AT A GLANCE:
- A new federal law caps Medicaid home equity at $1,000,000 starting January 2028.
- New York and New Jersey currently allow up to $1,130,000 — both must lower their limits.
- Homeowners with homes worth over $1M may lose Medicaid eligibility under the new rule.
- Even homes under the limit can be claimed by the state after death through estate recovery.
- The 5-year look-back means planning must start now — not when care is needed.
If you own a home in New York or New Jersey, a new federal law is about to change the Medicaid rules in a way that will affect thousands of families — including people who have modest incomes but homes that have grown in value over the decades.
The deadline is January 2028. And most families have no idea it’s coming.
WHAT THE CURRENT RULE SAYS
Right now, your home is generally exempt from Medicaid’s asset limits, meaning you don’t have to sell your house to qualify for Medicaid long-term care coverage. New York and New Jersey have both adopted the maximum allowable home equity limit, which currently sits at $1,130,000.
That means if your home is worth less than $1,130,000, it typically won’t count against you when you apply for Medicaid.
For most states, the limit is lower – $752,000. But New York, New Jersey, California, Massachusetts, and a handful of others chose the higher federal maximum to protect homeowners in expensive housing markets.
That protection is about to shrink.
WHAT CHANGES IN JANUARY 2028
The Budget Reconciliation Act of 2025, signed into law on July 4, 2025, sets a new hard cap of $1,000,000 on home equity for Medicaid eligibility — effective January 2028.
Here’s what that means in plain English:
- If your home is worth more than $1,000,000 at the time you apply for Medicaid, it will count against you — even if it’s your primary residence
- New York and New Jersey will be forced to lower their limits from $1,130,000 to $1,000,000
- The new cap is not indexed to inflation — it will not go up over time, meaning more and more homeowners will be caught by it as home values rise
For reference: the current $752,000 floor would reach $1 million “in roughly seven to ten years under typical inflation rates,” according to analysts at Justice in Aging. The $1 million cap will effectively shrink over time in real terms.
WHO IS MOST AT RISK?
This law hits one specific group hardest: people who are house-rich but cash-poor.
Many older adults in the New York metro area bought their homes 30, 40, or 50 years ago — in Queens, Nassau County, Bergen County, or Hudson County — for $80,000 or $100,000. Today, those same homes are worth $900,000, $1.1 million, or more.
These families:
- Have modest monthly incomes (Social Security, small pension)
- Have little liquid savings
- Would qualify for Medicaid in every other way
- But now own a home that pushes them over the new limit
As one advocate put it: they are “cash-poor and house-rich” — and under the new rule, that house could disqualify them from the very coverage they need most.
THE ESTATE RECOVERY PROBLEM DOESN’T GO AWAY
Even when your home is within the Medicaid limit, there’s another issue families often don’t know about: estate recovery.
When a Medicaid recipient dies, New York and New Jersey both have programs that allow the state to seek reimbursement for the cost of care — directly from the deceased’s estate. In most cases, that means the family home.
In other words: the home may be protected while you’re alive and receiving care, but after you pass, the state can make a claim against it.
Without proper planning, the home your family expected to inherit may instead be used to repay Medicaid for years of nursing home costs.
This is one of the most important and least-understood aspects of Medicaid planning — and it’s completely separate from the 2028 home equity change.
WHAT YOU CAN DO BEFORE 2028
The good news: there are legal strategies available right now that can protect your home — both from the new equity cap and from estate recovery. But they take time to implement correctly, and the 5-year look-back period means you need to start planning well before you need care.
Options worth discussing with an elder law attorney include:
- Irrevocable Medicaid Asset Protection Trusts — transferring the home into a properly structured trust so it is no longer a countable asset for Medicaid purposes
- Caregiver Child Exceptions — in certain situations, a home can be transferred to a child who has lived in the home and provided care, without triggering a penalty period
- Life Estates — a deed structure that allows a parent to transfer ownership to a child while retaining the right to live in the home for life
- Reverse Mortgages or Home Equity Loans — in some cases, reducing home equity below the Medicaid limit through borrowing (though this must be done carefully)
Each option has tradeoffs. The right strategy depends on your family’s specific situation — your income, assets, health status, and how soon you may need care.
THE CLOCK IS RUNNING
January 2028 sounds far away. It isn’t — not when Medicaid planning involves a mandatory 5-year look-back period.
That means transfers or trust arrangements made today won’t fully protect you until 2031. If you wait until 2027 to start planning, you may find yourself in a difficult position.
The families who will be best protected are the ones who start planning now, while they still have options.
WE HELP NEW YORK AND NEW JERSEY FAMILIES PROTECT WHAT THEY’VE BUILT
At FreedomCounsel, we work with families across New York and New Jersey to navigate Medicaid eligibility, protect family homes, and plan ahead — before a crisis forces your hand.
If you own a home and are concerned about what the 2028 law change means for your family, we’d like to talk.
Schedule a consultation today: Contact FreedomCounsel
