My widowed Mom has been living with my sister and my sister's husband for the past year. She is going to be entering a nursing home soon. She has about $60,000 in savings, so we expect she'll be on Medicaid before very long. When Mom moved in with my sister, we all agreed (and I think we may have it in writing) to pay them $50 a day out of Mom's money, for room and board. They haven't "paid" themselves yet, but now they're concerned that if they do, this will look bad when it comes time to apply for Medicare.
And a second, somewhat related question-- my brother "inherited" Mom's car (value $5000) when she stopped being able to drive. My sister and I were supposed to receive comparable ($5000 each) monies from Mom's estate. Can we pay ourselves that now, before she goes into the nursing home, without running into difficulties later?
Paying room and board is no problem ... Medicaid does not expect recipients to live expense-free. Why hasn't Sister been taking this money at more regular intervals, such as money or quarterly?
I think you would do well to use some of Mom's money to consult an attorney who specializes in Elder Law, to help Mom prepare for applying for Medicaid, and to handle such things as advanced health care directive and POA, if that has not already been done. It is best to have guidance to make sure money is handled appropriately in conformance with Medicaid rules.