If there is a Medicaid penalty period, how is a nursing home paid for if you have no money?

Uh oh. What gift or what asset or cash was made to whom, and has it all been spent? Everything will be private pay until the penalty is satisfied and that will be proportional to the amount that was gifted. Possibly the person who received the gift could pay or take out a loan, or possibly the home will have to be sold so all her money can go towards costs and maybe other family members can share in making up the rest. Look for any insurance policies with cash or face value too. Consider getting an eldercare attorney or estate planner consultation - you need someone who knows your state's medicaid regs and will do the math for you.

Definitely have an Elder Law specialist help you with the application process.

The nursing home does not get paid and once they find out who got the missing asset/money, they sue. And they win.

There is no large sum of money that was given away or anything. I just am unclear on how strident Medicaid is about money. For instance, she had given up driving so she gifted a 2003 car worth about $4,000 to a grandchild. Or paying my sister’s electric bill a few times. What kind of expenditures cause penalties?

Get her bank statements for the last five years and go over them. Yes, gifting a car as recently as 2011 (five years) or paying sisters bills will trigger a dollar for dollar penalty. So it has to be paid back. Can't pay it back? Then you get to keep mom yourself until the five year limit is passed. It is soooo important to stop your parent from thinking they can give it all away and go on Medicaid. We had to take the checkbook and debit/credit cards away from mom.

There is no way to pay it back. She has been being treated for cancer for the last eight years with near constant chemo and it has finally taken its toll. They are trying to rehab her to get her mobile, but it doesn’t look like they will be able to. She cannot move herself and is bedridden. How could I possibly take care of her on my own?

The 4K for the car could be an issue if it was less than 4 years ago, but that's only about one month of nursing home care before the penalty for that would be satisfied. I do not think Medicaid would be privy to the sister's electric bill in any way though. Get the elderlaw help. This may not be a full-blown disaster after all. And I hate to bring it up if it is premature or not appropriate, but Medicare does have some hospice benefits that might postpone or eliminate any need for Medicaid.