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I'm moving your question to the top. Hopefully, people with answers will see it.
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This is a question that really should be addressed to the VA. Have you contacted the social worker for the team caring for this person?

The VA standards are very complex. Someone familiar with the situation, the income level, etc. needs to address this issue. Sorry - I couldn't even hazard a guess. Every time I research VA standards, I end up deciding to just call the VA.
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It amazes me that I can’t get a straight answer from the VA! It is like no one knows.
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I just thought that someone might have actually had a similar situation.
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It is true you cannot get a straight answer from the VA. That said, the social worker at the hospital my dad recently left said he was eligible for free care at a number of VA contracted nursing homes in the metropolitan area we reside in. The problem was the ones closest to my parents were full. I also heard the ones that takes VA aid are sort of bottom of the barrel places. My parents have low income as they are retired, and asset wise are not bloody rich but have several hundred thousand, yet still we were told my dad could get free care at VA contracted nursing home. There just were none with availability close to where we wanted to be.
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My understanding when I checked for Dad --same situation, assets and income exceeded threshhold -- was that he would have been a full private-pay until his assets were depleted. Then I think Medicaid would have taken over, or maybe the VA pays. If I remember correctly, it was about $7k/month a year or so ago (in my area, which is actually about an hour away). After some spend-down of assets, he probably could have gotten Aid-and-Attendance, but I don't think it would have changed the cost, just prolonged the spending down of the assets.
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If they have money saved as you stated, could you place them in an Assisted Living community? If not they are going to need to spend down their assets before applying for Medicaid. Or, you can spend down their money by  paying for in home caregivers for them.
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