Will the houses affect their Medicaid eligibility?

My parents need assisted living. They own two homes, one that they live in and one that they rent out, total value about $85,000, and they charge $300/month rent for the rental home. They live in Missouri but we are thinking of moving them to an assisted living place that accepts Medicaid (HCBS waiver).

My dad is also a veteran and it sounds like he would qualify for the veterans benefit but three problems: They need assisted living now and it takes a long time, I understand, to be approved, and even if they received almost $2000/month, that plus their social security would still not be enough to cover their assisted living. Also, the assisted living place we are considering says they have experience with processing Medicaid, but they don't deal with veterans benefit. So is it better to go with Medicaid and not worry about the VA benefit, since it wouldn't be enough to cover assisted living anyway? Can you use both?

We saw an elderlaw attorney maybe prematurely, or maybe we didn't stress enough that we were going to need to get them into assisted living right away. He set up a revocable trust which included the two houses. Now I am wondering if that is going to complicate things since they are going to need to apply for Medicaid.

My parents have about $7000 in their checking account (which was a shock to us - they worry about money so much that we thought they were living from social security check to social security check). The elderlaw attorney told us that they can spend down this money for anything they need, even furniture for their assisted living apartment. I want to make sure this is true and do they need to spend this money before they move in/apply for Medicaid?