The Medicaid home equity cap can block nursing-home payment for a dementia patient who otherwise qualifies financially and medically. If the patient's ownership interest in the home exceeds the state limit, Medicaid will not pay for long-term care. The home equity cap measures ownership value minus mortgages and liens. For eligible adults with Alzheimer's or other dementia, Medicaid otherwise pays full nursing-home costs at a certified facility, according to the National Council on Aging National Council on Aging guide.
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Official resource:
- Read the official guidance from Justiceinaging — Use this primary source to verify the official guidance.
Table of Contents
- How much equity triggers denial?
- What changes in January 2028?
- Who stays exempt from the cap?
- What can families do next?
How much equity triggers denial?
Federal law since 2006 bars Medicaid payment for long-term services and supports when home-equity interest exceeds the state limit. That bar includes both nursing-facility care and home- and community-based services. For 2026 the federal floor is $752,000 and states may elect up to $1,130,000.
Most states use $752,000, while twelve states plus D.C. use $1,130,000, according to Justice in Aging Justice in Aging analysis. Home equity is separate from the usual $2,000 countable-asset limit for long-term-care Medicaid in most states in 2026. Excess equity alone can therefore disqualify a dementia patient who meets income, asset, and care-need tests.
What changes in January 2028?
Starting January 2028, the Budget Reconciliation Act of 2025 bars state Medicaid programs from covering long-term services if nonagricultural home equity exceeds $1 million. States remain free to set lower limits.
The change creates a national ceiling for nonfarm homes. A state could keep its current $752,000 limit. Families in high-price housing markets should check their state rule before assuming $1 million applies.
Who stays exempt from the cap?
The cap does not apply if a spouse lives in the home. It also does not apply if a child under 21 or a blind or disabled child lives there.
An absent nursing-home resident can otherwise keep the home exemption only by stating intent to return home. That statement becomes harder when dementia requires a long or permanent stay. Caregivers should record housing facts early, before function declines further.
What can families do next?
Applicants denied for excess equity may seek an undue-hardship waiver. Some states grant the waiver when denial would deprive needed medical care. The hardship option is reported in Arkansas, Illinois, Louisiana, New York, North Carolina, Ohio, Tennessee and Wisconsin, according to Medicaid Planning Assistance Medicaid Planning Assistance guide.
- Confirm your state limit and get a current equity calculation
- List who lives in the home and keep proof of residence
- Record intent to return when that remains realistic
- Ask the Medicaid office how to file a hardship waiver
