There is no Will from the elder father who is receiving Medicaid - He would like to keep his house during and after his long term stay.
Is PTSD considered a discapacity so that he can do just that?

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This is tricky. If no will then probate has to assign an administrator. Usually it's family but can be a lawyer as it was with my sister. The administrator is responsible for making sure all outstanding bills are paid. Medicaid will put a lean on the house and that will have to be satisfied. Who has been keeping up property taxes? If the person living in the house has he Can't expect to get that back. My Aunt left a will that her house be left to my cousin. She owed Medicaid 23k for her care. My cousin is considered disabled and was living in the house prior to my Aunts death. Because of his disability he is being allowed to stay in the house as long as taxes and bills are being paid. When and if he chooses to sell the house, he will then pay Medicaid out of the profit he makes.
I am assuming that Medicaid knows of the person living in the house and as a disabled person, PTSD is a disability, he has agreed to keep the taxes and utilities paid. After death of the owner he maybe able to stay there. If not, the house will need to be sold to pay any leans unless he can make a deal with the administrator to satisfy the leans and he will then own it. All depends.
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