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Have not applied for Medicaid for Mom yet. My Mom has more assets that is allowed. I am on a joint account with her bank account but I don't contribute to the account, I only write out all her bills. She does have an 401 k account that has beneficiaries in place. Illinois has a 5 year look back but I will need to have more money in bank to cover all her current medical bills and for funeral costs per her request. What to do??

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She will need to spend all of her assets down to $2000. Whether that be in home care, nursing home, or assisted living. Then and only then will Medicaid take over.

Does she need care now? Or just planning for the future?

You need an elder care attorney who can advise you and put together a trust to protect her assets, but it will not go into effect for five years.

She can't give her money away. Normal Christmas and birthday gifts are fine, but she can't buy a house or a car for someone else.

If the home she owns is lived in by a family member, Medicaid cannot say it needs to be sold. BUT if it is sold, all proceeds will need to be spent on her care. If she co-owns the home with you or someone else, only her portion of the proceeds will go toward her care. Ownership means whoever is on the deed. Not the mortgage. That doesn't matter.
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bolliveb has good advice. I am in NJ and we also have a five year look over the shoulder. And the birthday and Christmas gifts should be standard not extravagant (no buying cars for the grandkids); her assets are hers and should be used for her care. I would get an eldercare lawyer to assist in the planning for Medicaid but it is probable that your state will allow you for pay for her funeral costs in advance although it must be an irrevocable payment - that will reduce some of the funds that she has.
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You need to use her 401k account. Its an asset. Doesn't matter if there are beneficiaries. Her money needs to be used for her care.
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