A federal change scheduled for 2028 will put a hard $1 million ceiling on most state Medicaid home-equity limits used for nursing-home and other long-term-care eligibility. The number sounds generous until it is placed against rapidly appreciating homes, especially in states that currently use the higher federally permitted threshold. The law does not make a home a countable asset in every case, but it narrows how far states may raise the protection as housing values climb.
Section 71108 replaces an indexed maximum with a hard ceiling
Federal Medicaid law can deny long-term-services-and-supports coverage when an applicant’s equity interest in a home exceeds a state-selected limit. Before the change, states generally chose within a federally indexed range, and the upper end could keep rising with inflation. A Congressional Research Service analysis of Public Law 119-21 says Section 71108 caps certain home-equity limits at $1 million beginning January 1, 2028, regardless of further inflation indexing.
The enacted statutory text revises Section 1917(f) of the Social Security Act and preserves a separate treatment for certain agricultural homes. It also clarifies that states cannot bypass the home-equity restriction when determining eligibility for nursing-facility or other long-term-care services. The provision changes the eligibility ceiling; it does not create a federal tax or require a homeowner to sell immediately.
The timing creates a quiet transition risk. A house below a state’s permitted ceiling today may cross the new maximum by 2028 without any change in the owner’s cash income. Equity is the market value attributable to the owner after debt, so mortgage balances, ownership shares and local valuations can matter as much as the sale price displayed on a neighborhood listing.
The cap also reverses part of the protection that inflation indexing was designed to preserve. CRS reported that the federal range in 2025 ran from $730,000 to $1.097 million. A state using the top end could protect equity above $1 million under the old framework, while the 2028 rule blocks that higher election for most homes. The immediate dollar reduction may be modest in some states, but a fixed ceiling grows more restrictive with every later year of housing inflation.
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The home remains special, but the protection is conditional
Medicaid’s treatment of a primary residence is often misunderstood because several rules operate at once. A home can be excluded from ordinary asset counting while still being subject to the equity limit for long-term-care eligibility. Separate rules may protect eligibility when a spouse, a child under 21 or a blind or permanently disabled child lives there, and state hardship procedures can affect individual cases.
The protection also should not be confused with Medicaid estate recovery. Eligibility determines whether Medicaid can pay for covered care while a person is alive; estate recovery addresses what a state may seek after death for certain benefits. A house can therefore be protected during an eligibility decision yet later become relevant to a recovery claim, depending on survivors, state law and statutory exceptions.
Medicaid remains a joint federal-state program, so the new national ceiling does not erase state differences. States will continue setting rules within federal boundaries, applying their own methods for valuation, hardship and documentation. The federal Medicaid description of nursing-facility coverage emphasizes that eligibility can be calculated differently for institutional residents and directs applicants to state agencies for the applicable limits.
The financial exposure is concentrated geographically. In a lower-cost market, $1 million of home equity remains far above the value of a typical residence. In expensive coastal and urban markets, a long-owned house may exceed the ceiling even when its resident has modest retirement income and little liquid wealth. That mismatch between property wealth and spendable cash is the provision’s sharpest consequence.
A spouse or qualifying child in the home can change the legal result because federal law contains occupancy exceptions to the equity restriction. Those exceptions protect people, not merely property value, and they make household composition central to the eligibility analysis. Agricultural-home treatment adds another narrow exception under the 2025 law. A statewide one-line threshold therefore cannot resolve a case without identifying who lives in the residence and what kind of property is involved.
Planning pressure arrives before the 2028 effective date
The change gives families time to learn how their state will implement the cap, but it does not make last-minute transfers safe. Medicaid uses look-back and transfer-penalty rules that can make gifts or below-market transfers costly. Decisions involving deeds, trusts, mortgages or a spouse’s ownership interest also reach beyond Medicaid into taxes, creditor protection and estate administration.
The most important calculation is therefore not simply whether a tax assessment exceeds $1 million. The statute concerns the applicant’s equity interest, and the relevant figure may differ from assessed value or an online estimate. Ownership form, legitimate debt and the presence of a protected relative can change the analysis, while state implementation will determine what evidence must establish each point.
The 2025 law turns an inflation-adjusted outer boundary into a fixed dollar line at the start of 2028. That makes the rule easier to state but more restrictive over time, because housing values can continue rising while the ceiling does not. For households relying on a valuable home and limited savings, the enduring issue is not whether the residence counts as wealth on paper; it is whether federal and state rules still protect access to care when that paper value crosses the new cap.
This article was produced with AI assistance and reviewed against primary sources by The Money Overview editorial team.
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