If the child is paid a daily salary for elder care, does that rule apply? Also, the home is actually owned by a revocable trust, and the child kept the parent out of the nursing home actually lives down the road and another caregiver gets paid to sleep there. So they kept the elderly parent out of the nursing home, but they got paid to do it.
The house is an old mansion, rough shape, but still pretty valuable.
What blew it in our case, fortunately, is the house was owned by a family trust. What I have learned since is the house has to be owned by the elderly person(s): in their name(s).
If the value of the house is low enough, they might not even go after it. You would need to consult an expert to get an answer on this, as it's not straightforward.
The spend-down looks at all spending. Their giving you money without a valid personal services contract, seems to be viewed as gifting of $ from them to you and penalized.
You kinda have an number of different concerns going on and really as Medicaid rules are different for each state (the states administer Medicaid under an overall federal guideline but in tandem with their state laws), you should pull your elders documents together and go an see an elder law attorney. Ideally one who has a practice in the county in which the property is located. How your state views trusts is going to be super important as they are not always Medicaid compliant.
About the caregiver issues, I think you are thinking that there might be some sort of exclusion of the home because of this? MERP (estate recovery) has an exclusion (of the home) for caregivers who live in the home and provide for full-time care for a period of time prior to NH admission. There are also lots of other MERP exclusions, all of which have to be filed for in a timely manner after the elder's death in order to be reviewed by MERP (so they can decide whether to go after the house by a claim or lein on the estate). Speak with legal on that too.
Good luck.