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The only way they can protect the property is to have the parents execute a deed to their children, reserving a life estate. A life estate gives the parents a right to live in the property until their death, but it gets the ownership of the property out of their names.
The only catch is that Medicaid has a 5 year lookback period. This means that they'd have to wait 5 years from the date of the transaction to apply for unemployment. If they apply for Medicaid before the 5 years is up, the government has a right to reverse the transaction and take possession of the house and sell it to pay medical bills.