Gov. Jerry Brown has approved a path to open the state's health care exchange to people who cannot prove they are legally in the country.
Brown signed a law Friday that would allow illegal immigrants to buy insurance through the state marketplace but not receive government-subsidized health care.
The proposal still requires approval by federal regulators.
The Covered California marketplace already sells private health insurance and allows customers to compare insurance rates and buy coverage for multiple family members at once. Only U.S. citizens can participate.
Health advocates say SB10 would make health care simpler and more affordable for families of mixed immigration status.
The Public Policy Institute of California estimates 2.7 million immigrants are living in California illegally.