The $1 million cap makes home equity a firm cutoff in Medicaid planning for dementia care. According to Justice in Aging's analysis, state programs may not pay for long-term care after Jan. 1, 2028 when equity tops $1 million.
Long-term services and supports means nursing-facility care and home and community-based help with daily needs. For families facing years of care, that cutoff matters early. Home value must be weighed alongside care needs before an application.
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Table of Contents
- What changes in 2028?
- Why does dementia care face higher stakes?
- Who could lose access despite modest income?
- What should families check before 2028?
What changes in 2028?
A new federal law reset the home-equity rule. Applied Policy notes in its 2025 law summary that the Budget Reconciliation Act of 2025, signed July 4, 2025, added Sec. 71108 revising the Medicaid home-equity limit. According to Justice in Aging's update, states may not pay for nursing-home or home-based care after Jan. 1, 2028 when equity tops $1 million. That ceiling stays fixed with no inflation adjustment.
For context, Justice in Aging puts the 2026 federal limit at $752,000, with a state option up to $1,130,000, and says 12 states plus D.C. use the maximum. The shift cuts both ways. Many states will see a higher cutoff in 2028. High-limit states, including California, New York, New Jersey and Massachusetts, will see a lower one. Over time the freeze pulls more owners over the line as prices rise.
Why does dementia care face higher stakes?
Dementia often means years of paid help. The Alzheimer's Association facts page projects 2026 U.S. Alzheimer's health and long-term-care costs at $409 billion, with Medicare and Medicaid covering $263 billion. Lifetime care per person exceeds $400,000. Medicaid remains the backstop for long stays.
Justice in Aging reports that older and disabled applicants must still hold minimal countable assets, often $2,000 or less. Home equity gets excluded only up to the applicable limit. That structure leaves the house as the main asset for many households. A person can meet the asset test yet fail the equity test. For dementia, where needs grow and income may be fixed, that second test decides access.
Who could lose access despite modest income?
Place matters most. A $1 million house in New York City or San Francisco may be a modest two- or three-bedroom bought 40 to 50 years ago for $50,000 or less, a point emphasized in JBizNews' summary of the change. The same report notes that homes on agricultural property stay under the older inflation-adjusted rules. So a low-income longtime owner in a high-price market can be disqualified.
A similar owner in a lower-price market with far more housing for the money can qualify. The dollar figure does not measure wealth or living standard. The risk falls on people who bought decades ago and aged in place. Their equity grew without a sale, move, or cash gain. Dementia then forces a Medicaid review that treats paper equity like available funds.
What should families check before 2028?
Start with a clear equity number. Subtract mortgage and home-loan balances from likely sale value.
Track both parts, because payments raise equity and market gains do too. Recheck before any application. Get a fresh value opinion and loan payoff figure in 2027, then ask a benefits counselor or elder-law attorney to review equity, assets, and state practice together.
- Estimate current equity and save the worksheet.
- Compare it with your state's current limit and the $1 million rule.
- List countable assets separate from home equity.
- Note farm-property status if the home sits on agricultural land.
- Flag timing, since eligibility will be judged under post-2028 rules.
