Can the sale of Mom's house affect her Medicaid eligibility?
The assets your mother-in-law receives from the sale of her house can affect her Medicaid eligibility. When deciding eligibility, Medicaid looks at the total amount of someone's assets, not counting the home they live in. Once that home is sold, though, the money a person receives from the sale becomes an asset that Medicaid "counts" when deciding eligibility.
For regular medical coverage (as opposed to nursing facility care), Medicaid eligibility rules allow a person to keep only $2,000 in assets, plus the person's household possessions, a car, and a few other assets such as a wedding ring, a limited amount of life insurance and a burial plot. If your mother-in-law is already receiving Medicaid coverage and her assets suddenly jump -- such as from the sale of her house -- over that level, Medicaid can temporarily suspend her eligibility until she spends her assets down to $2,000. It sounds from your description that your mother-in-law will receive about $10,000 from the sale of the house she jointly owns with her sister. If so, Medicaid may suspend her eligibility until she spends that (and any other) money down to $2,000. By the way, she can spend the money in any way she wants; it doesn't have to be related to medical care.
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