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2025 2026

Covered California Income Limits 2026

Understanding income limits is crucial for determining your eligibility for Medi-Cal, Covered California subsidies, and cost-sharing reductions. Learn the 2026 Federal Poverty Level guidelines, critical income thresholds, and strategies to optimize your eligibility.

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2026 Federal Poverty Level (FPL) Guidelines

The Federal Poverty Level is updated annually and determines eligibility for Medi-Cal and Covered California subsidies. Your household income is compared to the FPL for your household size to calculate your percentage of FPL.

Household Size 100% FPL 138% FPL
(Medi-Cal)		 150% FPL 200% FPL 250% FPL 400% FPL
1 person $15,650 $21,597 $23,475 $31,300 $39,125 $62,600
2 people $21,150 $29,187 $31,725 $42,300 $52,875 $84,600
3 people $26,650 $36,777 $39,975 $53,300 $66,625 $106,600
4 people $32,150 $44,367 $48,225 $64,300 $80,375 $128,600
5 people $37,650 $51,957 $56,475 $75,300 $94,125 $150,600
6 people $43,150 $59,547 $64,725 $86,300 $107,875 $172,600
7 people $48,650 $67,137 $72,975 $97,300 $121,625 $194,600
8 people $54,150 $74,727 $81,225 $108,300 $135,375 $216,600
9 people $59,650 $82,317 $89,475 $119,300 $149,125 $238,600
10 people $65,150 $89,907 $97,725 $130,300 $162,875 $260,600

Note: For households with more than 10 people, add $5,380 per additional person to the 100% FPL amount, then calculate other percentages accordingly.

Monthly Income: To convert annual income to monthly, divide by 12. For example, if you earn $60,000/year, your monthly income is $5,000.

Critical Income Thresholds Explained

Certain income levels act as "thresholds" that determine the type and amount of assistance you receive. Understanding these thresholds helps you plan and maximize your benefits.

138% FPL

Medi-Cal Dividing Line

Below this threshold, you qualify for free or low-cost Medi-Cal instead of Covered California subsidies.

Example (Family of 3): $35,632

150% FPL

$0 Premium + Silver 94

At or below this level, you pay $0 for the benchmark Silver plan AND get Silver 94 coverage (best value!).

Example (Family of 3): $38,730

200% FPL

Silver 87 CSR Cutoff

Below this level, you qualify for enhanced Silver 87 plans with lower deductibles and copays.

Example (Family of 3): $51,640

250% FPL

Last CSR Level

Below this level, you qualify for Silver 73 plans. Above this, you receive standard Silver coverage only.

Example (Family of 3): $64,550

400% FPL

SUBSIDY CLIFF (RETURNED IN 2026)

Federal subsidies END at 400% FPL starting 2026. Anyone earning above this receives NO federal premium assistance.

Critical Threshold: $62,700 for individuals | $128,600 for family of 4

Example (Family of 3): $103,280

600% FPL

California State Subsidy Expansion

California provides additional state subsidies up to this level in some cases.

Example (Family of 3): $154,920

How Your Household Size is Determined

Household size directly affects which FPL level applies to you. It's based on your tax household, not necessarily everyone living in your home.

Who Counts in Your Household?

  • You - The tax filer always counts
  • Your spouse - If married and filing jointly
  • Tax dependents - Anyone you claim as a dependent on your tax return
  • Children under 19 - Even if not claimed as dependents (if living with you)

Common Household Scenarios

Scenario Who Counts Household Size
Single adult living alone Just you 1
Married couple, no kids You + spouse 2
Married couple with 2 children under 18 You + spouse + 2 children 4
Single parent with 1 child You + child 2
College student claimed as dependent Counted in parent's household Varies
Separated spouses (not divorced) Depends on filing status Varies
Adult child (26+) living at home Only if claimed as tax dependent Varies

Important: Household size is based on your tax filing status. If you're unsure who counts, consult a tax professional or certified enrollment counselor.

Estimating Your Annual Income (MAGI)

When applying for coverage, you'll need to estimate your Modified Adjusted Gross Income (MAGI) for the coverage year. Accuracy is important—overestimating means you get less help, underestimating can lead to owing money back at tax time.

What is MAGI?

MAGI includes most types of taxable income. For a detailed breakdown of what counts, see our MAGI FAQ or the How Subsidies Work page.

Quick summary—MAGI includes:

  • Wages, salaries, tips
  • Self-employment income (net profit)
  • Interest, dividends, capital gains
  • Retirement distributions (taxable portion)
  • Social Security (taxable portion)
  • Unemployment compensation

Income Estimation Strategies

Strategy 1: Use Last Year's Tax Return (Simple)

If your income is stable year-to-year, use your most recent tax return's Adjusted Gross Income (AGI) from Line 11 of Form 1040.

Best for: Salaried employees with consistent income, retirees with predictable income

Strategy 2: Project from Year-to-Date (Moderate)

If applying mid-year, look at your year-to-date earnings and extrapolate:

(YTD income ÷ months elapsed) × 12 = estimated annual income

Best for: W-2 employees with regular paychecks

Strategy 3: Account for Known Changes (Advanced)

Start with Strategy 1 or 2, then adjust for known changes:

  • Job change (new salary)
  • Expected raise or bonus
  • Planned IRA/401k withdrawals
  • Starting/ending self-employment
  • Investment sales

Best for: Anyone with significant income changes expected

Strategy 4: Self-Employed Projection (Complex)

Review your business financials:

  • YTD gross revenue - expenses = net profit to date
  • Project remaining months based on trends
  • Account for seasonal variations
  • Include expected deductions (home office, vehicle, etc.)

Best for: Self-employed, gig workers, small business owners

Common Estimation Mistakes to Avoid

  • Forgetting one-time income: Bonuses, stock sales, inheritance (if taxable)
  • Using gross instead of net: For self-employed, use profit after business expenses
  • Ignoring retirement withdrawals: IRA/401k distributions count as income
  • Overlooking Social Security: Up to 85% can be taxable
  • Not updating for life changes: Job loss, marriage, divorce all affect income

Real-World Income Scenarios

See how different income levels affect your eligibility with these detailed examples:

Scenario 1: Single Person at Medi-Cal Boundary

Household: 1 person

Annual Income: $20,000 (133% FPL)

Eligibility: Qualifies for Medi-Cal (free or very low cost)

Why: Income below 138% FPL threshold ($20,783)

Key Takeaway: If income were $21,000, would qualify for Covered California with $0 premiums and Silver 94 instead—similar benefits but different program.

Scenario 2: Family Maximizing Silver 94

Household: 2 adults, 2 children (family of 4)

Annual Income: $45,000 (144% FPL)

Eligibility: $0 premium + Silver 94 CSR

Coverage Value: Silver 94 pays 94% of costs—better than Platinum plans

Monthly Savings: ~$1,200 in premium subsidies + low out-of-pocket costs

Key Takeaway: This is the "sweet spot" for maximum benefits. Income just above 150% FPL ($46,800) would mean paying small premiums.

Scenario 3: Self-Employed with Variable Income

Household: Single freelancer

Projected Income Range: $35,000 - $55,000 (varies by quarter)

Estimate Used: $45,000 (conservative mid-range)

At $45,000 (299% FPL): Premium ~$200/month after subsidy

Strategy: Report income changes quarterly if significant variation

Key Takeaway: Conservative estimate prevents subsidy overpayment. Can adjust if income ends up lower. Maximizing business deductions reduces MAGI.

Scenario 4: Retiree Decision Point

Household: Married couple, both 62

Base Income: Social Security + pension = $48,000/year (235% FPL)

Decision: Withdraw $10,000 from IRA this year?

Without IRA withdrawal ($48,000):

• Silver 73 CSR eligibility (below 250% FPL)
• Premium ~$250/month after subsidy
• Lower deductible and copays

With IRA withdrawal ($58,000):

• 284% FPL—no CSR benefits
• Premium ~$350/month after subsidy
• Standard deductibles and copays

Key Takeaway: Delaying IRA withdrawal until next year saves $1,200 in premiums + better coverage. Strategic timing matters!

Scenario 5: Family Hit by 2026 Subsidy Loss

Household: 2 adults, 1 child (family of 3)

Annual Income: $120,000 (465% FPL)

2025 Costs (Enhanced Subsidies):

  • Maximum premium: $850/month (8.5% cap)
  • Annual cost: $10,200
  • Federal subsidy: $550/month ($6,600/year)

2026 Costs (Subsidies Expired):

  • NO federal subsidies (above 400% FPL)
  • Full premium: ~$1,400/month
  • Annual cost: $16,800
  • INCREASE: $6,600/year

Key Takeaway: Before 2021, they received no subsidy. From 2021-2025, they saved $6,600/year. In 2026, that benefit disappeared completely. This is the return of the "subsidy cliff."

Scenario 6: Seasonal Worker Strategy

Household: Single adult

Income Pattern: Works May-October earning $4,000/month, unemployed Nov-Apr

Annual Income: 6 months × $4,000 = $24,000 (159% FPL)

Initial Estimate: $24,000 annual income

Eligibility: Small premium + Silver 87 CSR benefits

During unemployed months: If receiving unemployment benefits, may qualify for enhanced benefits under unemployment rule

Key Takeaway: Report to Covered California when employment ends. Don't just use hourly wage × 2,080 hours—estimate actual work period.

Scenario 7: $100 Income Difference = $11,000 Cost (The Subsidy Cliff)

Two individuals, age 60:

Person A Income: $62,600 (400% FPL exactly)

Person B Income: $62,700 (401% FPL)

Person A (400% FPL): Receives subsidies, pays $520/month ($6,240/year)

Person B (401% FPL): NO subsidies, pays $1,440/month ($17,280/year)

Income difference: $100

Premium difference: $11,040/year

Effective tax rate on that $100: 11,000% (!)

Key Takeaway: This is the infamous "subsidy cliff" - a tiny income increase causes catastrophic premium increases. Strategic income planning is critical if you're near 400% FPL. Even small 401(k) contributions or retirement account adjustments can save thousands.

Reporting Income Changes During the Year

Your subsidy is based on your estimated annual income. If that estimate changes significantly during the year, you must report it to Covered California within 30 days.

When to Report Changes

You must report within 30 days if:

  • Income increases or decreases by more than 10%
  • You start or lose a job
  • You get a significant raise or bonus
  • Your work hours change substantially
  • You start or close a business
  • Household size changes (marriage, birth, divorce)
  • You become eligible for other coverage (employer, Medicare, Medi-Cal)

What Happens If Income Goes Up

  • You may lose CSR benefits if you cross a threshold (e.g., from 240% to 260% FPL)
  • Your subsidy decreases and your premium goes up for remaining months
  • You may owe money at tax time if you received too much subsidy earlier in the year (subject to repayment caps)

What Happens If Income Goes Down

  • You may gain CSR benefits if you cross below a threshold
  • Your subsidy increases and your premium decreases for remaining months
  • You may get money back at tax time if you received too little subsidy earlier in the year

How to Report Changes

  1. Log in to your Covered California account at CoveredCA.com
  2. Go to "Report a Change"
  3. Update your estimated annual income
  4. Review the new subsidy calculation
  5. Submit and confirm the change

Important: Failing to report income increases can result in owing thousands of dollars at tax time. Repayment caps provide some protection, but it's best to keep your estimate accurate throughout the year.

Special Income Situations

Some income situations require special consideration when estimating your annual income for Covered California:

Self-Employed / Gig Workers

  • Use net profit (revenue minus business expenses), not gross revenue
  • Maximize legitimate deductions: Home office, vehicle, equipment, supplies
  • Project quarterly: Review business trends every 3 months and adjust estimate
  • Account for seasonal variations: Don't just multiply one good month by 12
  • Include estimated tax payments in your budget, but they don't reduce MAGI

Retirees

  • IRA/401k withdrawals: Traditional account distributions are taxable income; Roth qualified withdrawals are not
  • Social Security: Up to 85% may be taxable depending on total income
  • Pension income: Generally fully taxable
  • Timing strategy: Delay IRA withdrawals to a later year if close to a threshold
  • Roth conversions: Count as income in the year of conversion—plan carefully

Multiple Jobs

  • Combine all W-2 income from all employers
  • Variable hours: Use average weekly hours × hourly rate × 52 weeks
  • Part-time + self-employed: Add W-2 income + net business profit
  • Second job mid-year: Project remainder of year with both incomes

Bonuses & Commissions

  • Annual bonus: Include expected bonus in initial estimate if predictable
  • Unexpected bonus: Report as income change if it increases annual income by 10%+
  • Commission-based: Use trailing 12-month average or conservative estimate
  • Stock options/RSUs: Include when exercised/vested (taxable event)

Investment Income

  • Capital gains: Count in the year you sell investments
  • Dividends & interest: Include projected annual amounts
  • Rental income: Use net rental income (rent minus expenses)
  • Large one-time gain: May push you into higher income bracket—report promptly

Unemployment Benefits

Special Rule (if still in effect for 2025):

  • Anyone receiving unemployment compensation is treated as 133% FPL
  • Qualifies for $0 premiums and maximum CSRs (Silver 94)
  • Applies even if actual income is higher
  • Check with Covered California for current year applicability

Income Verification Process

Covered California may request documentation to verify your reported income. This ensures you're receiving the correct subsidy amount.

Documents You May Need to Provide

W-2 Employees
  • Recent pay stubs (last 2-3 months)
  • Previous year's W-2 forms
  • Previous year's tax return (Form 1040)
  • Letter from employer (if needed)
Self-Employed
  • Profit & loss statement (YTD)
  • Schedule C from previous year's tax return
  • Business bank statements
  • Quarterly estimated tax payment records
  • 1099 forms received
Retirees
  • Social Security benefit letter (SSA-1099)
  • Pension/annuity statements
  • IRA/401k distribution records (1099-R)
  • Previous year's tax return
Other Income
  • Unemployment benefit statements
  • Investment income statements (1099-DIV, 1099-INT)
  • Rental property income/expense records
  • Alimony documentation (if applicable)

Verification Timeline

  • Initial request: You'll receive a notice by mail and/or email
  • Deadline to respond: Typically 30-90 days from notice date
  • How to submit: Upload through your online account or mail documents
  • After submission: Covered California reviews and confirms or adjusts your subsidy

Tip: Keep copies of all income documentation throughout the year. This makes verification requests quick and easy to respond to.

Legal Income Optimization Strategies

Important Disclaimer: The strategies below are legal tax and financial planning techniques. Always consult a qualified tax professional or financial advisor before making decisions. Never misreport or underreport income—penalties are severe.

Understanding how income affects eligibility allows you to make strategic decisions that may optimize your health insurance benefits while remaining compliant with tax laws.

2026-Specific: Avoiding the 400% FPL Subsidy Cliff

If you're earning $58K-$70K (single) or $120K-$140K (family of 4), strategic planning can save $10,000+/year:

  • 401(k)/Traditional IRA contributions: Every $1,000 contributed reduces MAGI by $1,000
    • Example: Person earning $65K contributes $3K to 401(k) → $62K MAGI → UNDER 400% FPL → saves $11K in premiums
    • Net benefit: $11K premium savings - $3K contribution = $8K ahead (plus tax deduction!)
  • HSA contributions: If using HDHP, max contribution $4,150 (single) / $8,300 (family) reduces MAGI
  • Delay IRA withdrawals: Retirees near 400% FPL should postpone withdrawals to next year if possible
  • Capital gains timing: Defer asset sales to 2027 if they'd push you over 400% FPL in 2026
  • Self-employed deductions: Maximize legitimate business expenses to reduce net profit

When to Consult a Professional: If your MAGI is within $5,000 of 400% FPL, consult a CPA or financial advisor. The premium savings often justify the consultation cost 100x over.

Retirement Account Strategies

  • Traditional IRA contributions: Reduce MAGI (deductible contributions lower taxable income)
  • Delay IRA withdrawals: If near a threshold, consider delaying withdrawal to next year
  • Roth conversions timing: Convert in low-income years to avoid threshold crossing
  • 401k contributions: Increase pre-tax contributions to reduce MAGI

Self-Employed Deductions

  • Maximize legitimate business expenses: Home office, vehicle, equipment, supplies
  • SEP-IRA contributions: Can deduct up to 25% of net self-employment income
  • Health Savings Account (HSA): Contributions reduce MAGI (if using HDHP)
  • Timing of invoices/payments: Shift income to different tax years if possible

Social Security Timing

  • Delay benefits: If 62-70 and not working, delaying SS reduces current income
  • File and suspend: Strategy for married couples (rules changed in 2016)
  • Taxable portion: Lower overall income reduces how much of SS is taxable

Investment and Asset Strategies

  • Tax-loss harvesting: Sell losing investments to offset gains
  • Capital gains timing: Defer asset sales to next year if near threshold
  • Roth account distributions: Qualified Roth distributions don't count as income
  • Municipal bonds: Interest is tax-free and doesn't count toward MAGI

What NOT to Do

Never:

  • Underreport or hide income
  • Claim false deductions
  • Work "under the table" to avoid reporting
  • Falsify documents for verification

Consequences: Subsidy repayment, penalties, interest, potential fraud charges, and loss of future eligibility.

Frequently Asked Questions

Q: What if my income is right at a threshold (like exactly 150% FPL)?

A: If you're at or below the threshold, you qualify for the benefits. For example, at exactly 150% FPL, you get $0 premiums. At 150.1% FPL, you'd pay a small amount.

Q: Can I choose to receive less subsidy to avoid owing money back?

A: Yes! When you apply, you can choose to receive less than your full subsidy amount as "advance premium tax credits." This means higher monthly premiums but less risk of owing at tax time.

Q: Does child support count as income?

A: No, child support received does not count toward MAGI. However, alimony received (for divorces finalized before 2019) does count.

Q: I'm between jobs—what income should I report?

A: Estimate your expected total annual income, including unemployment benefits and any new job income. Update your application when you start a new position.

Q: Does my teenager's part-time job income count?

A: If your teenager is claimed as a tax dependent, their income is included in your household's total MAGI for subsidy purposes.

Q: What happens at tax time if my actual income was different than estimated?

A: You'll complete IRS Form 8962 to reconcile your subsidy. If you received too much, you may owe some back (with caps). If too little, you'll get a tax credit.

Q: Why did my health insurance subsidies disappear in 2026?

A: The American Rescue Plan (2021) and Inflation Reduction Act (2022) temporarily enhanced federal premium subsidies. These programs expired December 31, 2025, and Congress did not renew them. Subsidy amounts reverted to pre-2021 levels, and the 400% FPL income cap returned.

Q: I'm just over 400% FPL by a few thousand dollars. What are my options?

A: You have several strategies: (1) Increase pre-tax retirement contributions (401k, traditional IRA) to reduce MAGI below 400% FPL, (2) Maximize HSA contributions if eligible, (3) Defer capital gains or IRA withdrawals to next year, (4) Consult a CPA to identify other MAGI-reducing strategies. Even small reductions can save $10,000+ in premiums if it brings you under 400% FPL.

Q: Will the enhanced subsidies come back?

A: It's unknown. Congress would need to pass new legislation to restore enhanced subsidies. While there have been proposals, as of 2026 there is no timeline for restoration. Do not count on subsidies returning—plan based on current 2026 rules.

Q: What is California doing to help with higher premiums?

A: California allocated $190 million to maintain near-$0 premiums for enrollees up to 150% FPL (with some assistance up to 165% FPL). This helps about 333,000 people (14% of the marketplace). However, anyone above 165% FPL receives no state assistance and faces full 2026 federal subsidy reductions.

For more detailed MAGI questions, see our MAGI FAQ page.

Need Help Determining Your Eligibility?

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