Starting January 1, 2028, states cannot set their Medicaid home-equity limit above $1,000,000. A parent whose net home equity exceeds the state limit cannot receive Medicaid payment for nursing home care until equity falls below that limit. Home equity means fair-market value minus mortgages, liens, and loans. The cap affects nursing-facility care and other long-term services and supports.
Medical information disclaimer: This article is for general educational purposes only and does not provide medical advice, diagnosis, or treatment. Always consult a physician or other qualified health professional about symptoms, medications, tests, or treatment decisions.
Official resources:
- Read the official guidance from Medicaid — Use this primary source to verify the official guidance.
- Check eligibility on Kff’s official study page — Use this page to check the study’s participation requirements.
Table of Contents
- Which care does the cap affect?
- How is home equity counted?
- Who is exempt from the cap?
- Why does the freeze matter in high-cost states?
Which care does the cap affect?
The cap applies to a parent seeking Medicaid payment for nursing-facility care. According to the National Health Law Program, it also applies to other long-term services and supports, including Home and Community-Based Services waivers.
That scope matters for dementia care. A family planning for either a nursing home stay or a waiver that pays for care at home must meet the same equity test.
How is home equity counted?
According to the American Council on Aging, home equity is the home's fair-market value minus mortgages, liens, and loans. A parent whose net equity exceeds the state limit is ineligible for Medicaid long-term care until equity is reduced. For example, a $950,000 house with a $200,000 mortgage has $750,000 in countable equity.
A paid-off $1,100,000 house has $1,100,000 in countable equity. State limits have varied by year and place. The Centers for Medicare & Medicaid Services set the 2026 allowable range at $752,000 to $1,130,000 in its updated 2026 standards. Hall Booth Smith's law summary says Section 71108 of the 2025 reconciliation law freezes the state-elected maximum at $1,000,000.
Who is exempt from the cap?
According to the American Council on Aging, the cap does not apply when a spouse lives in the home. It also does not apply when a child under age 21 or a blind or permanently disabled child of any age lives there.
Homes on land zoned for agricultural use are also excepted. According to the Congressional Research Service, that exception means the $1 million freeze principally binds non-agricultural homes.
Why does the freeze matter in high-cost states?
KFF reports that 11 states had 2025 limits above $1 million and notes that the new $1 million ceiling is fixed rather than indexed for inflation in its nursing facility characteristics report. Some parents who qualify now in high-cost states could lose future nursing-home Medicaid eligibility.
Because the ceiling does not rise with home prices, it becomes stricter over time. A home that passes the test in 2028 may fail it a few years later through appreciation alone. Families near the limit can take practical steps now: Check the current state limit before assuming a high-value home will still qualify in 2028.
- Get a realistic fair-market value and list every mortgage, lien, and loan
- Subtract debts from value to estimate net equity
- Compare the result to the current state limit and the $1 million freeze
- Ask the state Medicaid agency how it treats repairs, mortgage paydown, and lawful equity reduction
