Group home residents are usually paid for by a combination of sources rather than a single payer. Medicaid’s Home and Community-Based Services waivers cover the bulk of care costs for most residents, and the resident’s Social Security income, family contributions, veterans’ benefits, or long-term care insurance cover room and board. Private savings fill whatever gap remains. Understanding who pays for group home residents starts with a distinction the funding system draws sharply: care services and housing are paid for separately, by different sources, under different rules.
Care Costs and Room and Board Are Paid Separately
Group home expenses fall into two buckets. Care includes personal assistance with bathing, dressing, eating, and toileting, plus medication management, behavioral support, and recreational programming. Room and board covers housing, utilities, and meals. That split drives almost every funding decision, because most government programs pay for one but not the other.
Total monthly costs run roughly $5,000 to $6,200 nationally, with a wider range depending on facility size, care intensity, and geography. Small residential care homes with four to eight residents cost less than larger assisted living communities. Rural facilities generally charge less than urban ones. Homes serving residents with dementia, complex behavioral needs, or intensive medical requirements charge more. Monthly figures range from under $4,000 in lower-cost areas to well over $7,000 in expensive metro regions.
Medicaid Pays for Most of the Care
Medicaid is the dominant payer for group home residents. Through Home and Community-Based Services waivers authorized under Section 1915(c) of the Social Security Act, states fund care in community settings as an alternative to nursing facility placement. Over 86 percent of people receiving Medicaid-funded long-term services and supports were served through HCBS programs as of 2021, and more than 63 percent of all long-term care spending went to community-based care rather than institutions.1Centers for Medicare & Medicaid Services. Home and Community Based Services
Each state designs its own waiver programs within federal guidelines, serving specific populations such as people with intellectual and developmental disabilities, older adults, or individuals with serious mental illness. Standard covered services include personal care, case management, home health aides, habilitation, adult day services, and respite care.2Medicaid.gov. Home and Community-Based Services 1915(c)
The critical catch: Medicaid HCBS waivers do not pay for room and board. Care services are covered, but housing and meals have to come from somewhere else. That gap is where families feel the most financial pressure, and it’s why the funding picture for a single resident usually involves several payers stacked on top of each other.
Financial and Functional Eligibility
Qualifying for Medicaid-funded HCBS involves a financial test and a functional test. On the financial side, most states tie long-term care Medicaid eligibility to SSI resource limits: $2,000 in countable assets for an individual or $3,000 for a couple in 2026.3SSA. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet Countable assets include bank accounts, investments, and most property beyond a primary home. Exempt assets include a principal residence up to equity limits set by the state, one vehicle, personal belongings, and burial funds.
The functional test requires demonstrating a “nursing facility level of care,” meaning the individual needs the kind of support that would otherwise require nursing home placement. Criteria vary by state, but this generally means needing help with at least two activities of daily living, or requiring around-the-clock supervision due to cognitive impairment.2Medicaid.gov. Home and Community-Based Services 1915(c)
Waiver Waiting Lists
Approval doesn’t mean services start immediately. In 2024, roughly 710,000 people sat on waiting lists across 40 states, with an average wait of 40 months.4Congress.gov. Number of Individuals on HCBS Waiting Lists People with intellectual and developmental disabilities waited the longest, at an average of 50 months. More recent 2025 data shows roughly 600,000 people still waiting, with average waits dropping to about 32 months.5KFF. A Look at Waiting Lists for Medicaid Home- and Community-Based Services From 2016 to 2025 Apply as early as possible, even years before a placement becomes necessary.
The Medicaid Spend-Down
People whose income exceeds Medicaid limits may still qualify through a spend-down, which works like a deductible. The applicant incurs medical expenses until those costs consume the income above Medicaid’s threshold, at which point Medicaid covers additional expenses. Thirty-six states and the District of Columbia offer some form of spend-down or medically needy program.6Centers for Medicare & Medicaid Services. Eligibility Policy Details vary significantly by state.
Medicare Does Not Pay for Group Home Care
Families sometimes assume Medicare will cover long-term residential costs. It won’t. Medicare covers skilled nursing facility stays only after a qualifying hospital admission of at least three consecutive inpatient days, and only for a limited recovery period capped at 100 days per benefit period.7Medicare.gov. Skilled Nursing Facility Care Medicare is designed for short-term rehabilitation after an acute medical event, not for the ongoing personal care and housing a group home provides.
Social Security Pays the Room and Board
Because Medicaid won’t cover housing and meals, Social Security benefits become the primary source of room-and-board money for most group home residents.
Supplemental Security Income pays up to $994 per month for an eligible individual in 2026.8Social Security Administration. How Much You Could Get From SSI The actual payment depends on the living arrangement. If a resident lives in a group home and pays less than a fair share of household costs, SSA may reduce the benefit by up to one-third.9Social Security Administration. Supplemental Security Income (SSI) Living Arrangements
Watch for one specific situation. When a resident is in a facility where Medicaid pays for more than half the cost of care, SSI drops to just $30 per month plus any state supplement. This rule applies to medical treatment facilities, not all group homes, but the classification can vary by state and facility type.9Social Security Administration. Supplemental Security Income (SSI) Living Arrangements
Social Security Disability Insurance works differently. SSDI is based on the recipient’s work history and has no asset limit, so the monthly amount varies. Many group home residents receive both SSI and SSDI, though SSDI income reduces the SSI payment dollar for dollar after a $20 general exclusion. Most states require residents to contribute the bulk of their income toward the cost of care, leaving them a small personal needs allowance, typically between $35 and $160 per month depending on the state.
Many states supplement the federal SSI payment for residents in licensed residential care settings. These state supplemental payments range from under $100 to over $1,000 per month, depending on the state, facility type, and level of care. The state Medicaid office is the reliable source for the specific supplement available.
Veterans’ Aid and Attendance
Veterans who need help with daily activities may qualify for the Aid and Attendance benefit, which adds a monthly payment on top of the VA pension. For a veteran with no dependents, the maximum annual pension rate with Aid and Attendance is $29,093 in 2026, roughly $2,424 per month. A veteran with at least one dependent can receive up to $34,488 per year, or about $2,874 per month.10Veterans Affairs. Current Pension Rates for Veterans Surviving spouses of eligible veterans may also qualify.
To qualify, the veteran must have served at least 90 days of active duty with at least one day during a wartime period and meet income and net worth limits. The application requires VA Form 21-2680, an examination report completed by a physician documenting the need for assistance with daily living activities.11Veterans Affairs. VA Aid and Attendance Benefits and Housebound Allowance
Private Payment and Long-Term Care Insurance
When government programs fall short, families use private resources. Direct out-of-pocket payments from savings, retirement accounts, or current income are the most straightforward option, but at $5,000 or more per month, personal funds deplete quickly. Many families combine government benefits with private payments to bridge the gap.
Standard private health insurance rarely covers group home costs. Policies focus on acute medical needs and may pay for specific therapeutic services or short-term skilled care, but they generally exclude custodial care and room and board in residential settings.
Long-term care insurance is different. These policies are designed to cover daily care costs in group homes, assisted living, and nursing facilities. Benefits typically start when the policyholder cannot perform a certain number of activities of daily living independently. Policies must be purchased years before they’re needed, premiums can be expensive, and benefit amounts vary. For families who planned ahead, long-term care insurance can be one of the most significant private funding sources.
Tools That Protect Medicaid Eligibility
Medicaid’s strict asset limits create a dilemma: families want to preserve some resources for the resident’s future needs, but too many assets disqualifies the person from benefits. Several legal tools help navigate this problem, and structuring them wrong can be extremely costly.
Special Needs Trusts
A special needs trust holds assets for a person with a disability without disqualifying them from Medicaid or SSI. A first-party special needs trust (a d4A trust) holds the disabled person’s own assets, must be established before age 65, and requires that any funds remaining at death go back to the state to repay Medicaid costs.12Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets A pooled trust (d4C trust) works similarly but is managed by a nonprofit that pools funds from multiple beneficiaries for investment while maintaining separate accounts.13Social Security Administration. SSI Spotlight on Trusts
The distinction matters. If a family puts money into a regular revocable trust, SSA counts the entire trust as a resource and the person loses SSI eligibility. An irrevocable trust fares only slightly better: any portion from which payments could be made to the beneficiary still counts.13Social Security Administration. SSI Spotlight on Trusts Only trusts that meet the statutory requirements for special needs or pooled trusts are exempt. Families who inherit money or receive a personal injury settlement for a disabled loved one should consult an elder law or special needs attorney before touching the funds.
ABLE Accounts
ABLE accounts offer a simpler savings option for people whose disability began before age 26. These tax-advantaged accounts can receive up to $19,000 in total contributions per year in 2026, and the first $100,000 in the account is completely disregarded when calculating SSI eligibility.14Social Security Administration. Spotlight on Achieving a Better Life Experience (ABLE) If the balance exceeds $100,000, SSI payments are suspended but not terminated, restarting once the balance drops back down. Working account holders who don’t receive employer retirement plan contributions can add funds above the $19,000 limit, up to the federal poverty level for their state. ABLE funds can pay for qualified disability expenses including housing, health care, transportation, and assistive technology.
The 60-Month Look-Back
Giving away assets to get below Medicaid’s limits is risky. When someone applies, the state reviews all asset transfers made during the previous 60 months.12Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Gifts, transfers for less than fair market value, or asset sheltering during that window trigger a penalty period during which Medicaid won’t pay for care. The penalty length is calculated by dividing the total value of improper transfers by the average monthly cost of private nursing home care in the applicant’s state. During the penalty period, the person is ineligible for Medicaid-funded care but has already given away the money that could have paid privately. This is planning that requires professional guidance well before a group home placement is needed.
Estate Recovery After a Resident Dies
After a Medicaid recipient dies, the state is required to seek reimbursement from their estate for Medicaid-funded services. For individuals who were 55 or older when they received benefits, the state must attempt to recover costs for nursing facility services, HCBS, and related hospital and prescription drug services.15Centers for Medicare & Medicaid Services. Estate Recovery Any money remaining in a first-party special needs trust at the beneficiary’s death is also subject to Medicaid repayment.12Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
Protections exist. The state cannot pursue estate recovery while a surviving spouse is alive, or when the deceased is survived by a child under 21 or a child of any age who is blind or disabled.15Centers for Medicare & Medicaid Services. Estate Recovery States must also establish procedures to waive recovery when it would cause undue hardship. For residents with minimal estates, recovery may yield little, but families who own a home or have other assets should factor estate recovery into long-term planning.
A Tax Break Worth Knowing About
Some group home expenses qualify as deductible medical expenses on federal taxes. If the principal reason for living in a residential facility is to receive medical care, the full cost of the stay, including meals and lodging, can be included as a medical expense. If the placement is primarily custodial, only the portion attributable to actual medical or nursing care qualifies. The IRS also allows a deduction for the cost of keeping an intellectually or developmentally disabled person in a specialized residential home when a psychiatrist recommends the placement to help the person adjust to community living.16Internal Revenue Service. Publication 502 – Medical and Dental Expenses Deductions are available only to taxpayers who itemize, and only the amount exceeding 7.5 percent of adjusted gross income is deductible.17Internal Revenue Service. Topic No. 502, Medical and Dental Expenses
Starting the Applications
Applying for group home funding requires pulling together medical and financial documentation and working with multiple agencies at once. For Medicaid HCBS waivers, start at the state Medicaid office or the agency overseeing developmental disability services in your state. You’ll need medical records documenting diagnoses and functional limitations, proof of income and assets, and identification. A formal level-of-care assessment determines whether the individual meets the functional threshold for HCBS eligibility.
SSI applications go through the Social Security Administration online, by phone, or at a local office. Expect to provide detailed medical evidence and financial records. Veterans’ Aid and Attendance applications are filed through the VA, with VA Form 21-2680 completed by a physician who can document the veteran’s need for assistance.11Veterans Affairs. VA Aid and Attendance Benefits and Housebound Allowance
Given the HCBS waiting lists and processing times, begin the paperwork well before a crisis forces a placement decision. Applying for Medicaid and getting on a waiver waiting list early, even years before a group home is needed, can make the difference between a funded placement and scrambling to pay out of pocket.