It would appear to be an exempt asset, but the income counts. As always, consult an elder law expert for advice if you need to rely on it.
"Homestead” – “primary residence” (not a second or vacation home) which is occupied by the applicant, applicant’s spouse, minor, blind or disabled child.22 A one, two or three family home, condo, co-op, mobile home is considered to be a homestead. The homestead can be income producing property, or even attached or contiguous to income producing property. Although the primary residence will be considered as an exempt homestead, however, any income will be counted and treated as available"
Absolutely. We also own and live in 2 unit building. The lower flat is rented out. That is month income to us. I would think in ANY state this would be the case. Income is income is income is also assets. Your parent's CPA can tell you their exact income per the IRS.
"Homestead” – “primary residence” (not a second or vacation home) which is occupied by the applicant, applicant’s spouse, minor, blind or disabled child.22 A one, two or three family home, condo, co-op, mobile home is considered to be a homestead. The homestead can be income producing property, or even attached or contiguous to income producing property. Although the primary residence will be considered as an exempt homestead, however, any income will be counted and treated as available"
https://www.esslawfirm.com/articles/basics-of-medicaid-eligibility/