I am currently the POA and Health Proxy for my 91-year-old aunt who has dementia.Once my aunt needs to move into assisted living, her social security will no longer cover the cost. My brother and I have contributed what we can to her welfare. What happens if she is ineligible for Medicaid due to her social security but cannot afford assisted living and no one is in a position to help her? We live in New Mexico. I have tried to get an answer to this question from all of the usual agencies - and surely it has been asked numerous times before! - and no one has given me an answer.
You have no legal obligation to be caregivers or to take financial responsibility. In some states you would have some financial obligation IF she were your mother. She's not.
What you can do now is to be her advocate. See to it she has the appropriate care. Handle all the paperwork.
I would start by contacting an attorney who specializes in Elder Law. (Specialty is essential.) He or she can give you guidance on how to get Aunt ready to qualify for Medicaid and may help you with the application process.) The cost of this consultation should come out of your Aunt's funds. It is for her welfare.
Then search for a care center that accepts Medicaid. It sounds like now Aunt would need Assisted Living; perhaps by the time she needs to move she might need a Nursing Home, so I suggest looking at both now. Ahead of time is so much better than in a crisis situation.
You are a very caring family. Keep in mind you will need resources for your own old age, and arrange for Aunt to get what she needs with her own resources.
Let us know how this comes out.