Probably not. Every state Medicaid program is different, but in most cases Medicaid will pay for your mother’s care even if she keeps her home. However, the state will place a lien on the house so that it will be reimbursed when the house is sold or upon your mother’s death. From what you describe, it may be possible to protect against this claim by transferring the house to your sister. This is usually not allowed, but your sister may qualify for the “caretaker child” exception. I strongly recommend that your family consult with a local elder law attorney to determine what makes the most sense in your situation.
For more on Medicaid's asset transfer rules, including the "caretaker child" exception to these rules, click here.
For more on Medicaid's power to recoup benefits paid, including placing a lien on a home, click here.