Most people expect their home to be safe when they need long-term care. A federal law changing in 2028 puts that assumption to the test for some homeowners. Understanding the new rule now, well before it takes effect, is one of the more useful things elder law can do for a family.
What the New Rule Does
Medicaid has long protected a person’s home. Even someone living in a nursing facility can usually keep their house exempt from the asset test, as long as they intend to return. But that protection has limits, and those limits are about to tighten.
Starting in January 2028, a federal law will cap the home equity a person can hold and still qualify for Medicaid coverage of long-term care at $1 million. The Budget Reconciliation Act of 2025 created a hard national ceiling. No state will be allowed to exempt more than that amount.
Two details make this more than a technicality:
- The cap is frozen. It will not rise with inflation, so as home values climb, more people will cross the line each year.
- Twelve states and the District of Columbia currently allow a higher limit and will be forced to lower it. Homes on land zoned for agricultural use are the one exception and keep following the old rules.
An analysis from Justice in Aging estimates that today’s federal limit of $752,000 will reach $1 million in roughly seven to ten years, which means homeowners in lower-cost areas will feel the freeze soon enough.
Who Feels This First
The people most affected are what advocates call house-rich and cash-poor. Someone who bought a modest home decades ago may now sit on more than $1 million in equity while living on a fixed income with little in the bank. In a high-cost city, an ordinary two-bedroom house can cross that line. For that person, the home itself, not their savings, could stand between them and the care they need.
What You Can Do Before 2028
The rule does not take effect until 2028, and that runway is exactly what makes planning possible. If your home equity is near or above the cap, several paths are worth discussing with an attorney.
A reverse mortgage or a home equity loan can lower the equity you hold. The limit does not apply if a spouse, a child under 21, or a disabled child lives in the home. Federal law also requires states to offer a hardship waiver, though that process is uneven from one place to the next. And an elder law attorney can sometimes restructure finances through trusts or transfers, though strict lookback rules mean this only works if you start early.
Do Not Forget Estate Recovery
One point gets missed often. Keeping a home exempt while you are alive does not protect it after death. Medicaid can still seek repayment from your estate, and the home is frequently where it looks. Planning for eligibility and planning to preserve the home for your heirs are two different tasks, and both deserve attention.
Getting Ahead of the Change
The rules around Medicaid, real property, and long-term care fit together in complicated ways, and a wrong move can cost a family dearly. Working with an elder law lawyer gives you someone who can measure your equity against your state’s rules and map out the options that actually apply to your situation.
The 2028 deadline may feel far off, but the tools that work best, like reducing equity or restructuring assets, take time and careful timing to do right. The attorneys at Estate Planning Pros help older adults and their families plan for long-term care before a crisis forces rushed decisions, weighing eligibility, the home, and the family’s wishes together. If you or a parent owns a home that could approach the new cap, consider talking with an attorney now, while there is still room to plan rather than react.