If you and your family rely on Covered California for affordable health insurance, it’s time to pay close attention. Starting in 2026, premium tax credit (PTC) changes could affect millions of Americans, reducing coverage eligibility, increasing premium costs, and potentially leading to widespread insurance losses unless Congress intervenes.
At Skyline Benefit, we help individuals, families, and businesses navigate Covered California with clarity and confidence. Here’s what you need to know about the 2026 premium tax credit changes and how to prepare.
What Are the 2026 Premium Tax Credit Changes?
During the pandemic, federal lawmakers made temporary enhancements to the premium tax credit, allowing more people to qualify and increasing the subsidy amount. These easings made coverage more accessible and affordable for millions.
However, beginning in 2026, those enhancements will expire, reverting eligibility back to the pre-2021 rules. This means:
- Only individuals with a Modified Adjusted Gross Income (MAGI) between 100%–400% of the federal poverty level will qualify for the PTC.
- Those earning above 400% will no longer qualify, regardless of their actual premium costs.
- Even for those who still qualify, credit amounts will decrease, resulting in higher out-of-pocket costs.
The result? According to conservative estimates, up to 3.7 million people could lose health insurance coverage annually starting in 2026.
Who Will Be Most Affected by the 2026 premium tax credit changes?
These 2026 premium tax credit changes will hit:
- Middle-income earners with MAGI over 400%
- Self-employed individuals and small business owners are not offered employer-based coverage
- Older enrollees, who often face higher premiums
- Californians in high-cost regions like Los Angeles, Orange County, or the Bay Area
If you or your clients fall into any of these categories, Covered California health plans may become significantly more expensive—unless further legislative action is taken.
What Can You Do Right Now?
- Stay Updated
- These changes will start to impact 2026 plan pricing, with open enrollment for those plans scheduled to begin in Fall 2025.
- Evaluate Income Scenarios
- Since PTC is based on projected MAGI, it’s critical to estimate 2026 income accurately. Consider consulting a tax advisor to explore ways to reduce your Modified Adjusted Gross Income (MAGI) and remain eligible for tax credits.
- Update the Marketplace Immediately
- If your income or household changes in 2025, report it to Covered California. Adjustments could result in a higher PTC, reducing your monthly premiums now—and preventing surprises at tax time.
- Work With a Broker
- At Skyline Benefit, we simplify the complexity. Whether you’re helping clients choose a plan or reviewing your own, we provide hands-on support to help you stay protected—before and after the 2026 premium tax credit changes.
What If You Receive Advance PTC Payments?
If you opt to have the premium tax credit paid in advance to your insurer, it’s important to reconcile that on your tax return with IRS Form 8962. Failure to report income correctly can trigger IRS audits, especially if your actual MAGI disqualifies you or overstates your subsidy.
In short: The IRS gets a copy of Form 1095-A too. Accuracy matters.
Why This Change Matters
The premium tax credit has been a critical pillar in expanding access to health insurance since the Affordable Care Act. Letting the temporary enhancements expire without a replacement strategy could reverse much of that progress, especially in a state like California where costs are already high.
The 2026 premium tax credit changes are not just a tax issue—they’re a healthcare affordability issue.
Need Help Understanding the 2026 Premium Tax Credit Changes?
Skyline Benefit is a certified Covered California insurance agency dedicated to simplifying your health insurance journey. Our team will guide you through every change, every step and stay informed on subsidy updates, and prepare for what’s next.
Schedule a consultation today. Call us at: (714) 888-5112