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Open enrollment for Covered California started on Nov. 1. The federal government is entering its sixth week of a shutdown over the cost of health care. Headlines are blaring about premium spikes in California and in insurance marketplaces across the nation. What’s really going on?
How Covered California Subsidies Work
Close to 2 million Californians purchase health coverage through Covered California, the state’s health insurance exchange established in 2014 under the Affordable Care Act (ACA). These consumers earn too much to qualify for Medi-Cal enrollment but often can’t get affordable coverage through an employer. Many are self-employed or work for small businesses that don’t offer health benefits.
Under the ACA, consumers earning less than 400% of the federal poverty level (FPL) — projected to be around $63,000 for an individual and roughly $130,000 for a family of four in 2026 (the official 2026 FPL is not yet published) — are eligible on a sliding scale for federal subsidies to help afford their premiums. The lower someone’s income, the more help they receive.
During the COVID-19 pandemic, Congress significantly increased these premium subsidies and extended them for the first time to people earning more than 400% of FPL. These “enhanced” premium subsidies included a new requirement: no one would pay more than 8.5% of their household income on premiums. These changes were meant to last two years under the American Rescue Plan, and Congress later extended them through 2025 as part of the Inflation Reduction Act.
What Happens to Covered California Subsidies in 2026?
Because Congress has chosen not to extend these COVID-era “enhanced” premium subsidies, they will expire on Dec. 31, 2025. Unless Congress takes rapid action, premium subsidies starting in 2026 will revert to pre-pandemic ACA levels.
At the same time, premiums continue to rise as underlying costs in the health care system spiral upward.
The combination of higher premiums and reduced premium subsidies means 2026 will bring a financial shock to many Covered California enrollees. The impact varies widely depending on age, income, and location.
Five Families
CHCF projected premium costs for five hypothetical California families earning different incomes and living in different regions. These are illustrative examples only, based on real cost estimates pulled from the Covered California shopping tool in late October 2025.
For simplicity, we assume that each family is pricing the “benchmark” health plan (defined as the second lowest cost Silver Plan) for 2025 and 2026. (Covered California also offers Gold and Bronze plans. Learn more about plan metal tiers here.)
John and Louise
- 55-year-old married couple
- Income: Louise cuts hair and John runs a local restaurant. Combined, they earn around $107,000/year (500% of FPL)
- Hometown: Redding
| Total monthly premium | Monthly federal premium subsidy | What enrollee pays monthly | Premiums as % of income | |
| 2025 | $2,670 | $1,910 | $758 | 8.6% |
| 2026 | $2,923 | $0 | $2,921 | 33.2% |
| Difference 2025 v. 2026 | $253 | ($1,910) | $2,163 | 24.5% |
Summary: Californians like John and Louise will be hardest hit in 2026. Premiums are already more expensive for older Californians. There are fewer enrollees in rural regions, which also drives costs up. Because they earn more than 400% FPL, John and Louise are no longer eligible for any federal subsidy in 2026. They will have to pay an additional $2,161 a month and premium costs will take up a third of their income.
Kevin
- 25-year-old single man
- Income: Kevin drives for Lyft while pursuing an acting career. He earns about $32,000 a year (about 200% of FPL)
- Hometown: Los Angeles
| Total monthly premium | Monthly federal premium subsidy | What enrollee pays monthly | Premiums as % of income | |
| 2025 | $322 | $261 | $59 | 2.3% |
| 2026 | $361 | $188 | $172 | 6.6% |
| Difference 2025 v. 2026 | $39 | ($74) | $113 | 4.3% |
Summary: Kevin’s total premium didn’t go up much this year, and he’s still eligible for traditional ACA subsidies. Still, what he pays every month will triple, rising to $172. That’s not an insignificant increase for someone on a limited income, but his monthly premium costs are still only 6.6% of his income.
Carla, Diego, and Gabriella
- Carla is 42, Diego is 45, and Gabriella is 15
- Income: Carla is a waitress, and Diego works for a towing company. Combined, they earn slightly over $80,000 a year (about 300% of FPL)
- Hometown: Fresno
| Total monthly premium | Monthly federal premium subsidy | What enrollee pays monthly | Premiums as % of income | |
| 2025 | $1,389 | $971 | $415 | 6.2% |
| 2026 | $1,576 | $910 | $664 | 10.0% |
| Difference 2025 v. 2026 | $187 | ($61) | $249 | 3.7% |
Summary: Carla and Diego must absorb an increase in their total premium while the expiration of enhanced subsidies means they will get less financial help. They’ll have to pay $664 a month in 2026, a $249 increase from last year. Premium costs will jump from 6.2% of their income to 10%.
Meilin
- 35-year-old single mom to 10-year-old Chen, who is enrolled in Medi-Cal
- Income: Meilin works in retail, earning around $43,000 a year (about 200% of FPL for family of two)
- Hometown: San Francisco Bay Area
| Total monthly premium | Monthly federal premium subsidy | What enrollee pays monthly | Premiums as % of income | |
| 2025 | $613 | $533 | $79 | 2.2% |
| 2026 | $695 | $461 | $233 | 6.6% |
| Difference 2025 v. 2026 | $82 | ($72) | $154 | 4.4% |
Summary: Like Kevin, Meilin will see her monthly premium expense almost tripling. But she’ll pay more than Kevin in large part because she lives in a more expensive region. Her monthly premium will rise to $233, up $154 from the previous year. That’s 6.6% of her income. If her son wasn’t in enrolled in Medi-Cal, she would definitely face much higher costs for Covered California.
Mary
- 60-year-old single woman
- Income: Mary left her full-time job a few years ago and does freelance consulting until she can retire. She earns around $80,000 a year (about 500% of FPL).
- Hometown: San Diego
| Total monthly premium | Monthly federal premium subsidy | What enrollee pays monthly | Premiums as % of income | |
| 2025 | $934 | $379 | $554 | 8.5% |
| 2026 | $1,040 | $0 | $1,039 | 15.9% |
| Difference 2025 v. 2026 | $106 | ($379) | $485 | 7.4% |
Summary: Like Louise and John, Mary faces higher premiums as an older person, and in 2026 she will lose all subsidies because she earns more than 400% of FPL. Her monthly premium will almost double from $554 to over $1,000 a month. Premium costs will increase from 8.5% of her income to almost 16%.
Costs Over and Above Premiums
This analysis focuses on premiums only. Consumers in Covered California also face out-of-pocket costs, including deductibles, hospital expenses and co-pays for doctor visits, pharmaceuticals and more.
While the “enhanced” federal premium subsidies have been in place, additional state-based financial assistance from California reduced or in some cases eliminated deductibles and cost sharing for many Covered California consumers in Silver plans.
In the absence of “enhanced” federal subsidies, California will direct almost all state-based financial assistance in 2026 to Covered California consumers earning up to 150% of FPL (around $26,000 for an individual or a little over $50,000 for a family of four). The goal is to keep premiums for people in that income range comparable to 2025.
This means that, in addition to higher premiums, many middle-income consumers will also experience higher deductibles and co-pays in 2026. Consumers should factor in these costs, along with premiums, when assessing the overall affordability of a health plan.
Are You Shopping for a Covered California Plan?
The five examples above are illustrative only. If you’re shopping for a plan, the best thing to do is visit CoveredCA.com or call Covered California directly at (800) 300-1506 to explore and compare your plan options, and see if you qualify for financial help.
Open enrollment runs through Jan. 31, 2026.
Authors & Contributors
Katherine Wilson
Consultant
Katherine Wilson is an independent consultant specializing in health insurance markets and health care costs. She is the author of numerous publications and analyses, including CHCF reports on California health insurers.
