Medicaid can pay the full cost of long-term residence in a nursing home for someone who has low income and few assets other than their own home. The rules about
Medicaid nursing home eligibility and owning a house can be a bit tricky. In most states, a single or widowed person can enter a nursing home and have the nursing home costs covered by Medicaid -- assuming they qualify in terms of income and other assets -- even though they own a valuable house of their own. In that case, Medicaid pays the nursing home bills but can place a lien on the house equal to the value of all the money it spends on nursing home care for the owner of the house. That money is then collected out of the value of the house when the house is sold or the person dies.
If the person in the nursing home -- in this case, your mother -- sells the house, the proceeds from the sale become unprotected assets, meaning that they would count toward the Medicaid eligibility limit. These assets, assuming they're more than just a few thousand dollars, would then disqualify her from Medicaid coverage, and she would have to pay for the nursing home herself. If and when she spends enough of that money to get back down to Medicaid asset eligibility limits, Medicaid could start paying for her nursing home care.
There are some potential advantages to keeping the house rather than selling it right away. If your mother keeps the house, a family member could live in it (though if anyone pays rent for the house, that rent money would count as income and might disqualify your mother from Medicaid coverage). Also, because Medicaid is able to negotiate lower rates than individuals can, the amount Medicaid pays the nursing home is likely to be less than what your mother would have to pay on her own. This means that the total amount Medicaid would get reimbursed, out of the value of the house when it was later sold, would be less than what your mother would have to pay for her own care if she sold the house now and had to pay for the nursing home directly.
If you're thinking about your mother selling the house and then her giving the money to or spending it on her family members, be aware that Medicaid has a tough rule against that. The amount of any gift (or exchange for less than full market value) your mother makes within 60 months prior to applying for Medicaid nursing home coverage is still considered part of her assets, and if the amount is over the Medicaid asset limit it could disqualify her from Medicaid nursing home coverage for a considerable length of time.