my mother in law lives with us and pays rent to cover her living expenses incurred by us, ie. Room and board. Not medical expenses. If the parent goes into assisted living due to dementia and needs Medicaid at some point if her money runs out, could the money paid by her to us to cover those expenses be considered a gift instead of covering her expenses. She pays $1,200 a month. This also covers costs of taking her to doctor appointments. Could this be a "look back" issue in qualifying for Medicaid.
Also about AL & Medicaid, Its important to understand what Medicare & Medicaid does & more importantly does not do. MIL is nice & healthy now but all that could change in a fall. This site has really good articles on what the M&M's are.
One misconception on Medicaid is that it always covers AL. Medicaid as written is about providing a safety net for those who are "at need" both financially (impoverished) & medically (needing skilled nursing services). Skilled nursing means a NH. But the states - as each state administers Medicaid uniquely - can use a part of medicaids discretionary funding to have medicaid waiver programs.
Medicaid paying for a NH is dedicated & guaranteed funding as per law. But Medicaid paying for AL is on a waiver. Waver programs are limited and not guaranteed till forever. Most states Medicaid do NOT ever do AL waivers, so AL is totally private pay. Some states have AL waivers, but could have a pretty specific criteria as to what the AL is & must provide - like TX has this approach and the # of AL that choose to participate is tiny. Really in my experience with TXmedicaid, it's kinda easier to get into a NH than get a AL waiver. In home care is usually done via a medicaid waiver program. California has a really well established IHHS system for in home care by family that is a waiver program.
What is the current trend for medicaid waivers is PACE or other on-site community based senior focused center. In theory PACE is more cost effective as opposed to a 1-on-1 waiver paid for AL or in home care. If there is a PACE in your area and they have openings, MIL will need to be evaluated to participate in it before other waivers could be had. I mention all this as imho it's important to get a bead on what's what fir your state & in your area now & before you & hubs are having to do this in panic & crisis mode as she has fallen and broke a hip or has started wandering and gotten lost.