On January 1, 2028, a widow in Massachusetts with a paid-off house worth $1.08 million stops qualifying for Medicaid long-term care. Nothing about her changes that day. Her state's limit on home equity drops from above $1.13 million to a flat $1 million, and it never rises again.
Most coverage of this change treats it as a footnote, because about forty states sit far below $1 million today. That reading misses who gets hit and when. Nine states, the District of Columbia and California lose ground on day one. Every other state is on a slower road to the same ceiling.
What the law changed
The change is one short section of last year's budget law. Section 71108 of Public Law 119-21 rewrites the home equity rule in 42 U.S.C. 1396p(f), and it takes effect on January 1, 2028.
The old rule had a floor and a ceiling, and both moved with inflation. Congress set them at $500,000 and $750,000 in 2005. Each state picked a limit somewhere between the two, and both figures have been adjusted for inflation every year since 2011. For 2026 the floor is $752,000 and the ceiling is $1,130,000, according to the CMS bulletin on 2026 standards.
The new rule keeps the floor moving and locks the ceiling. From 2028 a state can choose a limit no higher than $1,000,000 for an ordinary home, and that figure is written into the statute as a plain dollar amount with no inflation adjustment. The floor keeps rising each year until it would pass $1,000,000. At that point the law says it "shall be deemed to be equal to $1,000,000."
Farms are the one carve-out. A home "located on a lot that is zoned for agricultural use" stays under the old rule, so a state can still apply the higher, inflation-adjusted ceiling to it.
The states where the limit drops on day one
The immediate cut lands only where the limit is already above $1 million. Two independent trackers agree on nine states and the District of Columbia using the $1,130,000 maximum this year, and on California applying no home equity limit at all.
| State | 2026 home equity limit | Limit from Jan 1, 2028 | Change vs. 2026 |
|---|---|---|---|
| Alabama | $1,130,000 | $1,000,000 | −$130,000 |
| Colorado | $1,130,000 | $1,000,000 | −$130,000 |
| Connecticut | $1,130,000 | $1,000,000 | −$130,000 |
| District of Columbia | $1,130,000 | $1,000,000 | −$130,000 |
| Hawaii | $1,130,000 | $1,000,000 | −$130,000 |
| Maine | $1,130,000 | $1,000,000 | −$130,000 |
| Massachusetts | $1,130,000 | $1,000,000 | −$130,000 |
| New Jersey | $1,130,000 | $1,000,000 | −$130,000 |
| New York | $1,130,000 | $1,000,000 | −$130,000 |
| Washington | $1,130,000 | $1,000,000 | −$130,000 |
| California | No limit | $1,000,000 | A limit where there was none |
The real cut is larger than the table shows. The $1,130,000 ceiling will be adjusted for inflation twice more before 2028, so the drop on New Year's Day will be measured from a higher number than this year's. CMS has not yet published the 2027 figure.
Tennessee is the one state the sources disagree on. The Justice in Aging fact sheet on the 2028 limit counts it among the maximum states. The state table kept by the American Council on Aging, updated in August 2026, shows it at the $752,000 floor. Tennessee families should ask TennCare which figure applies before they plan around either one.
California is the special case
California goes from no limit to a hard one. Medi-Cal has not applied a home equity test in recent years, and the home stayed exempt even when the state brought back a $130,000 asset limit in January 2026. Section 71108 closes that door directly: it adds a sentence saying the flexibility states use to ignore certain assets "shall not be construed as permitting a State" to decide nursing home or other long-term care eligibility "without application of the limit." A long-held house in a coastal California county is the textbook case of a modest household with more than $1 million in equity.
Why the freeze matters more than the number
A fixed dollar limit shrinks every year that prices rise. The home equity limit was indexed for one reason, which is that house prices and the general price level both climb, and a limit that stands still slowly reaches people it was never written for. Congress set $500,000 as the floor in 2005. Indexing has carried that same floor to $752,000. The new ceiling gets no such treatment.
The forty-odd floor states are not exempt. They are just later. Their $752,000 limit keeps rising with inflation, and at a steady 2.7 percent a year it would reach $1,000,000 in roughly eleven years. That is an illustration, not a forecast. After that point every state in the country has the same limit and it stays put for good.
The people this reaches are not the wealthy. A household with $3 million in investments was never going to qualify for Medicaid. The equity limit bites on a different person: someone with almost no savings, a modest pension, and a house bought decades ago in a neighborhood that got expensive around them. They cannot pay $11,000 a month for a nursing home out of pocket, and from 2028 the house alone can keep them off the program that would.
Who the limit does not touch
The limit skips most married couples. It does not apply when the applicant's spouse lives in the home. It also does not apply when a child under 21 lives there, or a child of any age who is blind or permanently disabled. Those exceptions sit in the same subsection and section 71108 left them alone.
That makes this a rule about single people. In practice it falls on widows, widowers, the divorced and the never-married, and on couples at the moment the second spouse needs care after the first has died. A married couple in a $1.4 million house is unaffected today and can become affected the month one of them dies.
The limit also applies only to long-term care. The statute covers "nursing facility services or other long-term care services," which takes in home and community-based waiver programs as well as nursing homes. Ordinary Medicaid health coverage for a senior who needs no long-term care is not subject to it.
Equity is not the same as value. The test counts the applicant's equity interest, meaning what the home is worth minus what is owed on it. A $1.2 million house with a $300,000 mortgage is under the limit.
The lawful ways out
The statute itself names borrowing as an option. The home equity provision says nothing in it prevents a person "from using a reverse mortgage or home equity loan to reduce the individual's total equity interest in the home." Borrowing against the house is the one fix Congress wrote into the rule, and section 71108 did not remove it.
Borrowing solves one problem and can create another. Loan money that sits in a bank account is a countable asset the following month, and most states allow a single applicant only about $2,000. The proceeds have to be spent on things Medicaid allows, such as care, home repairs or paying off other debt. Our explainer on how Medicaid spend-down works by state covers what counts.
The hardship waiver exists on paper and is weak in practice. Federal law requires every state to have a process for waiving the limit in a case of demonstrated hardship. Justice in Aging notes that CMS has not issued guidance on these waivers since 2006, and describes state implementation as inadequate. A family should ask for the waiver in writing, but should not build a plan on getting one.
Selling or giving the house away are the two moves that most often backfire. A gift to a child inside the five-year look-back period triggers a penalty period with no coverage. A sale turns an exempt home into countable cash. Both can be the right answer in a particular case, and both need an elder law attorney before anything is signed.
Keeping the house is not the end of the story either. A home that stays under the limit can still be claimed after death, which our post on what states can take through Medicaid estate recovery walks through.
What is still unsettled
The biggest open question is what happens to people already on Medicaid. The effective-date clause says only that the amendments "shall apply beginning on January 1, 2028." The text has no grandfather clause for people who are already enrolled, and CMS has not said whether current residents get re-tested at their next renewal. Someone approved in 2027 with $1.1 million in equity should assume the question will come up and ask the state agency in writing.
How states will value homes is also open. A limit this close to ordinary house prices turns the appraisal into the deciding document. Tax assessments, online estimates and formal appraisals can differ by more than the $130,000 at stake.
State legislatures have a small decision to make too. A state now at the maximum has to pick a new figure at or below $1 million. A state at the floor could raise its limit to $1 million and give its residents the most room the law allows.
A timeline for families in the eleven affected places
The two years before 2028 are the planning window. This is the third deadline the same law has set for families planning long-term care, after the 2027 cut to retroactive coverage and the work requirement rules that mostly exempt seniors.
- Now: Get a realistic value for the house and subtract any mortgage or lien. If the result is under $900,000, this change is unlikely to reach you soon.
- Before the end of 2026: If the equity is over $1 million and the owner is single, talk to an elder law attorney. Any transfer made now starts a five-year clock, so earlier is better.
- During 2027: Watch for CMS guidance and for your state's choice of a new limit. Ask the state Medicaid agency how it will treat people who are already enrolled.
- January 1, 2028: The $1,000,000 ceiling applies. Applications decided after this date are measured against it.
For everything else that decides whether Medicaid will cover a nursing home stay, start with our guide to when Medicaid will pay for a nursing home.