The Medicaid home equity cap limits how much home value a person can keep and still qualify for Medicaid nursing-home care. If their ownership share rises above their state limit, they cannot receive Medicaid payment for long-term services and supports.
Long-term services and supports means nursing-facility care plus home- and community-based services. Federal law normally excludes a principal residence from countable assets, but Congress capped that exclusion for these services in 2006, according to Justice in Aging's analysis of the home-equity rule. Caregivers should check equity before an application moves forward.
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 Nd — Use this primary source to verify the official guidance.
- Read the official guidance from Justiceinaging — Use this primary source to verify the official guidance.
Table of Contents
- What home value counts toward the cap?
- Which dollar limit applies in your state?
- When does the cap not block nursing-care coverage?
- What changes starting in January 2028?
- What can caregivers do before applying?
What home value counts toward the cap?
The cap looks at equity interest, not sale price alone. Equity interest is the home value minus mortgages, liens, and other secured debt. Only the applicant's share counts when ownership is shared. A home below the cap can stay exempt for a nursing-facility resident who states an intent to return home.
Applicants face that question on the Medicaid form. Justice in Aging advises answering "yes," regardless of prognosis, as reported in Justice in Aging's analysis of the home-equity rule. The cap is separate from the countable-asset test. That test generally limits other assets to about $2,000 for an individual or $3,000 for a couple under SSI-based rules. Excess home equity must be addressed apart from bank accounts, investments, and other countable assets.
Which dollar limit applies in your state?
The 2026 federal minimum is $752,000. States may raise their limit to $1,130,000 after inflation indexing. Each state selects its own threshold within that range. Most states use the $752,000 basic limit in 2026.
Twelve states plus the District of Columbia use the $1,130,000 maximum, including California, New York, Massachusetts, New Jersey, Hawaii, and Washington. A caregiver in a high-cost housing market should confirm the exact state figure before estimating eligibility. The limit changes with the property, not the diagnosis. Dementia does not create a higher allowance. Location and documented equity decide whether the cap blocks nursing-care coverage.
When does the cap not block nursing-care coverage?
The cap does not apply when a spouse lives in the home. It also does not apply when the applicant's child under age 21 lives there. The same protection covers a blind or disabled child of any age who lives in the home, according to North Dakota's Medicaid home-equity policy. Exceeding the limit bars Medicaid payment for nursing-care coverage, including home- and community-based services.
The person may still qualify for other Medicaid benefits. That distinction matters for medical care, prescriptions, and other covered services outside long-term care. Caregivers should document who lives in the home. Keep proof of marriage, age, disability status, and residence. A child who moved out, or a spouse who relocated, may not preserve the exemption.
What changes starting in January 2028?
The 2025 Budget Reconciliation Act, H.R.1/P.L. 119-12, sets a $1 million equity bar for Medicaid long-term-services payment beginning January 2028. Homes on agricultural property are excepted. That uniform federal ceiling will replace the current state-selected range for affected applicants. The change raises the stakes for families with substantial home appreciation.
A home that passes under a $752,000 or $1,130,000 state limit today could still face review under the later rule. Caregivers planning two or three years ahead should track home equity yearly. State guidance will control how the transition, valuation date, and farm-property exception work. Watch for updated application questions and appraisal rules. Do not assume the 2026 state list will still apply.
What can caregivers do before applying?
Get a current equity estimate first. Subtract mortgage balances and liens from a realistic market value. Use only the applicant's ownership share when siblings, a spouse, or others hold part of the home.
Act before nursing-home Medicaid starts. Excess equity must be reduced through permitted spending or cleared through state hardship or waiver review. Keep receipts, appraisals, loan statements, and occupancy records with the application.
- Confirm the state equity limit and the applicant's equity share.
- List countable assets against the separate $2,000 or $3,000 test.
- Identify whether a spouse, young child, or disabled child occupant triggers an exemption.
- Ask the state agency about permitted spending and hardship or waiver review before reducing equity, as described by Kinly's guide to Medicaid spend-down.
