I keep seeing $2000 cash as not being an asset...

No, assets and income are both considered for Medicaid. Social security and pension income have to be below a limit for your state. States allow amount not to exceed $2000 in bank account or cash to be exempt. All of Dad’s income will go to pay his share of cost for the nursing home, less a small personal needs allowance of $60-100 average depending on state, and Medicaid pays rest. Dad won’t have money left for mortgage, credit cards, car payment, etc.

Assets and income are separate issues, each with their own maximum limits, as set by the state. There are ways to deal with both regulations.

If Dad's assets are over the asset limit (often $2000) he can get under that limit by "spending down" his assets. For example, he can use some of it for a pre-paid burial plan. He can spend the excess assets on just about anything AS LONG AS IT IS FOR HIMSELF. No giving it to relatives or charities, etc.

If Dad's income is over the limit but still not enough to pay for his care (a common situation) there are ways to handle this that vary by state.

As far as I'm concerned, there are no silly Medicaid questions. That is a complicated subject, and all questions are reasonable!

I suggest you contact your Area Agency on Aging. (Here it is called senior-helpline. A google search will help you find it in your state.) Ask if they have resources to explain Medicaid requirements to you. You may ultimately want to contact an Elder Law attorney, but start with the Aging Agency.

BTW, if your Dad is married, the Medicaid requirements are quite different.