Will Medicaid allow her to keep enough funds in her checking account for funeral expenses?

You will need to check with your Mom's State Medicaid office, as each State has their own programs.

Most likely a prepaid funeral plan or a separate bank account for burial funds will be exempt up to a certain level. The level is low , like $1500.

My state will not allow my spouse to have more than $2,000.

Yes, prepaid funerals are a good way to "spend down" to qualify for Medicaid. An experienced funeral director should be able help you set something up that meets Medicaid's requirements.

The limits vary by state and to a certain extent by how exactly it is set up. I think my mother had about $4,000 in an irrevocable trust for funeral expenses. The funeral home director was very helpful when the time came in helping us stay within the funds available.