diff --git a/changelog.d/statute-first-ca-premium-subsidy.fixed.md b/changelog.d/statute-first-ca-premium-subsidy.fixed.md
new file mode 100644
index 00000000000..edcb4be4da5
--- /dev/null
+++ b/changelog.d/statute-first-ca-premium-subsidy.fixed.md
@@ -0,0 +1 @@
+Select California Premium Subsidy bands from exact nonnegative ACA MAGI divided by prior-year FPL under the adopted [2026 Program Design, (d)(4)](https://board.coveredca.com/meetings/2025/July%2028,%202025/CoveredCA_2026_Premium_Subsidy_Program_Design_Final.pdf#page=2): exactly 150% changes from a 3.19% contribution to 0%, while income above 150% enters the 3.19% band. Retain the truncated fraction for the rate within that band, following [FTB 3849 Table 1-2 (2020)](https://www.ftb.ca.gov/forms/2020/2020-3849-instructions.pdf#page=6) and [2021](https://www.ftb.ca.gov/forms/2021/2021-3849-instructions.pdf#page=6); [2025 Form 8962 Worksheet 2 line 4](https://www.irs.gov/pub/irs-prior/i8962--2025.pdf#page=9) likewise tests "more than" on the exact amount before truncating.
diff --git a/policyengine_us/parameters/gov/states/ca/hbex/premium_subsidy/applicable_percentage/threshold.yaml b/policyengine_us/parameters/gov/states/ca/hbex/premium_subsidy/applicable_percentage/threshold.yaml
index 2196012efae..63e30cf9e77 100644
--- a/policyengine_us/parameters/gov/states/ca/hbex/premium_subsidy/applicable_percentage/threshold.yaml
+++ b/policyengine_us/parameters/gov/states/ca/hbex/premium_subsidy/applicable_percentage/threshold.yaml
@@ -1,9 +1,14 @@
 description: California sets the federal poverty line thresholds for the applicable percentage brackets under the California Premium Subsidy program.
 values:
-  # 150% is untiered in the Program Design prose but sits in the 3.19% band:
-  # the Explainer labels the band "150% - At or Below 165%", and under
-  # 26 CFR 1.36B-3(g)(2) FPL-percentage truncation to 2 decimals collapses
-  # [150%, 151%) to 1.50, so 150% takes the 150-165% bracket rate.
+  # The adopted Program Design runs its bands "100% up to 150%" (0%) and
+  # "Above 150% up to 165%", so an exact ratio equal to a threshold takes the
+  # lower band: 150% pays 0%. The Policy Explainer labels the upper band
+  # "150% - At or Below 165%"; the model follows the adopted design.
+  # Band selection uses exact nonnegative ACA MAGI divided by prior-year FPG;
+  # only the rate lookup uses truncated aca_magi_fraction. The Designs leave
+  # rounding unspecified. FTB 3849 Table 1-2 (2020/2021) tests exact income
+  # for "above" boundaries before truncating for lookup; Form 8962 Worksheet 2
+  # line 4 likewise checks "more than" before truncation.
   2026-01-01:
     - 1
     - 1.5
diff --git a/policyengine_us/tests/code_health/test_source_conflicts.py b/policyengine_us/tests/code_health/test_source_conflicts.py
index 901b7b37215..ea7b9fbdddd 100644
--- a/policyengine_us/tests/code_health/test_source_conflicts.py
+++ b/policyengine_us/tests/code_health/test_source_conflicts.py
@@ -152,6 +152,7 @@
     "policyengine_us/variables/gov/local/ca/cc/ga/eligibility/ca_cc_general_assistance_eligible.py": 1,
     "policyengine_us/variables/gov/local/tax/sales/local_sales_tax.py": 1,
     "policyengine_us/variables/gov/states/ar/ade/oec/sra/rates/ar_sra_daily_copay.py": 1,
+    "policyengine_us/variables/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.py": 1,
     "policyengine_us/variables/gov/states/ct/tax/income/rebate/ct_child_tax_rebate.py": 1,
     "policyengine_us/variables/gov/states/fl/commerce/liheap/eligibility/fl_liheap_eligible.py": 1,
     "policyengine_us/variables/gov/states/fl/commerce/liheap/eligibility/fl_liheap_income_limit.py": 1,
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy.yaml b/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy.yaml
index 889da75d6d7..da255575843 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy.yaml
@@ -9,6 +9,9 @@
 # figure (spread across 12 months and re-summed by add()), matching the NM
 # convention. aca_magi, aca_magi_fraction, slcsp, aca_ptc and is_aca_ptc_eligible
 # are supplied directly so each expectation is exactly hand-verifiable.
+# Prior-year tax_unit_fpg is pinned so supplied MAGI and FPL fractions agree.
+# The negative-MAGI clamp case supplies eligibility and a positive rate to
+# isolate the amount formula; its income fraction is correctly zero.
 #   CA schedule: threshold [1.0, 1.5, 1.65], initial [0, 0.0319], final [0, 0.0391]
 
 # ---- 100-150% FPL band (applicable percentage 0%) ----
@@ -27,6 +30,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 21_000
         aca_magi_fraction: 1.40
         slcsp: 6_000
@@ -50,6 +55,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 21_000
         aca_magi_fraction: 1.40
         slcsp: 6_000
@@ -77,6 +84,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_873.015873015873
         aca_magi: 25_000
         aca_magi_fraction: 1.575
         slcsp: 6_000
@@ -102,6 +111,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_757.575757575758
         aca_magi: 26_000
         aca_magi_fraction: 1.65
         slcsp: 7_000
@@ -127,6 +138,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 24_000
         aca_magi_fraction: 1.60
         slcsp: 3_000
@@ -141,7 +154,11 @@
 # ---- Negative-MAGI clamp ----
 
 - name: Case 6, negative ACA MAGI is clamped to zero (does not inflate subsidy).
-  # magi_frac 1.575 -> pct 0.0355; aca_magi -10_000 clamps to 0 so the -pct*income
+  # Supply eligibility and pct 0.0355 to isolate the amount clamp:
+  # exact negative MAGI would otherwise be ineligible and select the 0% band,
+  # hiding a missing amount clamp. The income fraction is zero because
+  # aca_magi_fraction floors negative MAGI at zero before dividing by FPG.
+  # aca_magi -10_000 clamps to 0 so the -pct*income
   # term is 0 rather than +355. amount = max(0, 6_000 - 2_000 - 0.0355*0) = 4_000.
   # Without the clamp it would be 6_000 - 2_000 - 0.0355*(-10_000) = 4_355.
   period: 2026
@@ -154,8 +171,12 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi: -10_000
-        aca_magi_fraction: 1.575
+        aca_magi_fraction: 0
+        ca_premium_subsidy_eligible: true
+        ca_premium_subsidy_applicable_percentage: 0.0355
         slcsp: 6_000
         aca_ptc: 2_000
         tax_unit_is_filer: true
@@ -180,6 +201,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_873.015873015873
         aca_magi: 25_000
         aca_magi_fraction: 1.575
         slcsp: 6_000
@@ -204,6 +227,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2024: 15_873.015873015873
         aca_magi: 25_000
         aca_magi_fraction: 1.575
         slcsp: 6_000
@@ -228,6 +253,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 16_265.060240963856
         aca_magi: 27_000
         aca_magi_fraction: 1.66
         slcsp: 6_000
@@ -252,6 +279,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 21_000
         aca_magi_fraction: 1.40
         slcsp: 0
@@ -280,6 +309,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 15_000
         aca_magi_fraction: 1.00
         slcsp: 6_000
@@ -310,6 +341,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 24_000
         aca_magi_fraction: 1.60
         slcsp: 6_000
@@ -338,6 +371,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2027: 15_873.015873015873
         aca_magi: 25_000
         aca_magi_fraction: 1.575
         slcsp: 6_000
@@ -368,6 +403,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 16_265.060240963856
         aca_magi: 27_000
         aca_magi_fraction: 1.66
         slcsp: 6_000
@@ -396,6 +433,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 14_850
         aca_magi_fraction: 0.99
         slcsp: 6_000
@@ -427,6 +466,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2026: 15_873.015873015873
         aca_magi: 25_000
         aca_magi_fraction: 1.575
         slcsp: 6_000
@@ -458,6 +499,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_873.015873015873
         aca_magi: 25_000
         aca_magi_fraction: 1.575
         slcsp: 6_000
@@ -476,7 +519,8 @@
   # add(is_aca_ptc_eligible) > 0, which fires on any eligible member, so the tax
   # unit is eligible. The amount uses tax-unit slcsp/aca_ptc (not per-member), so
   # the asymmetry does NOT halve or zero the payout. magi_frac 1.575 -> pct 0.0355.
-  # income 30_000. amount = max(0, 8_000 - 3_000 - 0.0355*30_000) = 5_000 - 1_065 = 3_935.
+  # Pin prior-year FPG to 20_000: income 31_500 / 20_000 = 1.575.
+  # amount = max(0, 8_000 - 3_000 - 0.0355*31_500) = 5_000 - 1_118.25 = 3_881.75.
   # Confirms the add()>0 gate + defined_for + person->tax_unit aggregation produce
   # the full subsidy rather than a per-eligible-member proration.
   period: 2026
@@ -492,7 +536,9 @@
     tax_units:
       tax_unit:
         members: [person1, person2]
-        aca_magi: 30_000
+        tax_unit_fpg:
+          2025: 20_000
+        aca_magi: 31_500
         aca_magi_fraction: 1.575
         slcsp: 8_000
         aca_ptc: 3_000
@@ -503,4 +549,5 @@
         state_code: CA
   output:
     ca_premium_subsidy_eligible: true
-    ca_premium_subsidy: 3_935
+    ca_premium_subsidy_applicable_percentage: 0.0355
+    ca_premium_subsidy: 3_881.75
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.yaml b/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.yaml
index b71a61c042f..a5b10f361ab 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.yaml
@@ -6,17 +6,21 @@
 #   final:     [0,   0.0391]
 # Bands (initial -> final over the FPL band):
 #   100-150% FPL: 0%              (flat)
-#   150-165% FPL: 3.19% -> 3.91%  (interpolated linearly)
-# The percentage depends only on aca_magi_fraction; every expected value is
-# hand-computed inline. The variable itself has no income-band cap (out-of-band
+#   above 150-165% FPL: 3.19% -> 3.91%  (interpolated linearly)
+# The exact nonnegative MAGI / prior-year FPG ratio selects the band; the
+# truncated aca_magi_fraction determines the rate within it. Supplied-fraction
+# cases normalize prior-year FPG to $10,000 and supply consistent MAGI to
+# isolate interpolation, including fractional percentages that a derived
+# aca_magi_fraction would truncate. Every expected value is hand-computed
+# inline. The variable itself has no income-band cap (out-of-band
 # clamping to the nearest bracket rate is fine; the ca_premium_subsidy_eligible
-# gate zeroes the subsidy outside 100-165% FPL), so this file checks the raw
-# interpolation, including clamps at 0.99 and 1.66.
+# gate separately determines eligibility). This file
+# checks raw interpolation, including clamps at 0.99 and 1.66.
 
 # ---- Knot points ----
 
 - name: Case 1, exactly 100% FPL -> 0.00% (start of the flat 100-150% band).
-  # searchsorted([1.0,1.5,1.65], 1.00, "right") = 1, -1 -> bracket 0 [1.0,1.5].
+  # searchsorted([1.0,1.5,1.65], 1.00, "left") = 0, -1 = -1, clipped to bracket 0 [1.0,1.5].
   # initial 0, final 0 -> 0 regardless of position.
   period: 2026
   absolute_error_margin: 0.0001
@@ -28,6 +32,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 10_000
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.00
     households:
       household:
@@ -36,9 +43,11 @@
   output:
     ca_premium_subsidy_applicable_percentage: 0
 
-- name: Case 2, exactly 150% FPL -> 3.19% (start of the 150-165% ramp).
-  # searchsorted([1.0,1.5,1.65], 1.50, "right") = 2, -1 -> bracket 1 [1.5,1.65].
-  # position (1.50-1.50)/0.15 = 0 -> initial rate 0.0319.
+- name: Case 2, exactly 150% FPL -> 0% (the adopted design's "up to 150%" band).
+  # The 2026 Program Design's bands are "100% up to 150%" (0%) and "Above 150%
+  # up to 165%"; the Policy Explainer's "150% - At or Below 165%" would give
+  # 3.19%. The model follows the adopted design.
+  # searchsorted([1.0,1.5,1.65], 1.50, "left") = 1, -1 -> bracket 0 [1.0,1.5].
   period: 2026
   absolute_error_margin: 0.0001
   input:
@@ -49,16 +58,19 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 15_000
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.50
     households:
       household:
         members: [person1]
         state_code: CA
   output:
-    ca_premium_subsidy_applicable_percentage: 0.0319
+    ca_premium_subsidy_applicable_percentage: 0
 
 - name: Case 3, exactly 165% FPL -> 3.91% (top of the ramp).
-  # searchsorted([1.0,1.5,1.65], 1.65, "right") = 3, -1 = 2, clipped to bracket 1.
+  # searchsorted([1.0,1.5,1.65], 1.65, "left") = 2, -1 = 1 -> bracket 1 at position 1.
   # bracket_start 1.5, bracket_end 1.65, position (1.65-1.5)/0.15 = 1 -> final 0.0391.
   period: 2026
   absolute_error_margin: 0.0001
@@ -70,6 +82,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 16_500
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.65
     households:
       household:
@@ -92,6 +107,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 12_500
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.25
     households:
       household:
@@ -113,6 +131,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 15_750
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.575
     households:
       household:
@@ -134,6 +155,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 16_000
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.60
     households:
       household:
@@ -157,6 +181,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 15_100
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.51
     households:
       household:
@@ -177,6 +204,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 14_900
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.49
     households:
       household:
@@ -186,7 +216,7 @@
     ca_premium_subsidy_applicable_percentage: 0
 
 - name: Case 9, below the 100% floor (0.99) clamps to the first bracket -> 0.00%.
-  # searchsorted([1.0,1.5,1.65], 0.99, "right") = 0, -1 = -1, clipped to bracket 0.
+  # searchsorted([1.0,1.5,1.65], 0.99, "left") = 0, -1 = -1, clipped to bracket 0.
   # bracket 0 [1.0,1.5]: position (0.99-1.0)/0.5 = -0.02 clipped to 0; initial 0 -> 0.
   # The eligible gate (fpl_floor 1.0) separately zeroes the subsidy here.
   period: 2026
@@ -199,6 +229,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 9_900
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 0.99
     households:
       household:
@@ -208,7 +241,7 @@
     ca_premium_subsidy_applicable_percentage: 0
 
 - name: Case 10, above the 165% cap (1.66) clamps to the top bracket rate -> 3.91%.
-  # searchsorted([1.0,1.5,1.65], 1.66, "right") = 3, -1 = 2, clipped to bracket 1.
+  # searchsorted([1.0,1.5,1.65], 1.66, "left") = 3, -1 = 2, clipped to bracket 1.
   # position (1.66-1.5)/0.15 = 1.067 clipped to 1 -> final 0.0391. The eligible
   # gate (fpl_limit 1.65) separately zeroes the subsidy above the band, so this
   # confirms the schedule variable itself does not extrapolate past 3.91%.
@@ -222,6 +255,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 16_600
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: 1.66
     households:
       household:
@@ -231,7 +267,8 @@
     ca_premium_subsidy_applicable_percentage: 0.0391
 
 - name: Case 11, negative FPL fraction clamps to the first bracket -> 0.00%.
-  # searchsorted([1.0,1.5,1.65], -0.5, "right") = 0, -1 = -1, clipped to bracket 0.
+  # Negative MAGI is floored at 0 for the exact ratio; searchsorted(..., 0,
+  # "left") = 0, -1 = -1, clipped to bracket 0.
   # position (-0.5-1.0)/0.5 = -3 clipped to 0; initial 0 -> 0. Guards against a
   # negative aca_magi_fraction producing a spurious rate.
   period: 2026
@@ -244,6 +281,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: -5_000
+        tax_unit_fpg:
+          2025: 10_000
         aca_magi_fraction: -0.50
     households:
       household:
@@ -269,6 +309,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 15_750
+        tax_unit_fpg:
+          2026: 10_000
         aca_magi_fraction: 1.575
     households:
       household:
@@ -279,10 +322,11 @@
 
 # ---- PY2027 new 165-200% FPL tier ----
 
-- name: Case 13, PY2027 exactly 165% FPL -> 3.41% (start of the new 165-200% tier).
-  # PY2027 thresholds [1,1.5,1.65,2.0]. searchsorted(..., 1.65, "right") = 3,
-  # -1 = 2 -> bracket 2 [1.65,2.0], position 0 -> initial rate 0.0341. The 165%
-  # knot now takes the NEW tier's initial rate (2026 had 0.0391 at this point).
+- name: Case 13, PY2027 exactly 165% FPL -> 3.41% from either adjacent tier.
+  # PY2027 thresholds [1,1.5,1.65,2.0]. searchsorted(..., 1.65, "left") = 2,
+  # -1 = 1 -> bracket 1 [1.5,1.65] at position 1 -> its final rate 0.0341,
+  # which equals the 165-200% tier's initial rate, so the rate is continuous
+  # at 165% (2026 had 0.0391 at this point).
   period: 2027
   absolute_error_margin: 0.0001
   input:
@@ -293,6 +337,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 16_500
+        tax_unit_fpg:
+          2026: 10_000
         aca_magi_fraction: 1.65
     households:
       household:
@@ -314,6 +361,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 18_250
+        tax_unit_fpg:
+          2026: 10_000
         aca_magi_fraction: 1.825
     households:
       household:
@@ -336,6 +386,9 @@
     tax_units:
       tax_unit:
         members: [person1]
+        aca_magi: 19_900
+        tax_unit_fpg:
+          2026: 10_000
         aca_magi_fraction: 1.99
     households:
       household:
@@ -343,3 +396,159 @@
         state_code: CA
   output:
     ca_premium_subsidy_applicable_percentage: 0.050517  # model computes 0.05051714
+
+- name: Case 2b, a supplied fraction of 1.505 interpolates on the fraction given.
+  # searchsorted([1.0,1.5,1.65], 1.505, "left") = 2, -1 -> bracket 1 [1.5,1.65].
+  # position (1.505-1.50)/0.15 = 0.0333 -> 0.0319 + 0.0333 x (0.0391 - 0.0319)
+  # = 0.03214. (A fraction computed from income is truncated to whole
+  # percentages first; see the next case.)
+  period: 2026
+  absolute_error_margin: 0.0001
+  input:
+    people:
+      person1:
+        age: 40
+        is_aca_ptc_eligible: true
+    tax_units:
+      tax_unit:
+        members: [person1]
+        aca_magi: 15_050
+        tax_unit_fpg:
+          2025: 10_000
+        aca_magi_fraction: 1.505
+    households:
+      household:
+        members: [person1]
+        state_code: CA
+  output:
+    ca_premium_subsidy_applicable_percentage: 0.03214
+
+# ---- Derived fractions around the exact 150% and truncated 151% boundaries ----
+
+- name: Case 2c, income at 150.6% of FPL pays 3.19% despite truncating to 150%.
+  # The adopted Design (d)(4) puts exact income above 150% in the paying band.
+  # FTB 3849 (2020/2021), Table 1-2, decides "above" on the exact percentage
+  # before truncating for the rate lookup. $23,569 / 2025 one-person FPG
+  # $15,650 = 150.6006% selects the upper band; the truncated 1.50 fraction
+  # gives its starting rate 0.0319, for a $751.85 annual contribution.
+  period: 2026
+  absolute_error_margin: 0.000001
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income:
+          2026: 23_569
+        is_aca_ptc_eligible: true
+    households:
+      household:
+        members: [person1]
+        state_code: CA
+  output:
+    aca_magi_fraction: 1.50
+    ca_premium_subsidy_applicable_percentage: 0.0319
+
+- name: Case 2d, PY2026 raw income $23,475, exactly 150% remains in the 0% band.
+  # $23,475 / 2025 one-person FPG $15,650 = 150.0000%.
+  # Exact income selects the band; the derived fraction 1.50 determines
+  # the rate 0, for an annual contribution of $0.00.
+  period: 2026
+  absolute_error_margin: 0.000001
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income:
+          2026: 23_475
+        is_aca_ptc_eligible: true
+    households:
+      household:
+        members: [person1]
+        state_code: CA
+  output:
+    aca_magi_fraction: 1.50
+    ca_premium_subsidy_applicable_percentage: 0
+
+- name: Case 2e, PY2026 raw income $23,477, just above 150% enters the paying band.
+  # $23,477 / 2025 one-person FPG $15,650 = 150.0128%.
+  # Exact income selects the band; the derived fraction 1.50 determines
+  # the rate 0.0319, for an annual contribution of $748.92.
+  period: 2026
+  absolute_error_margin: 0.000001
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income:
+          2026: 23_477
+        is_aca_ptc_eligible: true
+    households:
+      household:
+        members: [person1]
+        state_code: CA
+  output:
+    aca_magi_fraction: 1.50
+    ca_premium_subsidy_applicable_percentage: 0.0319
+
+- name: Case 2f, PY2026 raw income $23,630, just below 151% keeps the starting rate.
+  # $23,630 / 2025 one-person FPG $15,650 = 150.9904%.
+  # Exact income selects the band; the derived fraction 1.50 determines
+  # the rate 0.0319, for an annual contribution of $753.80.
+  period: 2026
+  absolute_error_margin: 0.000001
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income:
+          2026: 23_630
+        is_aca_ptc_eligible: true
+    households:
+      household:
+        members: [person1]
+        state_code: CA
+  output:
+    aca_magi_fraction: 1.50
+    ca_premium_subsidy_applicable_percentage: 0.0319
+
+- name: Case 2g, PY2026 raw income $23,632, just above 151% uses the next truncated percentage.
+  # $23,632 / 2025 one-person FPG $15,650 = 151.0032%.
+  # Exact income selects the band; the derived fraction 1.51 determines
+  # the rate 0.03238, for an annual contribution of $765.20.
+  period: 2026
+  absolute_error_margin: 0.000001
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income:
+          2026: 23_632
+        is_aca_ptc_eligible: true
+    households:
+      household:
+        members: [person1]
+        state_code: CA
+  output:
+    aca_magi_fraction: 1.51
+    ca_premium_subsidy_applicable_percentage: 0.03238
+
+- name: Case 16a, PY2027 raw income $23,940, exactly 150% remains in the 0% band.
+  # $23,940 / 2026 one-person FPG $15,960 = 150.0000%.
+  # Exact income selects the band; the derived fraction 1.50 determines
+  # the rate 0, for an annual contribution of $0.00.
+  period: 2027
+  absolute_error_margin: 0.000001
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income:
+          2027: 23_940
+        is_aca_ptc_eligible: true
+    households:
+      household:
+        members: [person1]
+        state_code: CA
+  output:
+    aca_magi_fraction: 1.50
+    ca_premium_subsidy_applicable_percentage: 0
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_eligible.yaml b/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_eligible.yaml
index c2f5969cf23..85d82596a5a 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_eligible.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_eligible.yaml
@@ -2,8 +2,8 @@
 # Eligible when: the program is in effect (PY2026-2027), the household is in
 # California, at least one tax-unit member is eligible for the federal ACA
 # premium tax credit (which embeds on-Marketplace enrollment, the
-# married-filing-separately exclusion, and the federal required-contribution
-# income test), the tax unit is an applicable return filer, and ACA MAGI is at
+# married-filing-separately exclusion, and the federal FPL-band income test),
+# the tax unit is an applicable return filer, and ACA MAGI is at
 # or above the 100% FPL floor and at or below the FPL limit (1.65 in PY2026,
 # 1.99 in PY2027). is_aca_ptc_eligible and aca_magi_fraction are supplied
 # directly so the gate logic is tested in isolation from the premium-data lookup.
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/integration.yaml b/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/integration.yaml
index 8a5c9e53751..de51d8869c8 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/integration.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ca/hbex/premium_subsidy/integration.yaml
@@ -7,11 +7,14 @@
 #
 # To keep expected values exactly hand-verifiable and independent of the
 # rating-area premium lookup, aca_magi, aca_magi_fraction, slcsp (annual),
-# aca_ptc and is_aca_ptc_eligible are supplied directly, and each scenario
-# asserts the intermediate values so a reviewer can follow the arithmetic:
+# aca_ptc and is_aca_ptc_eligible are supplied directly. Prior-year FPG is
+# pinned to a synthetic $15,000 for the supplied single-person scenarios;
+# Scenario 4 uses the actual 2025 four-person $32,150. Each asserts intermediate
+# values so a reviewer can follow the arithmetic:
 #   eligible = in_effect & any(is_aca_ptc_eligible) & 1.0 <= magi_frac <= 1.65
-#   pct      = CA schedule keyed on aca_magi_fraction
-#              (100-150%: 0%; 150-165%: 3.19% -> 3.91% linear)
+#   pct      = exact nonnegative MAGI / prior-year FPG selects the CA band;
+#              aca_magi_fraction determines the rate within that band
+#              (100-150%: 0%; above 150-165%: 3.19% -> 3.91% linear)
 #   amount   = max(0, slcsp_annual - aca_ptc - pct * max(aca_magi, 0))
 #   result   = where(eligible, amount, 0)
 
@@ -29,6 +32,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 18_750
         aca_magi_fraction: 1.25
         slcsp: 6_000
@@ -43,9 +48,10 @@
     ca_premium_subsidy_applicable_percentage: 0
     ca_premium_subsidy: 2_200
 
-- name: Scenario 2, single age 40 exactly at 150% FPL (knot, pct jumps to 3.19%).
-  # magi_frac 1.50 -> bracket [1.5,1.65] start -> pct 0.0319. income 22_500.
-  # amount = max(0, 6_000 - 3_000 - 0.0319*22_500) = 6_000 - 3_000 - 717.75 = 2_282.25.
+- name: Scenario 2, single age 40 exactly at 150% FPL (top of the 0% band).
+  # The adopted 2026 Program Design puts 150% in its "up to 150%" band, so
+  # pct 0 (the Policy Explainer's band would give 3.19% and $2,282.25).
+  # amount = max(0, 6_000 - 3_000 - 0*22_500) = 3_000.
   period: 2026
   absolute_error_margin: 0.01
   input:
@@ -56,6 +62,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 22_500
         aca_magi_fraction: 1.50
         slcsp: 6_000
@@ -67,8 +75,8 @@
         state_code: CA
   output:
     ca_premium_subsidy_eligible: true
-    ca_premium_subsidy_applicable_percentage: 0.0319
-    ca_premium_subsidy: 2_282.25
+    ca_premium_subsidy_applicable_percentage: 0
+    ca_premium_subsidy: 3_000
 
 - name: Scenario 3, single age 55 at 157.5% FPL (midpoint of the 150-165% ramp).
   # magi_frac 1.575 -> pct 0.0319 + 0.5*0.0072 = 0.0355. income 23_625.
@@ -83,6 +91,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 23_625
         aca_magi_fraction: 1.575
         slcsp: 7_500
@@ -98,8 +108,10 @@
     ca_premium_subsidy: 3_461.31
 
 - name: Scenario 4, family of four at 165% FPL (top of the ramp, pct 3.91%).
-  # ages 45/43/15/13; magi_frac 1.65 -> pct 0.0391. income 51_500.
-  # amount = max(0, 18_000 - 9_000 - 0.0391*51_500) = 18_000 - 9_000 - 2_013.65 = 6_986.35.
+  # ages 45/43/15/13; magi_frac 1.65 -> pct 0.0391. income 53_047.50
+  # equals 165% of 2025 four-person FPG $32,150.
+  # amount = max(0, 18_000 - 9_000 - 0.0391*53_047.50)
+  # = 18_000 - 9_000 - 2_074.15725 = 6_925.84.
   period: 2026
   absolute_error_margin: 0.01
   input:
@@ -119,7 +131,9 @@
     tax_units:
       tax_unit:
         members: [person1, person2, person3, person4]
-        aca_magi: 51_500
+        tax_unit_fpg:
+          2025: 32_150
+        aca_magi: 53_047.50
         aca_magi_fraction: 1.65
         slcsp: 18_000
         aca_ptc: 9_000
@@ -131,7 +145,7 @@
   output:
     ca_premium_subsidy_eligible: true
     ca_premium_subsidy_applicable_percentage: 0.0391
-    ca_premium_subsidy: 6_986.35
+    ca_premium_subsidy: 6_925.84
 
 - name: Scenario 5, single age 40 at 160% FPL where APTC covers the residual -> $0.
   # magi_frac 1.60 -> pct 0.0319 + (2/3)*0.0072 = 0.0367. income 24_000.
@@ -148,6 +162,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 24_000
         aca_magi_fraction: 1.60
         slcsp: 3_000
@@ -175,6 +191,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2025: 15_000
         aca_magi: 21_000
         aca_magi_fraction: 1.40
         slcsp: 6_000
@@ -201,6 +219,8 @@
     tax_units:
       tax_unit:
         members: [person1]
+        tax_unit_fpg:
+          2024: 15_000
         aca_magi: 21_000
         aca_magi_fraction: 1.40
         slcsp: 6_000
diff --git a/policyengine_us/tests/unit/test_ca_premium_subsidy_applicable_percentage.py b/policyengine_us/tests/unit/test_ca_premium_subsidy_applicable_percentage.py
new file mode 100644
index 00000000000..4aecce7c251
--- /dev/null
+++ b/policyengine_us/tests/unit/test_ca_premium_subsidy_applicable_percentage.py
@@ -0,0 +1,87 @@
+"""Properties of the adopted 2026 Design (d)(4) contribution bands.
+
+FTB 3849 Table 1-2 distinguishes exact band eligibility from the truncated
+percentage used for the rate lookup. The physical-income properties use
+that truncation. Continuity tests supply untruncated lookup fractions to
+isolate the interpolation: the actual lookup has whole-percentage steps,
+whereas the underlying bands join continuously everywhere except 150%.
+"""
+
+import numpy as np
+import pytest
+from hypothesis import example, given, settings
+from hypothesis import strategies as st
+from policyengine_core.periods import period
+
+from policyengine_us.system import system
+
+FPG = 100_000
+VARIABLE = "ca_premium_subsidy_applicable_percentage"
+
+
+def _rates(year, incomes, *, truncate=True):
+    """Call the registered formula on vectorized inputs without rebuilding US."""
+    calculation_period = period(year)
+    incomes = np.asarray(incomes, dtype=float)
+    fractions = np.maximum(incomes, 0) / FPG
+    if truncate:
+        fractions = np.floor(100 * np.maximum(incomes, 0) / FPG) / 100
+    inputs = {
+        "aca_magi": incomes,
+        "aca_magi_fraction": fractions,
+        "tax_unit_fpg": np.full(incomes.shape, FPG),
+    }
+
+    def tax_unit(name, input_period):
+        expected_period = (
+            calculation_period.last_year
+            if name == "tax_unit_fpg"
+            else calculation_period
+        )
+        assert input_period == expected_period
+        return inputs[name]
+
+    formula = system.variables[VARIABLE].get_formula(calculation_period)
+    return formula(tax_unit, calculation_period, system.parameters)
+
+
+@pytest.mark.parametrize("year", [2026])
+@settings(max_examples=100, deadline=None, derandomize=True)
+@given(incomes=st.lists(st.integers(-100_000, 600_000), min_size=2, max_size=40))
+@example(incomes=[149_999, 150_000, 150_001, 150_999, 151_000])
+def test_rate_never_decreases_with_exact_income(year, incomes):
+    rates = _rates(year, sorted(incomes))
+    assert np.all(np.diff(rates) >= -1e-12)
+
+
+@pytest.mark.parametrize("year", [2026])
+@settings(max_examples=100, deadline=None, derandomize=True)
+@given(income=st.integers(-100_000, 150_000))
+@example(income=150_000)
+def test_rate_is_zero_at_or_below_exactly_150_percent(year, income):
+    assert _rates(year, [income])[0] == 0
+
+
+@pytest.mark.parametrize("year, starting_rate", [(2026, 0.0319)])
+@settings(max_examples=100, deadline=None, derandomize=True)
+@given(income=st.integers(150_001, 150_999))
+def test_exact_income_above_150_uses_upper_band_truncated_starting_rate(
+    year, starting_rate, income
+):
+    assert _rates(year, [income])[0] == pytest.approx(starting_rate, rel=0, abs=1e-12)
+
+
+@pytest.mark.parametrize(
+    "year, boundary",
+    [(2026, 1), (2026, 1.65)],
+)
+@settings(max_examples=100, deadline=None, derandomize=True)
+@given(epsilon=st.floats(min_value=1e-7, max_value=1e-4))
+def test_interpolated_bands_are_continuous_except_at_150_percent(
+    year, boundary, epsilon
+):
+    incomes = FPG * np.array([boundary - epsilon, boundary, boundary + epsilon])
+    rates = _rates(year, incomes, truncate=False)
+    # Each adopted band's slope is below 0.05, so two-sided variation is
+    # at most 0.1 * epsilon. An additional band-boundary jump violates this.
+    assert np.ptp(rates) <= 0.1 * epsilon + 1e-10
diff --git a/policyengine_us/variables/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.py b/policyengine_us/variables/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.py
index b32cc5a600a..014fc7bc446 100644
--- a/policyengine_us/variables/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.py
+++ b/policyengine_us/variables/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.py
@@ -13,24 +13,37 @@ class ca_premium_subsidy_applicable_percentage(Variable):
         # benchmark second lowest cost silver plan, bracket-interpolated
         # linearly within each federal poverty line band.
         "https://board.coveredca.com/meetings/2025/July%2028,%202025/CoveredCA_2026_Premium_Subsidy_Program_Design_Final.pdf#page=2",
-        "https://hbex.coveredca.com/stakeholders/PDFs/2026-02_StatePremiumSub_PolicyExplainer-Final.pdf#page=2",
+        "https://hbex.coveredca.com/data-research/Final-2027-California-Premium-Subsidy-Program-Design.pdf#page=2",
+        "https://hbex.coveredca.com/toolkit/webinars-briefings/downloads/OE27_Enroller_Kickoff.pdf#page=40",
+        "https://www.ftb.ca.gov/forms/2020/2020-3849-instructions.pdf#page=6",
+        "https://www.ftb.ca.gov/forms/2021/2021-3849-instructions.pdf#page=6",
+        "https://www.irs.gov/pub/irs-prior/i8962--2025.pdf#page=9",
     )
 
     def formula(tax_unit, period, parameters):
         magi_frac = tax_unit("aca_magi_fraction", period)
+        magi = max_(tax_unit("aca_magi", period), 0)
+        exact_magi_frac = magi / tax_unit("tax_unit_fpg", period.last_year)
         p = parameters(period).gov.states.ca.hbex.premium_subsidy.applicable_percentage
 
         thresholds = np.array(p.threshold)
         initial_rates = np.array(p.initial)
         final_rates = np.array(p.final)
 
-        # Find which bracket each tax unit falls into. searchsorted returns
-        # the index where magi_frac would be inserted; subtract 1 to get the
-        # bracket index, clamped to the valid range. Rate arrays are one
-        # shorter than thresholds (federal/NM convention), so bracket_idx is
-        # always a valid left edge and bracket_idx + 1 a valid right edge.
+        # The Board-adopted Designs (d)(4), operative under Gov. Code
+        # 100800(c), put exactly 150% in the 0% band and income above 150%
+        # in the paying band. Use the exact ratio to select the band.
+        # For rounding, predecessor FTB 3849 Table 1-2 (2020/2021) tests
+        # "above" on exact income before truncating for the rate lookup.
+        # Form 8962 Worksheet 2 line 4 likewise checks "more than" before
+        # truncation. side="left" keeps an exact threshold in the lower
+        # band; clipping keeps both bracket endpoints in the rate arrays.
+        # The OE27 enroller example conflicts with the adopted Designs at 150%:
+        # it charges 2.80%, but (d)(4) starts the paying band "Above 150%".
+        # Follow the adopted 0% boundary; the citations above document both.
+        # Candidate: us-ca:premium-subsidy-150-fpl-boundary until registered.
         bracket_idx = clip(
-            np.searchsorted(thresholds, magi_frac, side="right") - 1,
+            np.searchsorted(thresholds, exact_magi_frac, side="left") - 1,
             0,
             len(initial_rates) - 1,
         )
@@ -38,6 +51,8 @@ def formula(tax_unit, period, parameters):
         bracket_start = thresholds[bracket_idx]
         bracket_end = thresholds[bracket_idx + 1]
 
+        # Retain the truncated fraction within the band: 150.6% uses the
+        # 150% lookup row of the upper band (3.19% in 2026).
         position = clip(
             (magi_frac - bracket_start) / (bracket_end - bracket_start), 0, 1
         )
diff --git a/source_conflicts/candidates.yaml b/source_conflicts/candidates.yaml
index 8338e796c45..b51cb11f0bc 100644
--- a/source_conflicts/candidates.yaml
+++ b/source_conflicts/candidates.yaml
@@ -750,6 +750,51 @@ candidates:
   state: ruled
   note: 'The October 2026 statute-first ruling retains the bar; obtain the statutory URL and verify the instruction
     flow''s joint-return effect. Code not yet on main: ca_eitc_eligible.'
+- id: us-ca:premium-subsidy-150-fpl-boundary
+  program: california-premium-subsidy
+  years:
+    from: 2026
+    type: program
+    note: Covered California coverage year beginning January 1.
+  question: Does exactly 150% FPL remain in the zero-contribution band under the adopted Program Design or enter
+    the paying band illustrated by Covered California's guidance and enroller example?
+  sources:
+  - kind: statute
+    citation: California Government Code 100800(c), Board-adopted program design
+    url: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV&sectionNum=100800.
+  - kind: policy
+    citation: Final 2026 California Premium Subsidy Program Design, (d)(4), PDF page 2
+    url: https://board.coveredca.com/meetings/2025/July%2028,%202025/CoveredCA_2026_Premium_Subsidy_Program_Design_Final.pdf#page=2
+  - kind: policy
+    citation: Final 2027 California Premium Subsidy Program Design, (d)(4), PDF page 2
+    url: https://hbex.coveredca.com/data-research/Final-2027-California-Premium-Subsidy-Program-Design.pdf#page=2
+  - kind: guidance
+    citation: 2026 California State Premium Subsidy Policy Explainer, Table 1, PDF page 2
+    url: https://hbex.coveredca.com/stakeholders/PDFs/2026-02_StatePremiumSub_PolicyExplainer-Final.pdf#page=2
+  - kind: guidance
+    citation: 2027 Premium Subsidy Insight, Table 1, PDF page 2
+    url: https://hbex.coveredca.com/stakeholders/PDFs/2026-03_StatePremiumSub2027_Insight_Final.pdf#page=2
+  - kind: agency-practice
+    citation: OE 2027 Enroller Kick-off, exactly 150% FPL example, PDF pages 39-40
+    url: https://hbex.coveredca.com/toolkit/webinars-briefings/downloads/OE27_Enroller_Kickoff.pdf#page=40
+  readings:
+    statute: The Board-adopted Designs place income up to 150% in the 0% band and start the paying band above
+      150%, excluding exactly 150% from that band.
+    other: The guidance labels the paying band from 150%, and the OE27 example explicitly charges 2.80% at
+      exactly 150% FPL.
+  example: The OE27 single-person example has $23,940 income at exactly 150% FPL and a 2.80% contribution;
+    the adopted Design's boundary instead gives a 0% contribution.
+  pe_us:
+    follows: statute
+    code:
+    - policyengine_us/parameters/gov/states/ca/hbex/premium_subsidy/applicable_percentage/threshold.yaml
+    - policyengine_us/variables/gov/states/ca/hbex/premium_subsidy/ca_premium_subsidy_applicable_percentage.py
+    prs:
+    - https://github.com/PolicyEngine/policyengine-us/pull/10301
+  state: ruled
+  note: The adopted rule's explicit above-150% wording governs the conflicting training example. Recheck if
+    Covered California amends the Design or clarifies the boundary. PR 10301 changes the boundary; PR 10305
+    handles the final 2027 schedule and eligibility limits separately.
 - id: us-ca:renter-credit-2025-joint-income-limit
   program: income-tax
   years: