Enhanced Federal Subsidies Expiration Creates Financial Crisis
For Mikayla Tencer, being self-employed already meant juggling higher taxes, irregular income, and the constant pressure of finding her own health insurance. This year, it also meant rethinking how often she could afford to see a doctor and maintain her mental health care routine.
The 29-year-old content creator in San Francisco paid $168 a month last year for a Blue Shield health plan through Covered California. This year—without enhanced federal subsidies that expired at the end of December—that same plan would have cost $299 a month, with significantly higher copays for essential medical services.
“People assume that because I’m young, I can just pick the cheapest plan and not worry about it,” Tencer said. “But I do need regular care, especially for mental health support and ongoing medical monitoring.”
Tens of Thousands of Middle-Class Californians Affected
Tencer is among tens of thousands of middle-class Californians facing steep increases in health insurance costs after Congress allowed enhanced federal subsidies for Affordable Care Act plans to expire on December 31. The impact has been particularly severe for self-employed individuals and small business owners who rely on the individual insurance marketplace.
Those extra subsidies were enacted in 2021 as part of temporary, pandemic-era relief measures, significantly boosting financial help for people buying coverage on state-run insurance marketplaces such as Covered California. The law also expanded eligibility to people earning more than 400% of the federal poverty level, approximately $62,600 for a single person and $128,600 for a family of four.
Who Lost Coverage and Why
With the expiration of the enhanced subsidies, people above that income threshold no longer receive any federal assistance, and many who still qualify are seeing sharply higher premiums and out-of-pocket costs. On top of the loss of the extra federal benefits, the average Covered California premium this year rose by 10.3% because of fast-rising medical costs and increasing healthcare utilization.
Jessica Altman, executive director of Covered California, said that approximately 160,000 Californians lost their subsidies when the enhanced federal assistance expired because their incomes exceeded 400% of the federal poverty level. This represents a significant portion of the state’s individual insurance market.
Self-Employed Workers Hit Hardest
To lower her monthly bill, Tencer switched to the cheapest Covered California option available, bringing her premium down to approximately $161 a month. However, the savings came with new costs that undermine the value of insurance. Primary care and mental health visits now carry $60 copays, up from $35 under her previous plan.
When she showed up for a psychiatric appointment to manage her ADHD and generalized anxiety disorder, she said, she learned her doctor was out of network under the new plan. “That visit would have been $35 before,” she said. “Now it’s $180 out of pocket every single time.”
Because of the higher costs and financial constraints, Tencer said she has cut therapy from weekly to biweekly sessions, potentially compromising her mental health treatment plan. “The subsidies made it possible for me to be self-employed in the first place,” Tencer said. “Without them, I’m seriously thinking about applying for full-time jobs, even though the market is terrible right now.”
Dramatic Premium Increases Force Difficult Choices
For another self-employed Californian, the increase was even more dramatic and life-altering. Krista, a 42-year-old photographer and videographer in Santa Cruz County, relies on costly monthly intravenous treatments for a rare blood disorder. She asked that her full name not be used but shared her insurance and medical documents with The Times to verify her situation.
Last year, she paid about $285 a month for a comprehensive Covered California plan that covered her specialized treatments. In late December, she received a notice showing her premium would rise to more than $1,200 a month. The dramatic rise was due to her loss of federal subsidies, as well as a 23% increase in the premium charged by Blue Shield for her specific plan tier.
Medical Necessity Limits Options
“It terrified me. I thought, how am I ever going to retire?” she asked. “What’s the point of working if everything goes to health insurance?”
Krista ultimately enrolled in a plan costing about $522 a month, still nearly double what she had been paying, with a $5,000 annual deductible. She said she cannot downgrade to a cheaper plan because her clinic bills her treatment to insurance at roughly $30,000 a month, according to detailed medical statements and explanation of benefits documents.
To cut costs and preserve the ability to save for retirement and eventually afford a place of her own, Krista decided to move into an RV on private land. The difficult decision came the same week she received notices showing both a rent increase and a steep jump in her health insurance premiums.
Krista said she had been planning for more than a year to find a long-term living situation that would enable her to live independently and affordably, rather than continue paying escalating rent for an apartment. “Nobody asks to be sick,” Krista said. “No one should have their life ruined because they get diagnosed with a disease or break a leg.”
Enrollment Concerns and Coverage Gaps
Although overall enrollment in Covered California this year has held steady at approximately 1.8 million people, Altman said, she worries that more people will drop coverage as bills with the higher premiums arrive in the mail over the coming months. The true impact may not be visible until mid-year enrollment data becomes available.
Working Families Face Impossible Decisions
Those fears are already playing out across the state. Jayme Wernicke, a 34-year-old receptionist and single mother in Chico who earns about $49,000 a year, said she was transferred from Medi-Cal to a Covered California Anthem Blue Cross plan at the end of 2023. Her premium rose from about $30 a month to $60, then jumped to roughly $230 after the enhanced subsidies expired—a nearly 400% increase from her original cost.
“For them to raise my health insurance almost 400% is just insane to me,” Wernicke said. “I’m a working mother trying to make ends meet.”
Her employer, a small family-owned business, does not offer health insurance benefits to employees. Her current plan does not include dental or vision care and, she said, barely covers basic medical costs due to high deductibles and copays.
“At a certain point, it just feels completely counterintuitive,” she said. “Either way, I’m losing—either to premiums or to medical bills.”
Growing Number Choose to Go Uninsured
Wernicke dropped her own coverage and plans to pay for care with cash when needed, calculating that the state tax penalty is less than the annual cost of premiums. Her daughter remains insured through the same marketplace. Two other California residents told The Times that they also decided to go without coverage because they could no longer afford the monthly premiums. They declined to provide their full names, citing concerns about financial and professional consequences of being publicly identified as uninsured.
State Penalties Less Than Premium Costs
Under California law, residents without minimum essential coverage face an annual penalty of at least $900 per adult and $450 per child, or 2.5% of household income, whichever is greater.
One individual, a 29-year-old self-employed publicist in Los Angeles who requires medication for epilepsy, paid about $535 a month last year for a silver plan through Covered California. This year, the same plan would have cost $823 monthly—a 54% increase.
After earning about $55,000 last year, she calculated that paying for care out of pocket would cost far less than maintaining insurance. Her epilepsy medication costs about $175 every three months without insurance coverage, and her annual doctor visits total roughly $250 for monitoring and prescription management.
“All of that combined is still far less than paying hundreds of dollars every month for insurance I rarely use,” she said.
Small Business Owners Abandon Coverage
Another individual, April, a 58-year-old small-business owner in San Francisco, canceled her insurance in December after her quoted premium rose to $1,151 a month for a bronze plan and $1,723 for a silver plan, just for herself. Last year, April said she paid $566 for both herself and her daughter. This year, her daughter’s premium alone jumped from $155 to $424 monthly.
The bronze plan also carried a $3,500 deductible for lab work and specialist visits, meaning she would have had to pay thousands of dollars out of pocket before coverage kicked in, on top of the substantially higher monthly premium.
“The subsidies were absolutely what allowed me to sustain my business,” April said. “They were helping me sustain my financial world and have affordable care for my family.”
She rushed to complete medical tests and preventive screenings before dropping coverage and hopes to go a year uninsured while rebuilding her finances. “The scariest part is not having catastrophic coverage,” she said. “If something happens, it can be millions of dollars in medical debt.”
Calls for Universal Healthcare Reform
Tencer, the content creator in San Francisco, believes that in order to make the nation healthier, affordable healthcare should be universal and not tied to employment status or income fluctuations.
“Our government should be providing it,” she said. “People can’t go to the doctor for routine checkups, they can’t get things checked out early, and they can’t access the mental health resources they need to stay productive and healthy.”
