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For the 1.9 million Californians enrolled in Covered California, monthly insurance premiums could nearly double in 2026 if enhanced federal subsidies expire.
Insurance premiums are projected to increase sharply next year amid various federal policy changes. Those changes include the expiration of federal Enhanced Premium Tax Credits passed during the pandemic in 2021 to lower insurance costs for millions of Americans. The “enhanced” tax credits capped health insurance premiums at no more than 8.5% of a household’s income and eliminated the income threshold so that middle- and high-income households could receive subsidies as well.
The debate around whether to extend the tax credits was the central issue of the recent 43-day federal government shutdown, when Democrats unsuccessfully pushed for a continuation of the credits. Republicans argued that the pandemic-era enhanced subsidies were always intended to be temporary and should be reverted to the pre-2021 levels in which low-income households still receive some support. Without congressional action, the enhanced subsidies will expire at the end of the year.
Covered California is the state’s official health insurance marketplace. Established after the federal Affordable Care Act in 2010, qualifying California residents can compare plans and purchase private health insurance through Covered California that, until the end of 2025, have been significantly subsidized by the enhanced federal tax credits.
The size of the subsidy depends on an individual’s zip code, family size and income, but can be significant. Covered California estimates that a person making $63,000 to $78,000 pays $358 per month with the subsidized rate and $871 if the tax credits expire — resulting in savings of over $6,000 per year. Four out of five people who enroll in Covered California plans receive some form of financial assistance.
According to Covered California spokesperson Noah Glick, there are 33,510 Covered California enrollees in San Mateo County and 79,710 enrollees in Santa Clara County. With the expiration of the tax credits, monthly premiums for these residents are projected to increase by $201 and $156 in each county, respectively – increases that could double their monthly insurance bill, Glick said. And Californians from marginalized communities are likely to face the steepest financial ramifications.
“While everyone will feel the impact of rising costs, communities of color throughout California will be disproportionately impacted if Enhanced Premium Tax Credits expire,” Glick said in an email. “We estimate that Latino Californians will see a 122% increase in monthly premiums, and Black Californians will see a 106% increase in monthly premiums.”
NPR reported Monday that the Senate is expected to vote soon on a Democratic proposal to extend existing Affordable Care Act tax credits for three years. The plan is not expected to get the votes it needs to advance.
Without financial support to pay for their monthly health insurance premiums, millions of Americans and around 400,000 Californians are expected to drop their health insurance coverage, according to a University of Southern California report.
In addition to the expiration of federal tax credits, the budget bill President Donald Trump signed on July 4, includes significant changes to Medicaid eligibility, Affordable Care Act marketplace rules and other federal health programs that experts say could further increase the number of uninsured people. The Congressional Budget Office estimated that the changes made in the president’s budget could increase the number of uninsured people by 10.9 million people by 2034.
This exodus from insurance coverage can drive up prices for the system as a whole since younger, healthier people are more likely to go uninsured, Glick said.
“Those who are left with coverage often have chronic or pre-existing conditions that require ongoing health care, leading to increased costs for insurers and the health care system as a whole,” Glick said. “Insurers are preparing for that reality by increasing their monthly premiums.”
The federal policy changes have also led to confusion for residents navigating the health insurance system, according to Yadira Lopez, CEO of Tezana Insurance Services. The company is an insurance broker that helps Californians – particularly Hispanic and low-income residents — enroll in health insurance through Covered California. Lopez said that some customers believe that Covered California is going to disappear, so they don’t need to re-enroll for the upcoming year.
“That’s completely incorrect,” Lopez said.
In California, health insurance is mandatory under the law. Residents who don’t carry coverage must pay a penalty of at least $900 per uninsured adult when filing a state tax return.
But aside from the financial penalty, it’s important to have health insurance to avoid expensive hospital bills that could bankrupt a household, Lopez said.
“We don’t know what’s going to happen to us,” Lopez said. “We don’t know when we’ll get ill [or] when we’ll have an accident and we’ll need to go to the emergency room.”
Open Enrollment is underway for Covered California, meaning that Californians can sign up for health coverage through Jan. 31, 2026. Residents are encouraged to select a plan by the end of the year to ensure coverage for all of 2026.
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