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If the remainder sell the home, while she is still living, what happens to her life estate proceeds?

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I think you are going to be told, you will need a lawyer for this. Once on Medicaid SS and pension go to Moms care. None of her money can be used to keep up the house.

Also, very few ALs except Medicaid. When they do, its usually after private pay for 2 yrs.
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The value of the estate is money that belongs to her and will affect Medicaid status. There are actuarial tables that are used to calculate how much of the money that life estate is worth in house value and sale, and that governs how much should be used for her care. It’s worth consulting attorney to find options for how payment is made, if supplemental trust is appropriate, or spend down. You cannot just keep the money. When Medicaid renews, as it’s not one application and done, the sale of house will surface and tracking explanation required.
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sojourn, when it comes to "life estate", your Mom still has "life estate" of that house no matter where she lives. The house usually does not go back to the owner until Mom passes. Thus the owner of the house, of course, will now need to make the mortgage payment [if any], real estate tax, homeowner's insurance [changed over to an empty house policy], etc.

I would highly recommend you speak with an "Elder Law Attorney" to see what would be recommended. Maybe State law could have made some changes over the years, such as a certain time frame with Mom living in a nursing home, that house can go back to the owner, etc.
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For LEs determination of the remainder interest is super sticky. I wouldn’t suggest that you attempt it as a DIY but get a elder law atty with experience in LEs. They are going to have CPAs or taxation attorney they work with to get the #/% correct.
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