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Why can’t Mom continue to drive Dad’s car ? Yet you say you aren’t selling Dad’s car for a couple of reasons . Is someone else going to buy Dad’s car from her ? Or is someone hoping to inherit it ?
Every state is different but what I have heard is typically your mother would be allowed to stay in her house and have only one car .
You can buy a car and own ONE CAR that is exempt from Medicaid.
If the application is made and there is now a change in finances, it's a shame that this car business wasn't taken care of before the application stuff got started, because now you must call and find out what change this makes.
As to whether you and brother can buy a car for them, or partially pay for their car, yes, you can. If you have gifted, yourselves, more than 15,000 toward one person it must be declared and has tax implications for YOU but none for them. I would do a trade in with the junker so that at any time they don't hold title on two cars.
And do remember, your questions need to go to an attorney or to Medicaid in your state. We are just a bunch of caregivers with some good guesses from experience. About legal matters you cannot afford to be wrong so go directly to the horse's mouth.