The enhanced ACA subsidies expired at the end of 2025, and this is the first year founders feel it: here is what coverage actually costs and how to pay less.
Health insurance is the one moving-to-SF cost that got dramatically worse in 2026, and most advice online still describes a world that ended on December 31, 2025. If you are quitting a job to start a company, or you already pay yourself a founder salary of approximately nothing, the numbers below are the current reality.
What changed on January 1, 2026
The enhanced ACA premium tax credits expired on December 31, 2025, and buying your own health insurance got sharply more expensive for exactly the people who read this site: self-employed founders with no employer plan. Congress did not extend the pandemic-era subsidy boost, so 2026 is the first plan year under the old, stingier rules since 2020.
The damage, per KFF's 2026 data:
- Average monthly premium payments across marketplace enrollees (the share enrollees pay out of pocket after subsidies, not the sticker premium) rose 58%, from $113 to $178.
- That average hides the real pain. Enrollees who kept their same plan faced increases around 114%, from roughly $888 to $1,904 a year. The 58% figure is lower only because millions of people downgraded to worse plans.
- National marketplace enrollment is on track to fall from 22.3 million in 2025 to roughly 16.5 to 17.5 million in 2026.
The single most important change for founders: the subsidy cliff is back. From 2021 through 2025, nobody paid more than 8.5% of income for a benchmark plan, no matter how much they earned. In 2026, if your household income crosses 400% of the federal poverty level ($62,600 for a single person), your premium tax credit drops to zero. Not reduced. Zero. One dollar over the line can cost you thousands.
What a founder actually pays in California in 2026
Budget $250 to $550 per month for a decent Silver plan through Covered California if you qualify for subsidies, and $500 to $1,100 per month if you do not. Covered California's weighted average rate increase for 2026 was 10.3%, stacked on top of the subsidy loss.
Anchor numbers for a single founder in SF:
- A Silver HMO averages about $570 a month gross for a 40-year-old in California in 2026 (that is the statewide average, and SF is not cheaper than average). Founders in their late 20s tend to land in the $250 to $500 range.
- Covered California's own analysis of the subsidy expiration: a 25-year-old self-employed person in San Francisco earning about $31,000 saw the benchmark Silver premium jump from $53 to $174 per month, a 228% increase.
- Self-employed enrollees above the $62,600 cliff pay an average of $1,084 per month. That is more than $13,000 a year, funded from post-tax salary, before you use any care.
California softened the blow with $190 million in state subsidies, but only for enrollees under roughly 150% of the poverty line (about $23,500 for a single person). If you earn more than that, assume the federal rules are all you get.
The salary lever: your MAGI decides everything
Subsidy eligibility is based on modified adjusted gross income (MAGI), not on your savings, your equity, or your startup's bank balance, so a funded founder paying themselves a modest salary can legitimately qualify for real help. This was always true. The 2026 cliff just raised the stakes.
The 2026 brackets for a single person in California:
- Under $22,025 (138% of FPL; Medi-Cal runs on the newer 2026 poverty figures, which is why this number does not divide evenly into the $62,600 cliff, which uses the 2025 figures): you qualify for Medi-Cal, which is free. Medi-Cal eligibility is income-based, so savings and stock do not disqualify you. Plenty of pre-revenue founders are on it. Networks are limited, but it is real coverage.
- $22,025 to $62,600: premium tax credits through Covered California, larger the closer you are to the bottom of the range.
- Over $62,600: full freight, $0 in credits.
If you just raised and you are setting your salary anyway (see our legal setup guide for the payroll mechanics), know that the difference between a $60,000 salary and a $65,000 salary can be several thousand dollars a year in lost credits. Nine in ten self-employed Covered California enrollees are below the cliff. This is a mainstream situation, not a loophole.
Two honest warnings. First, MAGI counts everything: salary, interest, dividends, realized capital gains, and a spouse's income if you file jointly. Selling appreciated stock to fund your personal runway can push you over the cliff in a way that surprises you at tax time. Second, credits are reconciled on your tax return. If you estimate $45,000 and end the year at $70,000, you repay the credits in full. Estimate conservatively and report income changes to Covered California as they happen.
Quitting your job to start a company
Losing employer coverage is a qualifying life event that opens a 60-day special enrollment window with Covered California, and for most solo founders the marketplace beats COBRA on price. Do not let the window lapse. Outside open enrollment (November 1 to January 31 in California), no qualifying event means no plan.
The COBRA math: you pay 102% of the full group premium your employer was mostly covering, which for single coverage typically lands around $700 to $800-plus per month in 2026. COBRA makes sense in two cases: you are mid-treatment and need to keep your exact doctors and deductible progress, or your income this year is already over the cliff and the marketplace offers nothing cheaper anyway.
If you are heading into an accelerator batch, sort this out before the chaos starts (just accepted? read this) and put the premium in your personal budget next to rent. A $400 monthly premium is $4,800 a year out of the personal savings most founders plan around, and your personal runway matters as much as the company's (our fundraising timeline guide explains why).
One offset: self-employed founders can deduct premiums above the line, no itemizing required. It softens the sticker price by your marginal tax rate, so track the payments from month one.
Bronze plans and the deductible trap
The average marketplace deductible jumped 37% in 2026 to $3,786, the steepest one-year increase on record, so shopping on premium alone is how founders get hurt. About 9.2 million people bought Bronze plans for 2026, up from 7.3 million in 2025, trading lower premiums for deductibles that commonly run past $6,000.
Bronze is a defensible choice at 27 with no prescriptions: you are buying catastrophe insurance and paying cash for the occasional visit. It is a bad choice if you take any regular medication or expect to actually use care. Run the total-cost math (premium times twelve, plus expected usage against the deductible), not the premium comparison.
One more 2026-specific check: with roughly five million people leaving the market, insurers are trimming networks and exiting regions. Before you commit, confirm that your specific doctors and the big SF systems you would actually use (UCSF, Sutter/CPMC) are in-network on the 2026 network, not the one your friend had in 2024.
When you hire, switch to a group plan
Once you have at least one W-2 employee besides yourself, a small-group plan through Covered California for Small Business or a PEO usually beats the post-cliff individual market. Group rates are not income-tested, so there is no cliff. If you already run payroll through Gusto or Justworks, adding health benefits is a form, not a project, and the company pays premiums pre-tax as a deductible business expense.
This flips the pre-2026 advice. It used to be optimal to stay on subsidized individual plans as long as possible. Now, a founder paying $1,084 a month over the cliff will often do better moving onto the company's group plan the moment there is a group to join. Price it when you make your first hire, not when open enrollment forces the question.
The short version
Treat health insurance as a line item you set deliberately, the same week you set your salary.
- Quit your job? You have 60 days. Enroll through Covered California; skip COBRA unless you are mid-treatment.
- Set your founder salary with the $62,600 cliff in mind. MAGI, not net worth, decides your subsidy.
- Income under $22,025? Medi-Cal is free and legitimate.
- Budget $250 to $550 per month subsidized, $500 to $1,100 unsubsidized, and deduct it above the line.
- Check networks before you buy. 2026 is a churn year.
- First hire means group-plan quotes, immediately.
Put it on the same checklist as your SSN and bank account when you land (first 30 days guide). Insurance is boring right up until it is the most important document you own.
Numbers verified July 2026. ACA subsidy rules, Covered California rates, and Medi-Cal thresholds change fast, so confirm current figures before relying on them.
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This guide was researched and written with AI assistance for justmovetosf.com, with every number checked against the sources below in July 2026. Things change fast and mistakes are possible: do your own research, and for visa, tax, or legal decisions talk to a licensed professional.
Sources
Premiums in the context of everything else you pay here: San Francisco cost of living 2026.