Will Mom be penalized for large expense when she applies for Medicaid?

Go and get an elder law attorney to work through the Medicaid application. You want to see them BEFORE you do the application too. It is like Pstegman said, the property owner (you) has benefitted from the $ spent and Medicaid will tend to look at large expenditure paid to you as gifting. Now it isn't gifting per se but these sort of issues are super sticky to deal with and if you all are somewhat also dealing with mom's health & mobility issues 24/7 it will just be overwhelming to do all for her and then have to track down the guy who did the drywall to redo the receipt so that it has mom's name on it.

This site has a drop down list of NAELA (experienced elder law attorney's), I'd start there. Good luck and keep a sense of humor in all this too.

Medicaid will not pay for capital improvements to home, and they will challenge the expense, as it benefits the homeowner in the long run. Good luck.