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They moved in with us 3 yrs ago, sold their home. Their house was not worth much at the time of sale $36K and my father gifted the IRS limits to my husband and I. He has since passed away. My mother who needs 24/7 care, is in a wheelchair and is now in need of a nursing home. She basically has no assets except for some money from her SS income, under $5k. Will the gift cause a problem with the Mediaid lookback?

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YES, Medicaid will impose a gift penalty. You took the bait; they intended that you would have to care for them until death.
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