Open enrollment starts November 1. But nearly 2 million Californians on Covered California face a brutal reality: their premiums could more than double in 2026.
The cause? Advanced premium tax credits (APTCs) expire December 31, 2025. Unless Congress extends these federal subsidies, California families could see 114% premium increases overnight—transforming a $200 monthly payment into $428.
The political stalemate in Washington means millions of middle-income Californians face an impossible choice: pay double or drop coverage. KQED Forum examined the crisis as the January 1 deadline approaches.
Why Are Covered California Premiums Jumping?
Three factors collide to create this affordability crisis:
- APTC expiration on December 31, 2025. The American Rescue Plan Act of 2021 enhanced federal subsidies, capping marketplace premiums at 8.5% of household income. Without renewal, the old formula returns—punishing middle-income earners who make too much for Medicaid but can’t afford full-price insurance.
- Government shutdown blocks negotiations. Republicans and Democrats remain deadlocked over extending the subsidies, with neither side willing to compromise as federal funding lapses.
- Covered California operates independently but can’t fix federal policy. State officials manage the marketplace efficiently, but they can’t replace billions in federal subsidies California residents will lose.
The math is brutal. A family of four earning $90,000 annually currently pays around $200/month with subsidies. Without them? That same plan costs $428/month—a jump most households simply can’t absorb.
2 Million Californians Face Premium Shock
Who gets hit hardest when subsidies vanish?
| Income Level | Current Monthly Premium | Without Subsidies | Annual Impact |
|---|---|---|---|
| $50,000–$75,000 | $150–$250 | $400–$550 | +$3,000–$3,600 |
| $75,000–$100,000 | $200–$300 | $450–$650 | +$3,000–$4,200 |
| $100,000–$150,000 | $300–$500 | $600–$900 | +$3,600–$4,800 |
Middle-income families bear the brunt. They earn too much for Medicaid (which covers Californians under roughly 138% of the federal poverty level) but not enough to comfortably afford unsubsidized marketplace plans.
Gig workers, early retirees under 65, and small business owners face particularly tough choices. Many depend on Covered California as their only affordable option—employer coverage isn’t available, and Medicare doesn’t kick in until 65.
Open Enrollment Begins November 1: What Should You Do?
The timing creates massive uncertainty. Open enrollment for 2026 coverage starts before Congress decides whether to extend subsidies.
If you’re currently on Covered California, here’s your action plan:
- Enroll during open enrollment (Nov 1-Jan 31) even if you’re unsure about affordability. You can always cancel if premiums become unmanageable, but missing open enrollment locks you out unless you qualify for a special enrollment period.
- Budget for the worst-case scenario. Assume subsidies expire. Can you afford the full premium? Start identifying backup options now.
- Check if you qualify for Medi-Cal (California’s Medicaid program). Income limits expanded under the ACA. Single adults under roughly $20,783 and families of four under $42,660 qualify. Covered California’s website includes a screening tool.
- Explore employer options. Some employers offer limited coverage even to part-time workers. Compare costs—employer plans might become competitive if marketplace subsidies vanish.
The U.S. Department of Health and Human Services provides additional resources for navigating marketplace enrollment, though they can’t predict whether Congress will act in time.
Can California Step In If Federal Subsidies Disappear?
Short answer: Not easily.
California has the nation’s most robust state-run health insurance marketplace, but Covered California can’t replace billions in federal subsidies on its own. The state budget faces its own pressures, and creating a state subsidy program matching the federal APTCs would require legislative action—a process taking months, not weeks.
Governor Gavin Newsom’s office has indicated they’re monitoring the situation, but no concrete state subsidy plan exists yet. California previously created supplemental state subsidies for middle-income residents, but those programs were designed to work alongside federal APTCs, not replace them entirely.
Reality check: If federal subsidies expire, California families face the full cost burden unless Congress acts fast.
What Happens After January 1 If Subsidies Aren’t Extended?
Three likely scenarios unfold:
Scenario 1: Mass disenrollment. Hundreds of thousands of Californians drop coverage they can no longer afford. The California Health Care Foundation estimates 30-40% of current enrollees would leave the marketplace if premiums doubled.
Scenario 2: Adverse selection spiral. Healthier people drop coverage first since they need it least. The remaining risk pool skews sicker, driving premiums even higher in 2027—a classic insurance death spiral.
Scenario 3: Emergency legislative action. Public pressure forces Congress to extend subsidies retroactively, but families endure weeks or months of uncertainty and potentially higher bills before relief arrives.
None of these outcomes are good for California’s healthcare system or the families depending on it.
Frequently Asked Questions
Will Covered California premiums really increase 114% in 2026?
It depends on your income and plan. The 114% figure represents the average increase for middle-income families currently receiving maximum federal subsidies. If you earn between $55,000–$100,000 as an individual or $90,000–$150,000 as a family, you’ll see increases in that range. Lower-income residents eligible for Medi-Cal won’t be affected, and higher earners already paying closer to full price will see smaller percentage increases.
Should I still enroll in Covered California if subsidies might expire?
Yes. Enroll during open enrollment (November 1-January 31) even if you’re uncertain about affordability. Here’s why: Missing open enrollment means you can’t get coverage until the next year unless you qualify for a special enrollment period (job loss, marriage, etc.). You can always drop coverage if it becomes unaffordable, but you can’t add it mid-year without a qualifying event. Lock in coverage now and adjust later if needed.
What alternatives exist if Covered California becomes too expensive?
Your options are limited but include: (1) Medi-Cal—Check if you qualify based on updated income limits. (2) Employer coverage—Even part-time jobs sometimes offer health benefits. (3) Health sharing ministries—Not technically insurance, these programs pool medical costs among members but offer no regulatory protections. (4) Short-term health plans—Cheaper but exclude pre-existing conditions and provide minimal coverage. (5) Going uninsured—Risky and potentially expensive if you need care, though California’s individual mandate penalty applies.
Could Congress extend the subsidies retroactively if they expire?
Technically, yes—Congress can make subsidy extensions retroactive to January 1, 2026. However, this creates chaos for consumers and insurers. You might pay full premiums for January and February, then receive partial refunds months later once Congress acts. Insurers struggle with billing adjustments, and many people will have already dropped coverage due to sticker shock. Retroactive fixes are messy, expensive, and disruptive—which is why healthcare advocates are pushing for action before December 31.
How does the government shutdown affect Covered California specifically?
The shutdown stalls Congressional negotiations on extending APTCs, but Covered California itself continues operating normally. It’s a state-run marketplace funded by assessments on health insurance plans, not federal appropriations. Open enrollment proceeds on schedule, and you can enroll without disruption. The problem is federal—the subsidies come from the U.S. Treasury, and only Congress can authorize their continuation. California can’t fix this alone.
Bottom Line: Enroll Now, Plan for the Worst
Nearly 2 million Californians face financial uncertainty as federal subsidies hang in the balance. The December 31 deadline approaches with no Congressional resolution in sight.
Your best move? Enroll during open enrollment starting November 1, even if you’re worried about affordability. Budget for higher premiums in case subsidies expire. Check whether you qualify for Medi-Cal or employer coverage as backup options.
The political fight over APTCs isn’t about healthcare policy—it’s about who pays for it. Unfortunately, California families are caught in the middle, facing premium increases they didn’t cause and can’t control.
Stay informed through Covered California’s official updates and contact your Congressional representatives to demand action before the deadline. Your coverage—and your wallet—depend on it.