For many older adults, the family home is their largest asset. Fortunately, Medicaid has long recognized that individuals should not automatically have to sell their homes to qualify for long-term care benefits.
Under current law, a person’s home is often not counted when applying for Medicaid coverage of nursing home care or home and community-based long-term care services, provided certain eligibility requirements are met, including an intent to return home.
However, there has long been a limit on how much equity a person can have in the home before it affects Medicaid eligibility. In New York State, that limit is currently $1,130,000. However, beginning January 1, 2028, a new federal law will reduce that limit to $1,000,000 in New York and for most homes nationwide.
Before you become alarmed, it is important to understand that this home equity limit does not apply to everyone. If the applicant’s spouse lives in the home, or if the home is occupied by a child under age 21 or by a blind or disabled child of any age, there is and will be no limitation on the home equity value for Medicaid eligibility purposes. Those longstanding protections remain in place under the new law.
Additionally, there is another exception to the $1,000,000 home equity requirement. If the home is located on land that is zoned for agriculture, the existing valuation rules including annual inflation adjustments will apply.
What Is Home Equity?
Home equity is simply the value of your home minus any mortgages, home equity loans, or other liens. For example, if your home is worth $1,000,000 and you owe $300,000 on your mortgage, your home equity is $700,000.
What Is Changing?
Since 2006, federal law has allowed states to use one of two maximum home equity limits for Medicaid eligibility. In 2026, the federal minimum is $752,000, while states such as New York have chosen to use the higher allowable limit under federal law of $1,130,000. Those limits have increased each year with inflation.
The federal budget reconciliation law enacted in 2025 changes this system in two important ways beginning January 1, 2028.
First, it establishes a nationwide home equity limit of $1,000,000 for most homes. States, including New York, will no longer be permitted to use a higher limit.
Second, unlike today’s law, the new $1,000,000 cap will not increase with inflation. As home values continue to rise over time, more homeowners may eventually exceed the limit even if they would not today.
Who Could Be Affected?
The new law will primarily affect people who own homes with more than $1,000,000 in equity and who later need Medicaid to help pay for long-term care.
This is particularly important in states such as New York, where many homeowners purchased their homes decades ago for a relatively modest price. Today, those homeowners may have well over $1,000,000 in equity in their home even though the owners have modest retirement income and limited savings.
These homeowners are often described as “house-rich but cash-poor.” Without proper planning, they could find that the equity in their home exceeds the new federal Medicaid limit.
Planning Opportunities Before 2028
Fortunately, there are planning opportunities for homeowners whose equity approaches or exceeds $1,000,000. Our elder law attorneys are well versed in various techniques to properly limit the equity in your home.
Don’t Forget About Estate Recovery
Even if a home is protected during a person’s lifetime for Medicaid eligibility purposes, Medicaid may still seek reimbursement from the person’s estate after death. Protecting a home from the home equity limitation does not necessarily protect it from Medicaid estate recovery. There are ways that an elder law attorney can eliminate Medicaid estate recovery.
The Bottom Line
If your home’s equity is approaching or exceeds $1,000,000, now is the time to begin planning—not after a health crisis occurs. Consider transferring your home to a Medicaid Asset Protection Trust sooner than later. Estimate your home’s equity by subtracting mortgages and other liens from its current market value.
Although the new law does not take effect until January 1, 2028, waiting until long-term care is immediately needed may prevent you from adequately protecting your home and may significantly reduce your planning options.
An experienced elder law attorney can help determine whether the new law applies to you, explain the available exceptions, and develop an individualized plan to protect your eligibility for Medicaid long-term care benefits.
The attorneys in the Elder Law Practice Group of Meltzer Lippe are available to help you understand these important changes and prepare for your future long-term care needs.
Ronald Fatoullah, Esq. Chairs the firm’s Elder Law Practice Group and is a Partner of the firm’s Trusts & Estates Practice Group.
This blog posting is for informational and educational purposes only. It is general in nature and not person or circumstance specific. This blog posting is not intended, nor should it be construed as rendering independent investment, legal or tax advice. It may but does not necessarily constitute attorney advertising.