What I'm confused about in all this is, if she's worth $2.5 million, why would she go into a nursing home in the first place? She could easily have afforded a live-in nurse.

Yes, and you make good points. It is Medicaid rather than Medicare. In NY State, I believe it's 3 years for assets. One other point: If the son was her care giver and lived with her prior to her entering the nursing home, the state will not take the house. Essentially, he can keep it.

There are different "levels" of nursing homes, based on the severity of illness and/or the independence of the senior citizen in question. Not all are for blind, deaf, and dumb 200 year olds who can't wipe themselves.

2.5 million is really not that much when you consider that nearly half of that could have gone into her care over her last two years.