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She is bitter and has only heard from 1 of my 16 cousins in 2 years. She does not feel she should have to pay food or rent, and tells anyone she can that everyone has stolen her money.

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If she's no longer able to go up stairs to her room, then your home is no longer suitable for her to live in. It would be best for her to live else where and use her money to pay for it.

If you want to keep her, and you need to add a room to accommodate HER, then definitely use HER money. She also should be paying you for rent/food/care.
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If she needs to apply for Medicaid in the next 5 years, that money will likely be viewed as a gift and will delay or prevent her from Medicaid eligibility. Besides the blowback you may get from other family members for using her money to provide a benefit that you'll keep even after she's gone.

I also share cwillie's reaction. You want her to live with you, why?
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And you want this bitter woman to move in with you rent free because....?
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