Financial Help, Tax Credits, & Getting Affordable Health Insurance

If you’re looking for affordable health insurance, you are not alone. According to the Kaiser Family Foundation, four out of ten adults have difficulty paying for health care. But Covered California can help. We’re a free service from the state helping Californians get quality, affordable health insurance and the financial help to pay for it. Many of our enrollees pay $10 a month for coverage or even less.

This financial help comes in the form of a premium tax credit (where the federal government pays a portion of your monthly payment), cost-sharing reductions (additional funds that reduce out-of-pocket expenses like copays and deductibles), or both.

Here’s what you need to know about getting more affordable health insurance.

Finding Financial Help

Get ready for some good news: 90 percent of people who enroll in a health plan through Covered California receive financial help. In fact, our members get an average of $5,000 per year to help lower the cost of health insurance. This means more than half of Californians who are currently uninsured could pay less than $10 for their monthly premium — plans can even be as low as $0 per month!

Not sure if you’re one of the 9 out of 10 people who qualify for financial help? It’s easy to find out. Quickly see what subsidies you may get with our simple calculator. Here’s the information you’ll need:

• Total household income

• Zip code

• Household size and number of people who need coverage

• Age of people who need coverage

You’ll instantly receive a quote with your estimated monthly premium and the amount of your financial help. From there, you can check your eligibility and compare plans to see what fits your needs and budget.

We offer plans from brand-name health insurance companies, such as Anthem Blue Cross and Kaiser. And all of our plans include essential health benefits like preventive care, emergency services, prescription drugs, and more.

How to Estimate Household Income

Financial help is calculated based on your expected household income for the year you’re applying for coverage — not last year’s income. (If you are applying for coverage for 2024, use your predicted household income for 2024). When estimating, include your income, as well as that of a spouse and anyone you claim as a dependent on your taxes even if they are not applying for insurance.

If you are self-employed, between jobs, or otherwise have unpredictable income, estimate as accurately as you can. Just make sure to report any changes to your income throughout the year to avoid missing out on additional benefits or having to pay back money at tax time.

Different Types of Financial Help

Thanks to new programs, Californians have more support than ever before to pay for health insurance. That’s true for individuals, families, self-employed workers, and small businesses. When you apply for health insurance through Covered California, financial help comes in two main forms: tax credits and cost-sharing reductions. Read on to understand how those subsidies work.

What are Premium Tax Credits?

The federal government provides premium tax credits to help lower the monthly cost (also called a monthly premium) of your health insurance. The way to get this kind of financial help is to apply for coverage through Covered California.

• A premium tax credit is based on your income and household information. People with incomes between 100–400% of the federal poverty level (FPL) qualify for a tax credit to lower the monthly cost of health insurance. Even if you have an income over 400% of the FPL you still won’t have to pay more than 8.5 percent of your income for a benchmark Silver Plan.

• The term “advanced premium tax credits” describes one way to receive your health insurance tax credits. By receiving your tax credit in advance, you’ll lower the cost of your payment every single month. Alternatively, you can choose to pay the full cost of your premium each month and get the money back as a refund come tax time.

No matter how you take your premium tax credit, you’ll need a few tax forms. Covered California will send you an IRS Form 1095-A by January 31 following the year of your coverage. Use this to fill out Form 8962, Premium Tax Credit. If you received too much money throughout the year, you may have to pay some back. On the other hand, if you received too little or didn’t take your tax credits in advance, you’ll get money back.

What are Cost-Sharing Reductions?

While premium tax credits lower the cost of your monthly health insurance, cost-sharing reductions (CSR) help save you money on out-of-pocket expenses like copays and deductibles. (You can learn more about those terms here).

This form of financial help is available for those making less than 250% of the federal poverty level. In order to take advantage of this benefit, you must choose a Silver plan.

In 2024, there’s even more help available to reduce the cost of health care than ever before. Depending on the Silver plan you have, the new program means you’ll get the same standard as either Gold- or Platinum-level coverage. All of that boils down to big savings. Deductibles will be eliminated from all Enhanced Silver plans. If you have a Silver 73 Plan, that means potential savings of $5,400 a year.

How to Get Started

Wondering if you could be part of the majority of Covered California enrollees who receive financial help to make health insurance more affordable? You can find out in an instant through our quick quote calculator. From there, explore a range of plans to find the right fit for you or your family.