Covered California 2025 Rate Announcement

  • Regardless of the 7.9% average premium increase for 2025 plans announced today by Covered California, the Inflation Reduction Act caps premiums at 8.5% of income, and even less for lower incomes.
  • The Biden-Harris Administration’s Inflation Reduction Act (IRA) along with state investments, have continued to significantly reduce costs for nearly all 1.7 million Covered California enrollees, leading to record high health coverage enrollment.
  • Consumer advocates urge Congress to make IRA subsidies permanent. Without an extension, premiums will spike by 60-80% or more, costing consumers potentially thousands of dollars annually.
  • If federal premium help ends, state subsidies now used to lower out-of-pocket costs would need to be re-directed and could cause deductibles and co-pays to spike.
  • November 1st will also see additional enrollees in Covered CA with the expansion of health care access to DACA recipients.

SACRAMENTO, CA – Covered California, the state’s health care insurance marketplace, today announced a 7.9% premium rate increase for 2025 – though the vast majority of enrollees will be insulated from this increase and in fact see lower costs thanks to investments from the Biden-Harris Inflation Reduction Act (IRA) and recent state budget enhancements. The IRA – which is built upon affordability assistance already in the Affordable Care Act – caps premiums at 8.5% of income and often much less for those with lower incomes. Because of this federal financial help, California has been able to take even further steps to lower costs for many Covered California enrollees by eliminating deductibles and reducing co-pays for health services. All this investment in health care affordability has made Covered California costs lower than ever, leading to record enrollment.

However, without federal action, the enhanced premium subsidies in the Inflation Reduction Act are set to expire next year. If that happens, premiums would again increase and the savings enrollees now see in their out-of-pocket costs will spike, as state money would not be sufficient to maintain the level of affordability assistance consumers receive now.

A key part of the IRA was its extension of premium tax credits to those making over 400% of the Federal Poverty Level, or $58,320/year for an individual. If not extended, approximately 150,000 Covered California enrollees who are over that threshold would lose assistance entirely, seeing their premiums rise an average of $345 per month. Those under that threshold would also see an increase of an average of $70 per month. Enrollees in certain areas of the state will fare even worse, such as those in Imperial, Humboldt, and Shasta counties, which would see their average premiums more than double.

“As Californians struggle with higher costs of living, the worst thing we could do is increase their health care costs. Congress must act as soon as possible to make the premium subsides in the Inflation Reduction Act permanent,” said Diana Douglas, Director of Policy and Advocacy at Health Access California, the statewide health care consumer advocacy coalition, which has been advocating for the implementation and improvement of the Affordable Care Act in California for over a decade. “We know these investments work, as enrollment in Covered California is at an all-time high. But that means more Californians are at risk of seeing their health care costs go up. Inaction is inexcusable.”

“With the help from the federal government, the state has invested in making care even more affordable, with many Covered California consumers now eligible for plans with a $0 deductible. Without federal action, California stands to lose over $1.7 billion in assistance, which the state could only backfill a fraction of, which means consumers could again see deductibles as high as $5,000 or more,” said Douglas. “But this should not stop Californians from enrolling in care right now. Consumers should shop and compare their options for health plans and premium help. Even those already in Covered California should look again at their options, since the best deal last year may not be the best fit this year, and even an increase could turn into a reduction if you are able and willing to switch plans.”

Covered California continues to include 12 carriers, and all Californians will have two or more choices between health care plans, with 92% able to choose three carriers or more. This year Kaiser will also enter Monterey County, as Valley Health Plan leaves.

In addition, starting on November 1st, the Biden Administration’s rule to designate all DACA recipients as “lawfully present” goes into effect, giving California’s 165,000 DACA recipients full access to health care coverage through Medicaid and ACA health insurance marketplaces like Covered California. DACA recipients who are income-eligible are already able to enroll in Medi-Cal, but the new rule means more federal funding to provide health coverage for this group and premium subsides through Covered California, affecting an estimated 40,000 DACA recipients in California.

Open enrollment for 2025 Covered California plans begins on November 1, 2024 and runs through January 31, 2025.

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Press inquires can be directed to:
Rachel Linn Gish, rlinngish@health-access.org