What Is the Federal Poverty
Level — and Why Does It
Determine Your Benefits?

If you've spent any time navigating California's benefits programs, you've seen the abbreviation FPL everywhere. 138% FPL. 266% FPL. 400% FPL. These percentages determine who qualifies for Medi-Cal, Covered California subsidies, and other programs.

But what is the FPL, where does it come from, and why does it matter so much? This article answers all of that.

What the FPL is

The Federal Poverty Level is a measure of income published each year by the U.S. Department of Health and Human Services (HHS). It represents a minimum income threshold — the idea, roughly, is that it defines the income level below which a household is considered to be living in poverty.

The FPL is not a single number — it varies by household size. In 2025, the FPL base figures used for most California programs are:

How programs use the FPL

Benefits programs don't say "you qualify if you earn less than $X." They say "you qualify if you earn less than X% of the FPL for your household size." That percentage is multiplied by the FPL base to get your actual income threshold.

For example, a family of 4 at 138% FPL: $33,000 × 1.38 = $45,540. That's approximately the Covered California subsidy starting point for a family of 4. Medi-Cal uses its own published dollar figures rather than a straight multiplication — DHCS publishes the exact numbers, which account for additional adjustments.

When the FPL updates

HHS updates the FPL every January. The new numbers typically take effect for Covered California in January and for Medi-Cal as implemented by the state — usually within the first few months of the year.

Because the FPL is tied to inflation, it almost always goes up slightly each year. This means your eligibility thresholds rise a little each year too — which is one reason it's worth rechecking your numbers every January.

Why the FPL matters for the cliff strategy

Every dollar you contribute to a Traditional IRA reduces your MAGI — which means it moves you further from the FPL-based threshold that determines your eligibility. Understanding how far you are from that threshold (in dollar terms) is the key to knowing exactly how much to contribute.

That's exactly what the calculator does: it takes the current FPL numbers, calculates your threshold by household size and program, and shows you how your income and retirement contributions interact with those thresholds in real time.