Living with daughter and want to enlarge house. Would this interfere with Medicaid?

Yes, it could interfere with Medicaid. Talk to an attorney

You want to extend your house to accommodate your daughter?

Or she wants to alter her house for you and your husband to move in?

It is always best to get professional advice; but as a first guess if you and your husband are spending your money on your own needs, accommodation or fixed assets that would be fine; whereas if the benefit goes to your daughter - e.g. she gets a shiny new extension that increases the value of her property - then it would be considered a gift to her which Medicaid would refuse to cover.