Home equity cap tied to Medicaid eligibility is set to change

A new federal Medicaid rule will place a nationwide cap of $1 million cap on home equity for older adults who seek Under the new law, Medicaid will not cover long-term services and supports, including nursing home care and home-based care, for applicants whose home equity exceeds $1 million. Exceptions exist for properties zoned for agricultural use, according to a recent Current federal rules set the standard cap at $752,000 for 2026, while allowing states to raise the limit to as much as $1.13 million. A dozen states and the District of Columbia currently use the higher threshold, Justice in Aging noted.

Rising home values raise concerns

Advocates for older adults say the cap does not reflect rapidly rising Federal Medicaid law explicitly allows applicants to use “a reverse mortgage or home equity loan to reduce the individual’s total equity interest in the home,” Justice in Aging explained.

Still, experts caution that such products carry risks. Reverse mortgages can reduce values for heirs due to accumulated fees and interest, while HELOCs and home equity loans may create repayment obligations that are difficult for retirees on fixed incomes to meet.

Justice in Aging urged older adults to consult elder law attorneys or