In 2026, a single Californian earning £62,601 will pay the full cost of their health plan with no federal subsidy at all — that’s roughly £450–500 per month for a benchmark Silver plan, compared to someone earning £62,599 who could receive hundreds in tax credits. The 400% federal poverty level cliff is back, and it changes the calculation for anyone shopping through Covered California this year.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
The enhanced federal subsidies that kept premiums low from 2021 through 2025 expired on December 31, 2025. Congress did not extend them. California responded with a £190 million state subsidy that protects households earning up to 165% of the federal poverty level — roughly 333,000 of the lowest-income enrollees now pay near-zero premiums. But for everyone above that threshold, the numbers look different than they did two years ago. If you’re self-employed, between jobs, or simply checking whether you can get a better deal than your employer offers, these changes affect what you pay every month. Health insurance options for freelancers have shifted too, with new rules around subsidy eligibility. Here’s what you actually need to know.
A premium tax credit is the financial help the government sends directly to your insurer each month to lower what you pay for a health plan. It’s not a tax refund you wait for — it’s applied upfront to reduce your monthly bill, based on the income you estimate when you enrol.
What I tend to notice is that most people don’t realise how much control they have over the number — report a higher income estimate and your credit shrinks; underreport and you repay at tax time. The trick is getting the estimate right the first time.
2026 Income Limits, Premiums, and the Subsidy Cliff
Your eligibility for both federal and state help depends entirely on where your household income lands relative to the federal poverty guidelines. The table below shows the key thresholds for 2026 plans, which use the 2025 poverty guidelines.
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| Household Size | 138% FPL (Medi-Cal ceiling) | 400% FPL (subsidy cutoff) |
|---|---|---|
| 1 | £21,597 | £62,600 |
| 2 | £29,187 | £84,600 |
| 3 | £36,777 | £106,600 |
| 4 | £44,367 | £128,600 |
| 5 | £51,957 | £150,600 |
| 6 | £59,547 | £172,600 |
If your income falls below 138% FPL, you likely qualify for Medi-Cal rather than marketplace coverage. Between 138% and 400% FPL, you may receive federal premium tax credits. Above 400% FPL — nothing from the federal government.
Here’s how that translates into real monthly costs. For a 40-year-old non-smoker in 2026, the second-lowest-cost Silver plan (the benchmark used to calculate your tax credit) costs roughly:
- At £25,000 income (160% FPL): near £0 after federal + state subsidies
- At £35,000 income (224% FPL): about £140/month after tax credit
- At £45,000 income (288% FPL): about £280/month after tax credit
- At £55,000 income (352% FPL): about £390/month after tax credit
- At £65,000 income (415% FPL): full premium — no subsidy
These are estimates. Actual premiums vary by region, plan, and insurer. Use the Covered California plan finder at coveredca.com for an exact quote.
Four out of five people who enrol through Covered California receive some form of assistance — either premium tax credits, cost-sharing reductions, or both. That leaves roughly one in five paying full price, and that group includes almost everyone above 400% FPL.
Four Mistakes That Cost California Enrollees Money
Missing the Special Enrollment Period Window
Open enrollment for 2026 ended January 31. If you missed it, you can still enrol only if you have a qualifying life event — losing job-based coverage, getting married, having a baby, moving within California, or gaining lawful immigration status. You have 60 days from the event to enrol. Miss that window and you wait until the next open enrollment. The California individual mandate penalty still applies, so going without coverage costs you at tax time. If you owe the penalty from the prior year, that itself can trigger a special enrollment period — a lesser-known rule that can get you back in.
Choosing Bronze When Silver Would Save More
Bronze plans have the lowest monthly premium but the highest deductible — often £5,000 to £7,000. For someone earning between 138% and 250% FPL, a Silver plan with cost-sharing reductions (CSRs) can mean a deductible of a few hundred pounds instead of several thousand. The catch: CSRs only apply to Silver plans. Pick Bronze at this income level and you lose thousands in reduced out-of-pocket costs. The trade-off is worth weighing carefully — a slightly higher monthly premium on Silver can save you more than the difference in a single hospital visit.
Not Reporting Income Changes During the Year
Your premium tax credit is based on the income you estimate when you enrol. If your earnings rise mid-year — a new job, more freelance work, a bonus — and you don’t update your application, you may receive excess credits. You’ll repay that difference when you file your taxes. The same works in reverse: a drop in income can increase your subsidy, but only if you report it. You can update your income estimate at any time through your Covered California account.
Assuming Employer Coverage Is Automatically Better
If your employer offers health insurance, you generally can’t get subsidies through Covered California — unless that employer coverage is considered unaffordable. In 2026, the affordability threshold is 9.96% of household income for employee-only coverage. If the cheapest plan your employer offers costs more than that percentage of your income, you can qualify for marketplace subsidies. Use the Covered California Affordability Tool to check before defaulting to the employer plan.
How to Pick and Enrol in the Right Plan
Determine Which Coverage Path You’re On
Start with your income. If you’re below 138% FPL, you’ll be directed to Medi-Cal — free or very low-cost coverage with no monthly premium. Between 138% and 400% FPL, you’re in Covered California territory with federal subsidies available. Above 400% FPL, you can still buy a plan through the marketplace but at full price. If you’re self-employed or a gig worker, estimate your annual business income carefully — it directly determines your subsidy.
Match Plan Tier to Your Healthcare Use
Bronze plans work for people who rarely need medical care and can cover a high deductible out of pocket. Silver plans are the sweet spot for most subsidised enrollees because cost-sharing reductions only apply at this tier. Gold plans suit people with regular prescriptions, chronic conditions, or frequent doctor visits — the higher premium is offset by very low or zero deductibles.
- 1Go to coveredca.comThis is California’s official state marketplace. Do not use a third-party site.
- 2Create an account or log inReturning users can log in with existing credentials. New applicants need a valid email address.
- 3Complete the applicationEnter household size, income, and residency. The system will screen you for Medi-Cal if your income is below 138% FPL.
- 4Compare plans and enrolFilter by metal tier, premium, deductible, and network. Your estimated tax credit is applied to each plan. Pay your first premium to start coverage.
What’s Changing for 2027 Open Enrollment
Starting with the 2027 coverage year, open enrollment will not extend past December 31. For 2026 it ran through January 31, but for 2027 it ends December 31. Mark your calendar for November 1 to December 31, 2026, as the only window to enrol for 2027 — no January extension. Missing that window means no coverage unless you have a qualifying life event.
If you’re finding the options overwhelming, it can help to speak with someone who works through these plans day in and day out. A licensed insurance adviser can walk through your specific income, household, and health needs to identify the right metal tier and subsidy eligibility.
Frequently Asked Questions
Can I get Covered California if my employer offers insurance? ▾
What happens if I earn more than I estimated when I enrolled? ▾
I’m a freelancer — how do I estimate my income? ▾
Can I add my parents to my Covered California plan? ▾
What’s the difference between Silver 94, 87, 73, and 70? ▾
Is dental coverage included in Covered California plans? ▾
Planning Ahead for 2027 and Beyond
The biggest change coming is the open enrollment window itself. For 2027 coverage, you’ll have from November 1 to December 31, 2026 — no January buffer. That’s two months instead of three. Combined with the permanent return of the 400% FPL subsidy cliff and California’s state-only subsidy program targeting only the lowest incomes, the landscape for 2027 requires more attention, not less. If you earn between 165% and 400% FPL, your premium will depend almost entirely on the federal poverty level updates and whether Congress changes the tax credit rules — neither of which you can control. What you can control is knowing your exact household income, choosing the right metal tier, and enrolling within the window.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Your Complete Guide to Health Insurance in Canada.
Sources and Further Reading
Adding Dependents to Your Health Insurance — A practical look at how dependent coverage rules work and what they cost.
healthinsurance.org (2026). ACA Marketplace: California overview. 🔗
Covered California (2026). Health Insurance Plans Explained. 🔗
U.S. Department of Health and Human Services (2025). Federal Poverty Guidelines. 🔗
Congressional Research Service (2025). Premium Tax Credits and the American Rescue Plan Act. 🔗
