How Covered California Subsidies Work
Your Covered California subsidy fills the gap between a benchmark plan's price and the share of income you're expected to pay. For 2026, that share rose and the upper income limit returned.
Covered California subsidies are federal premium tax credits, topped up by California for lower incomes. The credit equals the price of the second-lowest-cost Silver plan in your area minus a set share of your income, which in 2026 runs from 2.1% to 9.96%. It ends completely above 400% of the poverty level ($62,600 for one person), because the larger subsidies of 2021 to 2025 expired.
The benchmark plan
Every subsidy starts with a benchmark: the second-lowest-cost Silver plan available to you, priced for your age and your region. California has 19 pricing regions, so the same income can bring a very different credit in San Francisco than in Fresno. You don't have to buy the benchmark plan. The credit is a fixed dollar amount you can put toward any Bronze, Silver, Gold or Platinum plan, but not a catastrophic plan.
The share of income you pay
The IRS sets the share of income you're expected to pay for the benchmark plan. For 2026, with the larger pandemic-era subsidies gone, it's back to the original sliding scale (Rev. Proc. 2025-25):
| Income (% of poverty level) | Share of income you pay | One person's income |
|---|---|---|
| Under 133% | 2.1% | $0 to $20,815 |
| 133% to 150% | 3.14% to 4.19% | $20,815 to $23,475 |
| 150% to 200% | 4.19% to 6.6% | $23,475 to $31,300 |
| 200% to 250% | 6.6% to 8.44% | $31,300 to $39,125 |
| 250% to 300% | 8.44% to 9.96% | $39,125 to $46,950 |
| 300% to 400% | 9.96% | $46,950 to $62,600 |
Within each band the percentage rises smoothly with income. The dollar figures use the 2025 poverty guidelines, which Covered California uses for 2026 coverage.
A worked example
A single adult earning $39,125 is at 250% of the poverty level, so their expected share is 8.44% of income: $275 a month. If the benchmark Silver plan for their age and region costs $600 a month (an example price, not a quote), the credit is $600 minus $275 = $325 a month. They pay $275 for the benchmark plan, less for a cheaper Bronze plan, or more for a Gold plan.
The 400% cliff
From 2021 through 2025, federal law capped anyone's benchmark premium at 8.5% of income, however much they earned. That expired on December 31, 2025. For 2026, a household above 400% of the poverty level gets no federal credit at all, and it's a cliff, not a phase-out: one dollar over can cost the whole subsidy.
| Household size | 400% of poverty level (2026 coverage) |
|---|---|
| 1 | $62,600 |
| 2 | $84,600 |
| 3 | $106,600 |
| 4 | $128,600 |
| 5 | $150,600 |
Income here means modified adjusted gross income: your AGI plus untaxed Social Security, tax-exempt interest and excluded foreign income. If you're close to the line, pre-tax contributions to a 401(k), traditional IRA or health savings account lower MAGI and can keep you under it.
California's own subsidy
California put $190 million into a state premium subsidy for 2026 to cushion the lowest earners:
- Up to 150% of the poverty level: the benchmark Silver plan costs nothing.
- 150% to 165%: you pay 3.19% to 3.91% of income, less than the federal scale alone.
There's no state help above 165%, and none for households over the 400% cliff. Most adults under 138% of the poverty level qualify for Medi-Cal instead, so the state subsidy mostly helps people between 138% and 165% and those who can't get Medi-Cal.
Lower incomes also get Enhanced Silver plans (Silver 94, 87 and 73) with smaller deductibles and copays, up to 250% of the poverty level. That help only comes with a Silver plan.
Paying it back at tax time
Most people take the credit in advance, based on the income they expect. At tax time, Form 8962 compares that with your actual income. If you earned more, you repay the difference, and starting with 2026 coverage there's no cap on the repayment. Crossing the 400% line after a year-end bonus can mean paying back the entire year's credit. Update your income with Covered California as soon as it changes.
Run your numbers
Our Covered California Subsidy Calculator shows which 2026 zone your household falls in. For what a single adult pays overall, see how much health insurance costs for one person, and check the Medi-Cal calculator if your income is lower.
Frequently Asked Questions
How is my Covered California subsidy calculated?
Covered California finds the second-lowest-cost Silver plan for your age and area, then works out how much you're expected to pay based on your income. Your subsidy is the difference. In 2026, the expected share runs from 2.1% of income for the lowest earners to 9.96% between 300% and 400% of the poverty level.
What is the income limit for Covered California subsidies in 2026?
400% of the federal poverty level, which for 2026 coverage is $62,600 for one person and $128,600 for a family of four. Above that there's no federal premium tax credit at all.
Does California have its own health insurance subsidy?
Yes. For 2026, California pays enough extra that enrollees up to 150% of the poverty level pay no premium for the benchmark plan, and those between 150% and 165% pay 3.19% to 3.91% of income. You get it automatically if you qualify for the federal credit and apply through Covered California.
Do I have to pay back my Covered California subsidy?
You may. The advance credit is based on your estimated income. If your actual income is higher, you repay the excess when you file your federal return, and starting with 2026 coverage there's no cap on the repayment. Report income changes to Covered California during the year.
Which poverty guidelines does Covered California use?
The previous year's. Premium help for 2026 coverage is measured against the 2025 federal poverty guidelines, which start at $15,650 for one person.
This article is for general information only and is not tax advice. Covered California determines your actual subsidy when you apply, and the IRS reconciles it on your federal return.