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Assisted living facilities (AL) offer primarily non-medical assistance with activities of daily living and offer a generally supportive environment for those who are able to manage some aspect of their own care. Many AL's have expanded services to include more intense and secure care for residents with memory disorders. Each assisted living facility has its own admissions criteria with some requiring higher degress of functioning than others.
Here in Florida, some AL's have an "upgraded" license which permits them to provide more medically oriented services.
Nursing homes (NH) provide skilled nursing services and custodial care typically for those who meet at least an "intermediate" level of care requirement. Definitially, this means that the recipent requires some care ordered by, but not necessarily delivered by, a skilled professional (MD, RN, RPT, OT, PT, etc.).
Of course one of the crucial differences is cost. NH is about twice the cost of AL. However in most states Medicaid will only provide benefits for NH care. Check with your state's Department of Elder Affairs or equivalent to find if Medicaid benefits are available for assisted living. Also keep in mind that Veteran Pension benefits can be obtained for AL and NH care.