['The purpose of this study was to examine risk of nursing home (NH) placement among older adults receiving publicly funded home and community-based services (HCBS) or assisted living (AL) and to explore whether these settings of care modify the relationship between dementia and risk of NH placement.', 'The sample consisted of dually eligible Medicare and Medicaid beneficiaries age 65 and older who received HCBS (n = 1630) or resided in AL (n = 836) in Florida between July 1999 and June 2000. Cox proportional hazards regression was used to estimate risk of NH placement over a 5-year study period and to test the interaction of setting of care by dementia status.', 'In all, 15% of HCBS participants were placed in a NH compared to 26% of AL participants. As indicated by a significant interaction term in the regression model, setting of care modified the relationship between dementia and NH placement (HR = 0.45, CI = 0.31-0.66). In post hoc analyses stratified by setting of care, dementia was associated with a 50% increased risk of NH placement from HCBS (HR = 1.50, CI = 1.12-2.02) but was not associated with placement from AL (HR = 0.86, CI = 0.63-1.16).'] Does setting of care modify risk of nursing home placement for older adults with dementia?