For the past several years, millions of Californians have benefitted from
enhanced federal subsidies that lowered the cost of health insurance purchased through Covered California. These expanded subsidies, first introduced under the American Rescue Plan and extended through the Inflation Reduction Act, have helped reduce premiums for individuals and families across all income levels.
Unless Congress acts again, these enhanced subsidies will
expire on December 31, 2025. That means starting in 2026, subsidy rules would revert to the old (pre-2021) formula. For many households, this could mean significant changes in what you pay each month.
What Could Happen to Premiums in California
Analysts and policymakers warn of sharp cost increases if the subsidies are not extended:
- Premiums could rise by 66% on average for many Covered California enrollees 【sfchronicle.com】.
- About
1.7 million Californians could see higher costs, with some middle-income households losing subsidies entirely.
- The return of the “subsidy cliff” means that people earning above 400% of the Federal Poverty Level may no longer qualify for any financial help, regardless of how much their premiums are.
- California is considering whether to step in with its own state-level subsidies, but nothing is guaranteed, and the funding gap is estimated in the billions 【calmatters.org】.
Why This Matters for You
If you or your family rely on Covered California, here are the main takeaways:
- Sticker shock is possible. Without federal help, many Californians will see their net premiums more than double.
- Plan choices may change. Some households may have to move from gold or silver-level plans to bronze-level coverage to keep premiums affordable.
- Budgeting is critical. Knowing what your plan could cost without subsidies will help you prepare for the worst-case scenario.
- If you currently have a Cost Sharing Reduction plan (CSR), such as the Silver 73 plan, you may no longer have access to that plan for 2026 if your income is above the threshold to qualify for it.
What You Can Do Now
While we wait to see what Congress decides, there are practical steps you can take today:
- Renewal information will be available on the Covered California Portal on October 15th. Utilize the Shop and Compare tool on the main page at coveredca.com.
- Check your income level. If you’re close to or above 400% of the Federal Poverty Level, you’re most at risk of losing subsidies.
- Model your costs. Tools like
KFF’s premium calculator can show what your premiums could look like without subsidies.
- Plan for flexibility. Be prepared to adjust plan levels (for example, from gold to silver, or silver to bronze) if necessary.
- Stay informed. Watch for updates from Covered California and state policymakers. California may create new state subsidies, but those decisions won’t be finalized until later in 2025.
- Get professional help. Working with a licensed broker can make the process easier and ensure you understand your full range of options.
Final Thoughts
The uncertainty around subsidies may feel unsettling, but the best approach is to
stay informed and be prepared. Even if Congress ultimately extends the enhanced subsidies, reviewing your options during Open Enrollment is always a good idea.
As always, we are here to be a resource for you and help you navigate these changes. If you’d like to review your coverage or talk about possible scenarios for 2026, please reach out — together we can make sure you’re ready for whatever comes next.
Benefits by Design Insurance Services at admin@benefisbydesignca.com or 415-524-8959 or 760-696-3573.
