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What you need to realize is Mom has Dementia. As such, she may not be able to live on her own. In my opinion an Assist Living would be a good choice but its private pay. Medicaid does not usually pay for AL or Memory Care. It pays for NH care which ur Mom may not be ready for.
As said, Dementia people get confused and like familiar surroundings. Its not wise to bounce them around from place to place.
The other thing to consider is if mom is moving to AL with dementia, depending on her progression and needs, she may need to move to memory care before too long and that is another move. If you decide on the 1 bedroom she may need MC before you need to move her for financial reasons and skip the extra upheaval. Are all of these, IL, MC, nursing care available at the same facility, same property?
Is there a possibility of exchanging with a home health aide, or a nursing student (or two) - or some other kind and patient person --
(maybe a senior citizen who is in good shape physically and mentally and pleasant ) who likes being mostly at home... And spends most of their time at home.
Letting them live in the house and watch after her while they are going to school or maybe they work remotely on the computer etc. It would give her care and company.
It would help both of them out, plus keep your mom happy in her own home.
Even if your mom was the most responsible money saver, the cost of care is so high that the average person cannot afford to pay for it for long. If your mom has more assets than just a checking account, house and car I strongly recommend investing in a consult with an estate planner who is experienced with elder issues and Medicaid prepping. There is lots to know and the rules differ from state to state. There are many pitfalls that family members mistakenly fall into which can delay or prevent qualifying and if you're her PoA you need to know what these are.
Are you planning on moving her to a facility near you? If not, why not? With elders in decline, it is best to make the fewest moves possible as this becomes very distressing and disorienting and a lot of work for you. She will (most likely) become more resistant and unreasonable as time goes on, so it may be best to have this next move be her last. I am overseeing care for 4 elder LOs. One is in a NH local to me, 2 are in FL (I'm in MN) and my mom lives next door. If my FL elders didn't have local cousins living next door helping to provide hands-on care for them, I'd have moved them up here. It's so much easier, less stress and provides better advocacy to them, even if they don't "like" it. I hope this info helps you. I wish you much wisdom and peace in your heart with whatever arrangement you settle on.
If your mother stays in her home with in-home care you/she will also have hire essential outside help for maintenance.