Why Covered CA is asking consumers to act to keep big price breaks on health insurance

As open enrollment begins this month at Covered California, state residents shopping for health insurance through the agency can take advantage of more financial help than at any time since the Affordable Care Act went into effect.

In 2024, 1.5 million Californians received an enhanced premium tax credit from the U.S. government that they were able to use at the time of purchasing their policies to reduce their monthly premium payment. Or, they could elect to pay their premium cost and use the tax credit on their taxes.

The American Rescue Plan Act, passed by Congress in March 2021, offered these credits to expand and stabilize health insurance coverage during the COVID-19 pandemic. They were initially set to expire in 2022, but the Inflation Reduction Act of 2022 extended them through 2025.

Nationwide, a record 92% of marketplace enrollees, or 19.7 million Americans, qualified for premium tax credits in 2024, according to the U.S. Centers for Medicare and Medicaid Services.

This financial help won’t be there for consumers in 2026, however, if Congress doesn’t act to extend it.

Premiums will spike, and 4 million Americans are expected to drop coverage in 2026 because they can no longer afford it, said Jessica Altman, executive director of Covered California.

Altman and her peers from other state-based health insurance marketplaces sent Congress a letter in September, urging leaders to protect middle-class and low-wage earners around the nation from having to choose between paying their rent or mortgage or protecting themselves in the event of illness or injury.

Earlier this week, in a video-conference call with media, these state leaders urged congressional leaders to pass an extension early enough in 2025 to ensure that the open enrollment for 2026 is not affected.

Altman said the 1.5 million Californians receiving the help are a diverse group that includes farmworkers, Uber drivers, restaurant employees, freelance writers, middle-income earners and thousands of small business owners. In total, 5.9 million state residents bought health care policies through Covered California.

Roughly 157,000 middle-income Californians with incomes at or above 400% of the federal poverty level, starting at $58,320 for an individual, will completely lose their eligibility for subsidies and would have to pay the full cost of their monthly premium, Altman said.

Their premiums would jump by an average of 60%, she said, but those payments would soar even more for enrollees earning the lowest wages, between $20,000 and $30,000 a year.

Their premiums would nearly double, Altman said. That’s because the less you earn, the more help you get on premiums.

There’s also a segment of middle income consumers who received tax credits for the first time under the Inflation Reduction Act, and they are currently shielded from paying more than 8.5% of their household income for Covered California’s benchmark silver-tier plan.

They would see their costs jump to 15% of their income, on average, Altman said, and that’s a 79% average increase in premiums.

“It would be higher for many in that group,” Altman said, “and these increases will not be felt equally by all. Communities of color will see higher increases than white enrollees in California. Older enrollees will see higher increases than younger enrollees, particularly middle-income, older enrollees, significantly so, and rural enrollees will see higher increases than urban because of the cost challenges in many of those regions.”

Covered California has done surveys, interviews and focus groups to better understand its consumers, Altman said, and those in working-class and lower middle-class households have told the agency that they are quite literally making choices when it comes to basic needs, Altman said.

“We know that a large percentage of our enrollees — particularly lower income and particularly those who have chronic conditions — are also experiencing food insecurity, are also experiencing lack of transportation and difficulty affording things like rent,” she said. “I think close to 10% of our low income enrollees have told us that they have been unhoused or are currently unhoused.”

Many of her peers nodded in commiseration with Altman as she spoke about the financial circumstances that Covered California members had shared.

Covered California said that an older couple, both aged 55, living in Sacramento County and jointly earning $80,000 annually would see monthly premiums increase from $570 to $1,830 for the benchmark silver-tier plan. This represents monthly increases of $1,260 to pay for coverage, or $15,120 more per year, the agency noted.

“Members of Congress need to understand the high level of impact that this will have,” Altman said, so consumers should share their stories with them and request extension of the premium tax credits or other subsidies that have helped them.

Health Access California, a consumer advocacy group, also has a Get Involved section on its website where consumers can go to share their stories.

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