If a person who is receiving Medicaid to pay nursing home expenses receives an inheritance, the inheritance will probably cause the person to exceed the Medicaid resource limit of $2,000.00. This would cause a Medicaid disqualification, and the person would then become a private pay patient. The inheritance would then have to be used to pay the nursing home expenses until the assets are again down to $2,000 when the person could re-apply for Medicaid.
With proper planning, It may be possible to avoid the loss of some or all the inheritance by using a special needs trust, gifting (with a disqualification period and a partial return of the gift to pay for care during the disqualification period), converting some or all of the inheritance into exempt assets, or other Medicaid planning techniques.
There are many excellent Elder Law attorneys in your area. It would be a good idea to consult with one of them to learn what all the options for saving the inheritance might be.