A new federal Medicaid rule will cap home equity at $1 million for seniors seeking long-term care coverage starting in 2028. The change affects how states evaluate asset eligibility when older adults apply for nursing home or in-home care benefits through Medicaid.
Currently, most states exempt primary residences from Medicaid asset limits entirely, allowing seniors to keep homes of any value while qualifying for coverage. The $1 million cap represents the first nationwide threshold on home equity for Medicaid purposes in decades.
The shift has immediate implications for affluent senior homeowners. Those with home equity exceeding $1 million must spend down assets or restructure ownership before applying for Medicaid-funded long-term care. In high-cost markets like California, New York, and Massachusetts, many middle-class homeowners will exceed this threshold.
Adult children and estate planners now face new decisions. Some families may accelerate gifting strategies to reduce home equity before 2028. Others might explore irrevocable trusts or transfers to family members. Medicaid's five-year lookback period complicates these moves, penalizing transfers made too close to application dates.
Lenders and title companies should expect increased activity around home equity products and refinancing before 2028. Reverse mortgages may see renewed interest as seniors seek to access equity while lowering their counted assets.
State Medicaid programs will implement rules differently. Some states currently apply stricter equity limits, while others have none. The federal floor of $1 million creates flexibility for states to maintain tighter caps but prevents them from exempting equity entirely.
For sellers of homes owned by seniors, the rule creates urgency. Homeowners with equity above $1 million planning eventual Medicaid coverage face pressure to sell or restructure within five years of potential claims.
Renters and lower-equity homeowners