Does the fact that my stepmother pays me to care for her have an affect on her Medicaid eligibility?

Yes, this could. There will be a five-year look back. This is a failing of Medicaid, in my view - people should be able to care for their own loved ones and it is cheaper than a nursing home.

It is not the same everywhere, but I would keep detailed records of what it costs you to have her live with you - like rent and groceries, etc. Then, you may want to figure out the going rate in your area for caregivers. Get it drawn up legally and have an attorney who knows Meidcaid advise you. This could be very important down the road.
Carol