some level of supervision, personal care, or support services. Group homes serve very different populations: people with intellectual or developmental disabilities, adults recovering from substance use, people with serious mental illness, and seniors who need help with daily activities but not full nursing care. The legal definition varies a lot by state and by the population the home serves. Some states license these homes under "adult foster care," others use "community residential facility," "residential care home," or "group living home." What they share is a state license, a set of staffing ratios, a physical plant that has to meet fire and life-safety code, and regular inspections. A group home is not automatically a medical facility. Staff generally help with things like medication reminders, meals, transportation, and supervision. Skilled nursing, if it happens at all, is usually brought in through a home health agency rather than provided by the group home's own staff.
What is assisted living, and how is it different from a group home?
Assisted living is a licensed care model for people, mostly older adults, who need help with activities of daily living (bathing, dressing, medication management) but don't need the 24-hour skilled nursing care of a nursing home. The Centers for Medicare & Medicaid Services describes assisted living as residential care that provides "personal care services, 24-hour supervision, and health-related services" in a home-like setting [1]. A group home and an assisted living facility overlap conceptually (both are non-medical residential care) but they're licensed differently in most states and often serve different age groups and disability categories. Assisted living almost always serves seniors and is regulated under an aging or elder-services statute. Group homes more often serve working-age adults with IDD, mental illness, or substance use disorders, and are regulated under disability or behavioral health statutes. If your organization is trying to decide which license category fits, read our explainer on assisted living facility licensing alongside your state's group home rules before you file anything, because picking the wrong category can mean redoing your application from scratch.
What is an assisted living facility, exactly?
An assisted living facility (ALF) is a state-licensed building or set of buildings where residents have private or semi-private rooms, receive help with daily activities, get meals, and have staff on site around the clock, but don't receive hospital-level medical care. Every state has its own licensing category and its own name for this (some call it "residential care facility for the elderly," others "personal care home"). ALFs are inspected on a regular schedule, usually annually, and have to meet minimum staffing ratios, staff training hours, and building code requirements specific to non-ambulatory or memory-care residents if the facility serves them. Costs and staffing rules differ so much state to state that there's no single national standard. Confirm the specific staffing ratio, training-hour requirement, and inspection frequency with your state licensing agency before you build a budget or a staffing plan around assumptions from another state. For a walkthrough of the licensing paperwork itself, see assisted living facilities licensing steps and the general assisted living overview.
What is the difference between assisted living and a nursing home?
| Medical oversight | Limited, mostly non-nursing staff | 24-hour skilled nursing | |
|---|---|---|---|
| Federal regulation | None (state-licensed only) | 42 CFR Part 483 [2] | |
| Typical resident | Needs help with ADLs | Needs medical/rehab care | |
| Medicare coverage of room and board | Not covered | Short-term SNF stays may be covered under conditions [3] | Group homes for non-senior populations sit closer to the assisted-living end of this spectrum: non-medical support with occasional visiting nursing or behavioral health services layered on top. |
The core difference is the level of medical care. Assisted living provides help with daily living activities and some health monitoring, but residents are generally able to direct their own care and don't need continuous skilled nursing. A nursing home (also called a skilled nursing facility, or SNF) provides 24-hour nursing care, is licensed under a much stricter federal and state framework, and is the setting for people recovering from surgery, managing complex chronic illness, or needing rehabilitation therapy. CMS regulates nursing homes participating in Medicare and Medicaid under 42 CFR Part 483, which sets requirements for things like sufficient nursing staff, resident assessments, and quality of care [2]. Assisted living facilities are not federally regulated in this way. They are licensed entirely at the state level, which is part of why rules and terminology vary so much across the country. | Feature | Assisted living | Nursing home (SNF) |
What does assisted living provide day to day?
Assisted living, and group homes serving a similar support level, typically provide: help with bathing, dressing, and grooming; medication reminders or, in some states, medication administration by trained staff; three meals a day plus snacks; housekeeping and laundry; transportation to appointments; and social or recreational activities. Staff are present around the clock, though the ratio of staff to residents at night is usually much lower than during the day. What's not typically included: skilled nursing procedures like wound care, IV therapy, or ventilator management. Those require either a higher license tier or an outside home health agency coming in. If a resident's needs progress past what the facility's license allows, most states require a "negotiated risk agreement" or a discharge/transfer plan, and your policy manual needs to spell out exactly what triggers that conversation. Group homes serving IDD or mental health populations add services assisted living doesn't usually include: behavior support plans, skills training toward independence, and coordination with a case manager or a state disability agency. Your program description and your state application need to match what your staff are actually trained and licensed to do, not an idealized version of the program.
Does Medicare cover assisted living facilities?
No. Medicare does not pay for room and board in an assisted living facility, and it doesn't cover custodial care generally. Medicare.gov states plainly that "Medicare doesn't cover long-term care (also called custodial care)" if that's the only care a person needs [4]. Medicare will pay for medical services a resident receives, such as doctor visits or physical therapy, even if that resident happens to live in an assisted living facility, but it will not pay the facility's monthly fee. Medicaid is a different story, and it's the funding source most group home and assisted living operators actually rely on. Medicaid can cover home and community-based services (HCBS) for eligible residents, often through a state's HCBS waiver program authorized under Section 1915(c) of the Social Security Act, but Medicaid still generally does not pay for room and board itself in most states, only for the services delivered [5]. Some states route SSI payments or state supplemental payments toward room and board instead. If your non-profit is counting on Medicaid HCBS reimbursement as a funding pillar, get the actual waiver terms and provider enrollment requirements from your state Medicaid agency before you finalize a budget. Reimbursement rates, covered services, and waiting lists differ enormously by state.
How is a non-profit group home different from a for-profit one?
The licensing requirements are almost always identical. Your state doesn't care whether your bank account belongs to an LLC or a 501(c)(3); it cares whether you meet staffing ratios, pass fire inspections, and follow the resident-care rules in its regulations. What changes with non-profit status is the funding and governance side. A non-profit group home organized under IRC Section 501(c)(3) can accept tax-deductible donations, apply for private foundation and government grants, and in some states qualify for property tax exemptions on the residence itself, though that exemption is never automatic and has to be applied for separately through your local assessor [6]. Non-profits also have to maintain a board of directors, file an annual Form 990 with the IRS, and avoid private inurement (using organizational funds for the benefit of an individual insider), which for-profits don't have to worry about in the same way. On the funding side, some state Medicaid HCBS contracts and some Substance Abuse and Mental Health Services Administration (SAMHSA) grant programs are open only to non-profit or governmental applicants, so non-profit status can open doors that are closed to LLCs. It also means slower decision-making in some organizations, since a board has to approve major changes rather than a single owner-operator.
How do I start a group home?
The path is roughly the same whether you incorporate as a non-profit or a for-profit, with the non-profit path adding an extra IRS layer up front. Here's the general sequence, though your state's exact order and requirements will differ: 1. Decide on your population (IDD, mental health, substance use recovery, or senior/RAL) and your state's specific license category for that population. 2. Incorporate. For a non-profit, file articles of incorporation with your state and then apply for 501(c)(3) tax-exempt status with the IRS using Form 1023 or the shorter Form 1023-EZ if you qualify [7]. 3. Confirm zoning for your property with your local planning or zoning office. Group homes for people with disabilities are protected under the federal Fair Housing Act, which limits how localities can restrict them compared to an ordinary single-family home, but local occupancy and building codes still apply [8]. 4. Write your policy and procedure manual: admissions criteria, medication management, staffing plan, emergency procedures, resident rights, grievance process. Most states require this manual as part of the license application, not as something you write after you're approved. 5. Hire and train staff to your state's minimum requirements (first aid/CPR, medication training, abuse-reporting training, and background checks are close to universal, though specific hour requirements vary). 6. Submit your license application to your state agency along with your fire marshal inspection, health inspection, and any required surety bond or liability insurance certificate. 7. Pass your pre-licensing inspection and get your license issued before you accept your first resident. For a full walkthrough of the paperwork itself, we built the $299 one-time State Group Home Licensing Kit, which packages state-specific application checklists, a policy manual template, and a staffing plan template so you're not starting from a blank page. It's a reference tool, not a guarantee of approval; your state licensing agency makes the final call on every application.
What licenses and approvals does a group home need before opening?
At minimum, expect to need: a business or non-profit corporate registration with your Secretary of State, a group home or residential care license from your state's health or social services department, a local business license or zoning approval, a fire and life-safety inspection sign-off from your local fire marshal, and, for most homes serving three or more unrelated residents, some form of food service permit if you're preparing meals on site. Depending on the population you serve, you may also need a separate behavioral health or IDD program certification layered on top of the residential license. A group home serving people with mental illness, for example, might need both a residential license and a certification from the state's mental health authority to bill for services. Every one of these requirements, including the specific agency name, the fee amount, and the renewal cycle, is state-specific. Confirm the exact list with your state licensing agency before budgeting, because the difference between a $200 application fee and a $2,000 one, or a 30-day review and a 6-month review, changes your whole opening timeline.
How does zoning affect where I can open a group home?
Zoning is one of the most common places new operators get stuck, non-profit or not. Under the federal Fair Housing Act (42 U.S.C. § 3604), it is illegal for a city or county to treat a group home for people with disabilities differently than it treats an ordinary family home solely because of the residents' disability [8]. HUD has issued guidance confirming that reasonable accommodation requests, such as a variance from an occupancy cap, must be considered when they're necessary for people with disabilities to use housing equally . That protection doesn't eliminate zoning review entirely. Localities can still enforce genuinely neutral rules: building and fire codes, parking requirements, spacing requirements between group homes in some states, and maximum occupancy tied to septic or safety capacity, not disability status. Before you sign a lease or a purchase agreement, check with your local zoning or planning department about whether the property is in a zone that allows a "family" or "congregate residential" use, and ask specifically whether a conditional use permit is required. For a broader look at how this plays out property type by property type, see our related coverage on assisted living at home situations, where zoning questions come up just as often for smaller, home-based operations.
What staffing and inspection requirements should I expect?
Every licensed group home has to meet a minimum staff-to-resident ratio, and that ratio usually changes based on time of day (day shift versus overnight) and resident acuity. States also generally require a designated administrator or program director who meets minimum education or experience requirements, background checks (often through a state and FBI fingerprint check) for every staff member with resident contact, and a set number of initial and annual training hours covering topics like medication administration, abuse/neglect reporting, CPR/first aid, and fire safety. Inspections happen both before you open (a pre-licensing survey) and on an ongoing basis after that, typically annually, plus complaint-driven inspections that can happen anytime someone files a report with the state. Inspectors check the physical building (fire exits, smoke detectors, sprinklers where required), resident records, medication logs, staff training files, and compliance with your own written policies. The specific ratios, training hour minimums, and inspection frequency are set by each state's licensing regulations, not by federal law, so the honest answer to "how many staff do I need" is: it depends entirely on your state and your population, and you should get the actual number from your state licensing agency's regulations before you build a staffing budget.
Frequently asked questions
What is assisted living?
Assisted living is a licensed residential care option for people, usually seniors, who need help with daily activities like bathing, dressing, and medication management but don't need 24-hour skilled nursing care. CMS describes it as combining housing, personal care services, and health-related services in a home-like setting [1]. It's regulated at the state level, so exact rules vary.
What is a group home?
A group home is a licensed residential setting where a small number of people live together and receive supervision and support services, commonly serving people with intellectual/developmental disabilities, mental illness, substance use disorders, or, in senior residential assisted living (RAL) contexts, older adults needing personal care. It's licensed by a state agency, not the federal government.
What is an assisted living facility?
An assisted living facility is a state-licensed building where residents get help with daily activities, meals, and 24-hour staff supervision but not hospital-level medical care. Naming varies by state (some call it a residential care facility for the elderly or a personal care home), and licensing, staffing ratios, and fees are all set individually by each state's licensing agency.
What is assisted living facility care actually like?
Day to day, residents get help with bathing, dressing, medication reminders, three meals plus snacks, housekeeping, transportation to appointments, and organized social activities. Staff are on site around the clock, though overnight staffing ratios are usually lower. Skilled medical procedures like wound care or IV therapy aren't included and require an outside home health agency or a higher license tier.
What is the difference between assisted living and a nursing home?
Assisted living provides help with daily activities and limited health monitoring for people who can mostly direct their own care. A nursing home provides 24-hour skilled nursing care under federal rules at 42 CFR Part 483 [2], serving people recovering from surgery or managing complex medical needs. Nursing homes are far more medically intensive and federally regulated; assisted living is state-regulated only.
Does Medicare cover assisted living facilities?
No. Medicare does not pay for room and board in assisted living because it's considered custodial, not medical, care [4]. Medicare will pay for covered medical services a resident receives (like doctor visits or physical therapy) regardless of where they live, but it won't cover the facility's monthly fee. Medicaid HCBS waivers may cover services, though usually not room and board.
Does Medicaid cover group home or assisted living costs?
Medicaid can cover home and community-based services through state HCBS waivers authorized under Section 1915(c) of the Social Security Act [5], but in most states it still doesn't cover room and board directly, only the care services delivered. Coverage, reimbursement rates, and waiting lists vary by state, so confirm current terms with your state Medicaid agency.
How do I start a group home?
Pick your population and license category, incorporate (and apply for 501(c)(3) status if going non-profit), confirm zoning, write your policy manual, hire and train staff to state minimums, submit your license application with required inspections, and pass your pre-licensing survey before accepting residents. Every step's exact requirements come from your state licensing agency, not a national standard.
How do I start a non-profit group home specifically?
Follow the same state licensing steps as any group home, but first incorporate as a non-profit with your state and file IRS Form 1023 or Form 1023-EZ for 501(c)(3) status [7]. Non-profit status can open access to certain grants and Medicaid contracts restricted to charitable organizations, but it does not change your state's licensing, staffing, or inspection requirements.
Is a non-profit group home cheaper to start than a for-profit one?
Not necessarily. Licensing fees, staffing costs, and building requirements are the same regardless of tax status. Non-profits add IRS filing costs (Form 1023-EZ has a $275 user fee as of the IRS's current fee schedule; confirm the current amount on IRS.gov) and ongoing Form 990 reporting, but may gain access to grants and donations that offset those costs over time.
Can a city block a group home from opening in a residential neighborhood?
Not solely because of residents' disabilities. The Fair Housing Act (42 U.S.C. § 3604) prohibits treating a group home for people with disabilities worse than an ordinary family home for that reason [8]. Cities can still enforce neutral building, fire, and occupancy codes, and may require a reasonable accommodation request for zoning variances tied to disability-related needs [9].
What's the difference between a group home and residential assisted living (RAL)?
Residential assisted living usually refers to smaller, home-based assisted living settings for seniors, often licensed under the same assisted living statute as larger facilities but operating out of a converted single-family home. "Group home" is a broader term that also covers IDD, mental health, and recovery housing, often under separate disability or behavioral health statutes rather than an aging statute.
What staffing ratio does a group home need?
There's no single national ratio. Each state sets its own minimum staff-to-resident ratios, usually varying by shift and by resident acuity level, in its licensing regulations. Some states also require a certain ratio of staff with specific training (medication aide certification, for example). Get the exact current ratio from your state licensing agency's regulations before building a staffing budget.
Sources
- CMS, Nursing Home vs. Assisted Living overview: Assisted living combines housing, personal care, and health-related services in a residential setting
- eCFR, 42 CFR Part 483 Subpart B: Nursing homes participating in Medicare/Medicaid are regulated under 42 CFR Part 483
- Medicare.gov, Skilled Nursing Facility Care coverage: Medicare may cover short-term skilled nursing facility stays under specific conditions
- Medicare.gov, Long-Term Care: Medicare doesn't cover long-term custodial care
- Medicaid.gov, Home & Community-Based Services 1915(c): Medicaid HCBS waivers under Section 1915(c) can cover home and community-based services for eligible individuals
- IRS, Exemption Requirements - 501(c)(3) Organizations: Requirements an organization must meet to qualify for 501(c)(3) tax-exempt status
- IRS, Form 1023-EZ Instructions: Streamlined application process and user fee for smaller organizations seeking 501(c)(3) status
- U.S. DOJ/HUD, Fair Housing Act, 42 U.S.C. § 3604: The Fair Housing Act prohibits discrimination against group homes for people with disabilities in zoning decisions