Most Orange County families have heard that the house does not count when a parent applies for Medi-Cal. For the everyday $130,000 asset test, that is true. But there is a second, separate rule that applies when the coverage being requested is long-term care, such as a nursing home stay, and it looks at how much equity your parent holds in the home. Starting January 1, 2028, federal law caps that equity line at $1,000,000 and stops it from rising with inflation. In a county where many homes are worth well over a million dollars, that change deserves a place on every family’s planning calendar now.
For decades of Southern California homeowners, the house is the single largest asset in the family. That is exactly why a home equity rule matters more here than almost anywhere else.
Two Medi-Cal Rules About Your Home, Not One
Medi-Cal looks at a home in two different ways, and mixing them up is an easy and costly planning mistake.
Rule one is the asset test. California reinstated a $130,000 asset limit for older and disabled Medi-Cal applicants in 2026. Under that test, the home your parent lives in is an exempt asset, so it does not count toward the $130,000. Our guides to the $130,000 asset limit and the 2026 redetermination process walk through that test in detail.
Rule two is the home equity limit. It applies only when Medi-Cal is being asked to pay for long-term care. California Welfare and Institutions Code section 14006.15 says a person “is not eligible for medical assistance for home and facility care if their equity interest in the principal residence exceeds” a set dollar amount. The federal version of the same rule, 42 U.S.C. §1396p(f), describes the covered services as “nursing facility services or other long-term care services.”
So a home can be completely exempt for the asset test and still block long-term care coverage under the equity test. The two rules sit in different sections of the law and answer different questions.
| Question | $130,000 Asset Test | Home Equity Limit |
|---|---|---|
| What it measures | Countable savings, investments, and property other than exempt items | Equity in the principal residence |
| Is the home counted? | No, the home you live in is exempt | Yes, that is the whole point of the test |
| Which coverage it affects | Medi-Cal eligibility for older and disabled applicants | Long-term care: nursing facility care and other long-term care services |
| California source | State budget trailer bill AB 116 | W&I Code §14006.15 |
| Changes on Jan 1, 2028? | Not under this federal provision | Yes, capped at $1,000,000 |
What the Law Says Today
California’s statute sets the limit at $750,000 and requires that amount to be raised every year, starting no later than December 31, 2011, based on the national Consumer Price Index for all urban consumers, rounded to the nearest $1,000. Federal law allowed states to choose a figure between a $500,000 floor and a $750,000 ceiling, both indexed to inflation, and California chose the top of that range.
Because the base has been adjusted for inflation for well over a decade, California’s working figure today is higher than $750,000. Our own rough arithmetic from published inflation data suggests it has likely climbed above $1 million. That is an estimate, not an official number. The Department of Health Care Services sets the current figure each year, and your county eligibility worker can confirm the exact amount that applies to an application.
Coastal and hillside neighborhoods carry some of the highest home values in Orange County. Under the equity test, what matters is equity, not the asking price a neighbor’s listing suggests.
What Changes on January 1, 2028
Section 71108 of Public Law 119-21, the federal budget law signed in July 2025, rewrites the home equity rule. Three parts of it matter for Orange County families:
- A hard $1 million ceiling. States can still choose a limit above the federal floor for homes that are not on agricultural land, but that choice now “does not exceed $1,000,000.”
- Inflation adjustments stop at $1 million. The law says that if the yearly inflation adjustment “would result in a dollar amount … exceeding $1,000,000, such amount shall be deemed to be equal to $1,000,000.” In plain terms, the line stops moving.
- The start date. The ceiling and the freeze “shall apply beginning on January 1, 2028.”
The same section also adds language making clear that a state may not decide long-term care eligibility “without application of the limit.” That closes off the idea of a state simply setting the equity test aside.
Why does this matter so much here? If California’s inflation-adjusted figure is already above $1 million, as the arithmetic suggests, then the 2028 change is not just a freeze. It is a rollback to $1 million. And every year after that, Orange County home values can keep rising while the limit stays put. More homes cross the line each year, even if nothing else about a family’s situation changes.
Who the Equity Limit Does Not Apply To
This is the single most important part of the rule for many families, and it is the part most often left out of headlines. California’s statute lists three situations where the equity limit does not apply:
| Exception | What It Means in Practice |
|---|---|
| A spouse lives in the home | If your parent’s husband or wife is lawfully living in the house, the equity limit does not apply. |
| A qualifying child lives in the home | The same is true if a child under 21, or a child of any age who is blind or disabled, is lawfully living in the home. |
| The application was filed before January 1, 2006 | People found eligible based on an application filed before that date are not subject to the limit. |
| Hardship | The statute allows an exception for hardship, and federal law requires a hardship waiver process. |
When one spouse needs long-term care and the other still lives in the home, the equity limit does not apply. That single exception covers a large share of married Orange County homeowners.
Lawful Ways Equity Can Be Lower Than You Think
Federal law says directly that nothing in the equity rule prevents a person “from using a reverse mortgage or home equity loan to reduce the individual’s total equity interest in the home.” A reverse mortgage is a major financial decision with real costs and long-term consequences, so it deserves careful advice before anyone signs. Our guide to paying for home care in Orange County explains how reverse mortgages work as a payment source.
Equity is also simply value minus debt. An existing mortgage or a recorded lien already reduces equity, and California lets the applicant use the lower of the tax-assessed value or an independent appraisal. A family that only looks at a real estate website’s estimate may assume the home is over the limit when the measured equity is not.
What we will not do is tell families how to transfer or restructure a home to qualify. Medi-Cal has separate look-back and transfer rules, and the right answer depends on the whole family’s situation. That is a conversation for a certified elder law attorney. Free, unbiased Medicare and benefits counseling is also available through HICAP at the Council on Aging – Southern California, (714) 560-0424.
Selling the family home is one path some families take when long-term care is needed, but it is rarely the only option. Get legal advice before listing a parent’s home for care-related reasons.
What Families Can Do Before 2028
January 1, 2028 is a little over a year away, which is exactly why now is the right time to look at it calmly instead of in a crisis. A few practical steps:
- Find the assessed value. Your parent’s Orange County property tax bill shows the assessed value. Compare that number, minus any mortgage balance, against the figures above.
- Know who lives in the home. A spouse, or a child who is under 21, blind, or disabled, living in the house changes the answer completely.
- Separate the two Medi-Cal tests. Passing the $130,000 asset test does not settle the long-term care equity question, and the equity test is about long-term care coverage, not ordinary doctor and hospital coverage.
- Plan for where care will happen. If the equity limit could block Medi-Cal payment for long-term care, the realistic choices are usually paying privately for facility care, using home equity through an approved method, or keeping your parent at home with paid in-home support. For many families, staying home is also what their parent wants most. Our Orange County home care cost guide lays out typical hourly ranges.
- Get legal advice early. Planning done years ahead has far more options than planning done after a hospital discharge. If a hospital stay is what starts the conversation, our explainer on Medicare observation status covers the nursing home coverage trap families hit most often.
Your Home Equity Planning Checklist
Click each step as you finish it.
- Pull your parent’s most recent Orange County property tax bill and note the assessed value
- Write down the current mortgage or home equity loan balance, if any
- Subtract the debt from the assessed value to estimate equity under California’s definition
- Note whether a spouse, or a child under 21, blind, or disabled, lives in the home
- Check whether your parent was found eligible on a Medi-Cal application filed before January 1, 2006
- Ask the county eligibility worker for the current home equity limit figure in writing
- Mark January 1, 2028 on the family calendar as the date the $1,000,000 cap begins
- Book a consultation with a certified elder law attorney before making any changes to the home’s title
- Call HICAP for free, unbiased benefits counseling (numbers in the FAQ below)
- Talk as a family about where your parent would prefer to receive care if needs increase
Test Your Knowledge
Frequently Asked Questions
It depends on which test. For the $130,000 asset test, the home your parent lives in is exempt. For long-term care coverage such as a nursing home, California’s home equity limit under W&I Code §14006.15 can make your parent ineligible if their equity in the home is above the limit, unless an exception applies.
California’s statute starts at $750,000 and adjusts the figure for inflation every year, so the current number is higher than $750,000. The Department of Health Care Services sets the official yearly figure, and your county eligibility worker can confirm it for a specific application. From January 1, 2028, federal law caps it at $1,000,000.
No. Public Law 119-21, section 71108, says that if the inflation adjustment would push the amount above $1,000,000, the amount is treated as exactly $1,000,000. For non-agricultural homes, the limit stops rising at that point.
Under California’s statute, the equity limit does not apply when a spouse is lawfully living in the home. The same is true if a child under 21, or a blind or disabled child, lives there. An elder law attorney can confirm how the rule applies to your family’s exact situation.
No. The equity limit is a Medi-Cal eligibility rule. Families who pay privately for non-medical in-home care, or use long-term care insurance or veterans benefits, are not affected by it. That is why many families look at in-home support as one realistic option when Medi-Cal long-term care coverage is uncertain.
HICAP at the Council on Aging – Southern California offers free, unbiased counseling at (714) 560-0424 or (800) 434-0222. For questions about the home itself, title, or transfers, speak with a certified elder law attorney. To talk through in-home care options, call At Home VA Staffing at (213) 326-7452.
More on Medi-Cal and Paying for Care in Orange County
- The $130,000 Medi-Cal Asset Limit Is Back: What OC Seniors Need to Know Before Their 2026 Renewal
- How to Pay for Home Care in Orange County: Every Option for 2026
- AB 1983 and CCRC Entrance Fee Refunds in Orange County
Planning for Care at Home in Orange County
At Home VA Staffing provides non-medical in-home care across Orange County, from a few hours of help each week to round-the-clock support. If your family is weighing where a parent will receive care, we are happy to talk through what in-home support could look like.
Talk to Our Team: (213) 326-7452Proudly Serving Orange County Communities
This article is for general informational purposes and is not legal, tax, or financial advice. It summarizes California Welfare and Institutions Code section 14006.15, 42 U.S.C. §1396p(f), and Public Law 119-21, section 71108, as of October 21, 2026. The current California home equity figure is set by the Department of Health Care Services and is not stated here. Rules can change, and how they apply depends on each family’s facts. Consult a certified elder law attorney before making decisions about a home or Medi-Cal eligibility. At Home VA Staffing is a non-medical home care agency and is not affiliated with the Department of Health Care Services or any government agency.
