The IRS considers 1099C as countable income. Each State's Medicaid authority has slightly different rules. If I were you I'd sit down with an Elder Law attorney in your state. See 'Find-A-Lawyer' at the top of this page. Good Luck.
My answer is based on the limited facts presented. It doesn’t create an attorney-client relationship. Use the ‘Find-A-Lawyer’ search engine at the top of this page and follow proper legal advice.