Understanding the Impact of the Federal Poverty Level on Covered California Consumers



The Federal Poverty Level (FPL) is a vital metric established by the Department of Health and Human Services (HHS) that impacts millions of Californians. Its primary purpose is to determine eligibility for various programs and benefits, including health insurance subsidies through Covered California, the state’s health insurance marketplace. Understanding the FPL and how it influences healthcare accessibility can help consumers make informed decisions regarding their health insurance needs.

The Role of the Federal Poverty Level

Annually updated, the FPL is a measure of income used to identify poverty in the United States. It represents the minimum amount of money required for the necessities of life, such as food, clothing, and shelter. The level varies based on household size and is slightly higher in Alaska and Hawaii due to higher living costs.

In the context of health insurance, the FPL serves as a benchmark for determining who can receive financial assistance to offset the cost of insurance premiums and, in some cases, out-of-pocket costs. The relationship between an individual’s or family’s income and the FPL is often expressed as a percentage.

Covered California and the Federal Poverty Level

Covered California uses the FPL to determine eligibility for premium tax credits, also known as subsidies, and other cost-sharing reductions. Here’s how it typically breaks down:

  1. Medi-Cal Eligibility: If a household’s income is less than 138% of the FPL, they may qualify for Medi-Cal, California’s Medicaid program, which provides free or low-cost health insurance.

  2. Premium Tax Credits: Households with incomes between 138% and 400% of the FPL may be eligible for premium tax credits. These credits can significantly lower the monthly cost of health insurance premiums.

  3. Cost-Sharing Reductions: For those earning between 138% and 250% of the FPL, cost-sharing reductions may be available. These reductions lower the out-of-pocket costs associated with health insurance, such as deductibles, copayments, and coinsurance.

  4. Incomes Above 400% FPL: Households with incomes above 400% of the FPL generally do not qualify for subsidies through Covered California. However, in response to the COVID-19 pandemic, temporary changes have been enacted to help more people get financial assistance. Depending on the circumstances, some people with incomes above 400% FPL might be eligible for premium tax credits.

Changes and Updates

The FPL chart is updated every year, which can affect consumers’ eligibility for programs and benefits. It’s important for Covered California consumers to keep an eye on these updates to understand if their eligibility for subsidies might change.


The FPL plays a significant role in determining the affordability of health insurance for many Californians. Understanding this measure and how it interacts with Covered California programs is key to making the most of available health insurance options. With an understanding of the FPL, Covered California consumers can better navigate the health insurance landscape and select the most affordable and suitable coverage for their needs.


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