Mom Will Need Nursing Home Care in 2028 With $1.1 Million in Home Equity. A New Medicaid Ceiling Puts Her Over the Limit In Every State
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Picture a mother who spent three decades paying down her mortgage. By 2028, when her doctor says she needs nursing home care, the house carries $1.1 million in equity and no loan at all. Her kids figure the house is safe because Medicaid exempts the home from its asset test. They’re half right.
A separate federal rule, the Medicaid home equity limit in Section 1917(f) of the Social Security Act, bars Medicaid from paying nursing home costs when an applicant’s home equity tops the state’s cap. Starting January 1, 2028, a new federal law caps that limit at $1,000,000 for a non-agricultural home, with no inflation adjustment. Unless a family exception applies, Mom’s $1.1 million puts her over the line in every state.
How the Home Equity Limit Trips Up an “Exempt” House
Medicaid’s regular asset test often allows around $2,000 in countable savings, although limits vary by state, and it generally ignores the home as long as the applicant intends to return. Since 2006, though, federal law has layered on a second test that applies only to long-term services and supports, including nursing home care and home and community-based services.
Equity means the home’s market value minus mortgages, home equity loans and liens. If Mom co-owns the house, only her share counts. Go over the limit and Medicaid won’t cover her nursing home costs. She keeps the house, and she can still get other Medicaid coverage, like doctor visits, if she otherwise qualifies.
Medicare won’t fill that hole. The federal health insurance program for people 65 and older is Medicare, while Medicaid is the joint federal-state program for people with low income and few assets. Medicare covers skilled nursing only short-term after a qualifying hospital stay of at least three days, and the coinsurance rises to $217 a day in 2026 once the stay passes 20 days. Ongoing custodial care falls to the family or Medicaid, and a private nursing home room ran $355 per day, or about $130,000 per year, in CareScout’s 2025 survey.
2028’s $1 Million Cap Shrinks Limits in 9 States and DC
For 2026, the federal floor is $752,000 and states may raise their limit as high as $1,130,000. Both figures rise with inflation every year. Most states use the floor. Alabama, Colorado, Connecticut, the District of Columbia, Hawaii, Maine, Massachusetts, New Jersey, New York and Washington use the maximum, according to an October 2026 analysis by ElderCare Index.
That geography determines Mom’s fate. In Massachusetts, her $1.1 million fits under the 2026 ceiling but lands above the $1 million cap in 2028. In Ohio, a floor state, she’s already over the 2026 limit. Tennessee families get a muddier picture: Justice in Aging counts the state among the maximum states, while the American Council on Aging lists it at the floor.
California gets the biggest shock. Medi-Cal applies no home equity test today, even after the state brought back a $130,000 asset limit in January 2026. Section 71108 of the new law closes that door by barring states from using asset flexibility to skip the limit. That brings California under an equity cap for the first time.
The freeze matters more than the number. The floor keeps climbing with inflation until it reaches $1 million, then stops there. Homes on lots zoned for agricultural use keep the old inflation-adjusted ceiling. Meanwhile, the Case-Shiller national home price index rose 2.1% in the year through August 2026, meaning a frozen ceiling could pull more homeowners above the limit as property values rise.
Spouse and Child Exceptions That Switch Off the $1 Million Cap
The equity limit stops applying entirely when certain relatives legally live in the home: the applicant’s spouse, a child under 21, or a blind or disabled child of any age. If Mom’s adult daughter with a disability lives with her, the $1.1 million stops mattering for eligibility.
Federal law also requires a process for lifting the limit in cases of demonstrated hardship. It also lets applicants cut their equity with a reverse mortgage or home equity loan. Families that borrow need a plan for the cash, though. Money still sitting in the bank the following month counts as an asset. Transfers to a spouse or a blind or disabled child can escape transfer penalties. Special exceptions also apply to certain transfers of the home, including to a child under 21. Gifts to other relatives inside the look-back period can trigger penalties.
State rules still run the show. Each state spells out its limit in its Medicaid plan, and states determine how they value the home and handle hardship requests. CMS hasn’t published the 2027 figures yet, and those numbers set the last inflation increase before the cap takes effect.
Mom may not have an extra dollar in the bank. Yet the $1.1 million locked inside her house could become the number that delays her Medicaid eligibility.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
