Starting in 2028, More Than $1 Million in Home Equity Disqualifies You From Medicaid Nursing Home Coverage, and the Cap Never Adjusts for Inflation

A frozen $1 million home equity cap takes effect January 2028 for Medicaid nursing home coverage, with no inflation adjustment ever built in.

Twelve states plus D.C. currently allow limits up to $1.13 million and must permanently drop to $1 million, squeezing house-rich retirees in high-cost cities.

The cap disappears entirely if a spouse, child under 21, or blind or disabled child of any age lives in the home.

Starting in January 2028, a homeowner with more than $1 million in home equity cannot qualify for Medicaid long-term services and supports, no matter how thin the bank account. That ceiling was written into the Budget Reconciliation Act of 2025, signed into law on July 4, 2025, and it applies nationally to nursing home coverage under Medicaid.

The number that matters is equity. Equity is the current market value of the home minus the mortgage balance and any outstanding loans against it. A house worth $1.3 million with a $400,000 mortgage has $900,000 in equity and stays under the cap. A paid-off house worth $1.05 million does not.

How the $1 Million Cap Rewrites the Current Rule

Medicaid, the joint federal-state program that pays for most nursing home care in the U.S., is separate from Medicare, which covers only short post-hospital rehab stays and stops well short of long-term custodial care. Since 2006, federal law has already capped the excludable home equity for Medicaid. In 2026, the federal floor is $752,000, and states are permitted to raise it as high as $1,130,000. Both of those numbers adjust upward every year for inflation.

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The new law kills the inflation adjustment. The $1 million ceiling is frozen. Analysts at Justice in Aging estimate that the current $752,000 federal floor would have reached $1 million on its own in roughly seven to 10 years at typical inflation rates. After that, the cap keeps tightening in real terms every year the Consumer Price Index climbs, and the CPI has kept climbing. The index sat at 332.8 in July 2026, up from 324.245 in September 2025.