Covered California credits and HCARF resources helped drive record 2025 enrollment; federal cliff could reduce aid in 2026

Covered California officials told the Assembly Budget Subcommittee No. 1 on Health that a combination of enhanced federal premium tax credits and state cost‑sharing assistance from the Healthcare Affordability Reserve Fund (HCARF) produced an all‑time high of roughly 1.98 million enrollees for the 2025 plan year.

Katie Ravel, director of policy, eligibility and research at Covered California, said enhanced federal premium tax credits under the American Rescue Plan, extended through 2025 by federal law, are estimated to provide about $2.1 billion in premium support for California enrollees for 2025. In addition, Covered California used HCARF appropriations to eliminate silver plan deductibles and reduce cost sharing for primary care, outpatient mental health and prescription drugs for many enrollees.

The combination of federal and state assistance drove enrollment increases: as of Jan. 31 Covered California reported about 1,980,000 enrollees, roughly 200,000 more than any prior year; about 1.3 million of those enrollees received state enhanced cost‑sharing assistance. Covered California staff said the state appropriation also included a $20 million California Premium Credit Program to offset certain abortion‑related cost‑sharing for enrollees.

Officials warned that the program’s trajectory depends on federal action. If Congress does not extend enhanced federal premium tax credits beyond 2025, federal subsidies for many enrollees would shrink or disappear under pre‑2021 Affordable Care Act rules. Covered California estimated an average loss of $101 per month in premium savings for affected enrollees and said hundreds of thousands would face higher premiums or become ineligible for subsidies altogether.

The committee also discussed HCARF loans to the general fund and repayment schedules. The administration’s budget did not propose delays to the repayment schedule; some loan repayments are statutory and scheduled through the 2028–29 fiscal year, though staff said the administration can revisit certain loan terms under specific provisions if necessary.

Why this matters: premium assistance and cost‑sharing reductions are the principal levers keeping coverage affordable for many Californians. A federal decision not to extend enhanced premium tax credits could produce substantial premiums increases and coverage losses unless the state is willing to commit additional HCARF resources.

What comes next: Covered California said it will provide technical assistance to federal policymakers and work with the Legislature on possible HCARF strategies for 2026. The committee will continue monitoring federal subsidy developments and HCARF loan repayment schedules.

Ending note: officials encouraged Congress to extend enhanced premium tax credits and told legislators the state can partially backfill federal reductions but cannot replace the full federal investment without additional state resources.