The anticipated changes are primarily driven by the scheduled expiration of enhanced federal financial assistance and adjustments to plan designs.
1. Potential Significant Increase in Monthly Premiums (Net Cost)
This is the most critical change for many enrollees, particularly those who received the expanded financial help under the American Rescue Plan Act (ARPA).
- Expiration of Enhanced Premium Tax Credits (APTCs): Unless Congress acts to extend them, the enhanced federal premium tax credits are set to expire at the end of 2025. This means:
- Higher Net Premiums: Many enrollees will see a substantial increase in their out-of-pocket premium costs because their federal subsidy will be significantly reduced, or in some cases, eliminated. Initial estimates suggest an average net premium increase of 66% for many enrollees who benefit from the enhanced credits.
- Premium Cap Removal: The current federal rule capping a household’s premium for the benchmark plan at 8.5% of income will no longer apply to most income levels.
- Average Rate Increase: Separately, the preliminary weighted average rate increase across all health plans for 2026 is an estimated 10.3%. This is an increase in the full price of the premium, before subsidies are applied, and is due to rising health care costs, pharmaceutical expenditures, and general inflation.
- State Subsidies as a Partial Offset (for lowest incomes): California has allocated state funding to help maintain lower premiums for individuals earning up to 150% of the Federal Poverty Level (FPL) and provide some additional assistance up to 165% FPL. However, this state funding will not fully replace the loss of the much larger federal enhanced subsidies for the broader population (especially those above 150% FPL).
2. Changes to Cost-Sharing (Deductibles, Copays, Out-of-Pocket Maximums)
Federal rules are leading to adjustments in the standard benefit design:
- Changes to Silver 73 (for higher incomes): The Silver 73 benefit design, which currently offers more generous cost-sharing, will revert to its pre-pandemic structure for those with incomes above 250% FPL (who are currently receiving it). This means these individuals will be automatically mapped to a standard Silver 70 plan, resulting in significantly higher deductibles and out-of-pocket maximums compared to what they had in 2025.
- HSA Eligibility for Bronze: Bronze plans will be designed to qualify as High-Deductible Health Plans (HDHPs) that allow enrollees to contribute to a Health Savings Account (HSA). This is a new option for those who prefer the lowest premium and higher out-of-pocket exposure.
3. Changes to Financial Assistance Reconciliation and Verification
- Full Repayment of Excess APTC: Starting with the 2026 plan year, if your household income ends up being higher than you projected and you received too much in Advance Premium Tax Credits (APTCs) throughout the year, there will no longer be a cap on the amount you must repay when you file your 2026 taxes (filed in 2027). You will have to repay the full excess amount.
- Action Item:It is more critical than ever to accurately project your 2026 income and update your Covered California application immediately if your income changes.
- Shorter Window for Income Inconsistency: The automatic 60-day extension to resolve income inconsistencies will no longer be available. The standard window to fix data issues will be 95 days.
4. Changes to Plan Offerings and Enrollment
- Carrier Changes: There will be some changes in the carriers and plans offered by region. For example, some carriers may exit or enter the market in certain areas.
- Auto-Enrollment Process: If you take no action, you will be automatically re-enrolled into your current plan (or a similar one if yours is discontinued) using your updated financial aid eligibility. Crucially, your new premium will reflect the reduced (or eliminated) federal enhanced subsidies.
- Renewal Review: It is absolutely essential that every enrollee carefully reviews their renewal notice (typically sent in October) to see the new monthly premium and benefit structure for 2026. Given the expected premium changes, comparing other plans on the exchange to find a better value will be paramount.
In summary, for most current enrollees, the expectation for 2026 is a significantly higher monthly premium due to the potential loss of enhanced federal subsidies, in addition to general rate increases and some adjustments to plan benefits. Proactive review of your renewal package and comparison shopping during Open Enrollment (Nov 1, 2025 – Jan 31, 2026) will be vital.
Fiduciary & Professional Disclaimer: TheBenefits.Guru Insurance Services is an independent insurance brokerage committed to acting in the best interests of our clients. Our advice and recommendations are strictly limited to the scope of insurance and employee benefits products. We are not attorneys, accountants, fiduciaries, or financial advisors, and the information herein is not intended as legal, tax, or investment advice. Please consult with qualified professionals in those fields for guidance specific to your circumstances.