- Covered California premiums for 2026 are projected to rise about 10.3% on average as medical costs climb and enhanced federal subsidies expire.
- With enhanced premium tax credits ending Jan. 1, 2026, many enrollees could see net premiums jump roughly 66%–114%, pushing some into cheaper plans or uninsured.
- California is spending $190 million to cushion costs for the lowest-income enrollees (about up to 150% of poverty), but it covers only a small share of the lost federal aid.
- During open enrollment (Nov. 1, 2025–Jan. 31, 2026), officials warn up to 400,000 Californians could lose coverage and risk-pool shifts could further raise costs.
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The expiration of enhanced premium tax credits on January 1, 2026, marks a turning point for California’s health insurance market. These enhanced credits had expanded eligibility and lowered OOP costs since 2021, but without renewal, their loss contributes to an average premium increase of 10.3% for 2026 marketplace plans—a rate significantly above previous years, though still less than the expected national average increase. [m] [p]
Middle-income consumers—those just above subsidy cutoffs—are among the hardest hit. Many now face full-premium costs they can’t afford, pushing them toward Bronze-tier or catastrophic plans, or into being uninsured. Open enrollment data and projections estimate that up to 400,000 Californians could lose coverage. [n] [p]
State-level mitigation efforts exist: California allocated $190 million to maintain stable premiums for individuals earning up to approximately $23,475 and families of four up to ~$48,225. These funds extend cost-sharing reduction eligibility (Enhanced Silver 73) and aim to protect as many low-income enrollees as possible. [m][p]
Strategically, insurers and policymakers face risk of adverse selection if healthier individuals drop coverage or select lower-tier plans, raising costs for those remaining. Additionally, the gap in federal support may strain state budgets and drive demand for deeper policy reforms or subsidy extensions. [m] [n]
Open questions for 2026 include whether Congress will act to reinstate enhanced subsidies; how many Californians will actually shift to lower-cost or less comprehensive plans; and to what extent state interventions can buffer cost shocks without federal reenactment. [p] [n]
Supporting Notes
- Market-based premiums for Covered California individual marketplace plans are projected to rise by an average of 10.3% in 2026. [m] [p]
- The loss of enhanced federal subsidies—expiring Dec 31, 2025—is expected to cause premium increases of ~66% to 114% for many subsidy-eligible Californians. [m] [p]
- California has set aside $190 million in state funds to offset costs for the lowest-income Covered California enrollees, targeting up to ~150% of the federal poverty level for individuals. [m] [p]
- Nearly 92% of Covered California’s enrollees receive financial assistance; in 2026, nearly half may pay $10/month or less, and roughly 17% of renewing enrollees could pay $0 for premiums if they keep their current plan. [p]
- Projections suggest up to 400,000 Californians might become uninsured due to rising costs and loss of subsidies. [n] [p]
- If healthier individuals exit the marketplace (drop plans or shift to less expensive ones), remaining risk pools worsen, driving further premium increases. [m] [p]
- The marketplace now includes 11 insurers in California, but noted exits (such as Aetna’s in 2026) could reduce competition and consumer choice. [m] [p]