Will my sister's high income affect my parents' benefits since she lives with them?

Are ur parents on Medicaid for health?
How was the food stamp application filled out? It must show all the people living in the house and their incomes. Probably the same with Medicaid. My nephews renewal is for a single person.

Just my opinion, but when sister bought parents house that gave them added income which they can use towards health insurance and and food. From what I remember, in a household all living there have to be on Food Stamps. I say this because my nephew would get paperwork concerning him applying but because he lived with Mom, she too would need to apply.

You would need to know how paperwork was done.

Not everyone in the same house would have to be in one food stamp case. Depends on whether or not they actually purchase and prepare their food together. Roommates often do not share food, family members usually do. I have many years of processing food stamp applications, in several states.

If they plan on applying for Medicaid, the house title which should be in sister's name only will have to be confirmed. They will scruitinize the fair market value at the time of purchase. They can wait to apply at 5 years and 1 month After the sale, before applying as wall. Ideally, your parents should sign a rental agreement.

There are limits on assets, but a lot of assets are exempt, not counted. These exempt assets include a car, house, personal items and retirement accounts, etc. Money that is readily available for food, like a bank account, does count.
There are limits on income and some expenses are considered, depending on the composition of the household, like medical expenses for the elderly. There have been a lot of emergency adjustments to the SNAP (Food Stamp) program due to the pandemic and I am not up to date on what's been going on recently. I suggest people apply if they feel they need help. If you don't qualify, ok, but at least you'll know.

There are many issues in here, including the price sister paid for the house, the assets parents now have in the bank, their income from them (not that interest rates are all that great, at least here), the amount of household expenditure that is jointly shared and for what. Sister and parents have two options available on this complicated situation– drop down on claiming the freebies, or to try for the max freebies and risk having to compensate for it in the future if it all gets questioned (which does sound quite possible).

Your sister should consult with an attorney who specializes in elder law. If the money for the house went into their bank account, there may be issues with their eligibility for benefits. I'm wondering why they are paying for all utilities. Shouldn't she be paying for a portion of the utilities, property taxes, etc.? She should also speak to the attorney about their eligibility for Medicaid. She can also get connected with a local social worker to help apply for benefits, but it would be best to speak with the attorney first.

Your concern might be valid. Hard to know with so little information.
The benefits I would be most concerned about is their ability to utilize Medicaid for facility care should the time come that they need to.
When did your sister buy their home? What happened to that money? Thats what Medicaid will want to know. If they filled out the paperwork honestly for food stamps then something might be wrong about what they sold the house for. It has to have been FMV. Or perhaps happened a long time ago and they have spent the money?
We here on the forum wouldn’t know the circumstances and it can be complicated.

It is a good idea for them to go to a certified elder attorney to make sure they have their finances in order for their (and your) future peace of mind.

Sister may be earning every penny of whatever advantage she may have received on the housing transaction but that won’t matter to Medicaid if the paperwork isn’t correct.

I based my answer on Medicaid for health insurance.

If you are asking about Medicaid in the future for Longterm care, the house may cause a problem. Not because they sold it but how much did they sell it for. If Medicaid maybe be needed in the next 5 years, there is a 5 yr look back. If the house was sold within that 5 yr look back, it had to sell at Market Value. Like Mac said, sister would have to own it for 5yrs and one month when parents apply. The profits are placed in an acct for parents needs only. No large gifts going out. Yes the IRS allows 15k a year but Medicaid diesn't.

To receive food stamps it goes by the total household income. So i assume they started receiving it before they lived with your sister. Periodically they have to update their income level with the program and probably at that time they will lose it. If they tell the truth.

Time to make an Elder Law Attorney appointment for the three of them.