California Health Care Coverage (Form 3853)

Beginning with tax year 2020, the state of California requires residents and their dependents to maintain qualifying health care coverage, also known as Minimum Essential Coverage (MEC). This requirement is commonly referred to as the California Individual Health Care Mandate.

Taxpayers who do not maintain MEC for one or more months during the year may be subject to the California Individual Shared Responsibility Penalty, unless they qualify for and claim an approved exemption.

Individuals report coverage, exemptions, or penalties using California Form 3853 – Health Care Coverage Exemptions and Individual Shared Responsibility Penalty.

When Does the Penalty Apply?

A penalty applies if all of the following are true:

• The taxpayer or their dependents did not have MEC for one or more months
• The taxpayer does not qualify for an exemption for those months
• The taxpayer files a California return (Form 540 or Form 540NR)

The penalty is calculated and assessed when filing the California state tax return.

How the California Health Care Penalty Is Calculated

The penalty is the greater of the following two amounts:

1. Flat Dollar Amount (Household-Based)

• $800 per adult
• $400 per dependent child

The total flat amount is based on the number of individuals in the tax household who lacked coverage.

2. Percentage of Household Income

• 2.5% of California adjusted gross income
• Applies only to the portion of income that exceeds the filing threshold, based on:
  • Filing status
  • Number of dependents

Key Factors Used in the Calculation

• Number of people in the household
• California household income
• Number of uninsured months

California Health Coverage Exemptions

California allows 15 exemptions from the health care mandate penalty.

Marketplace‑Only Exemptions (Require an ECN)

The following exemptions must be approved by Covered California and require an Exemption Certificate Number (ECN). These should not be selected on Form 3853 unless the taxpayer has received (or has a pending application for) an ECN:

• General hardship – Exemption Code K
• Members of certain religious sects – Exemption Code L
• Coverage unaffordable based on projected income – Exemption Code M

All other exemptions may be claimed directly on the tax return using Form 3853.

Payment Assistance Through Covered California

Eligible individuals and families may qualify for state financial assistance through Covered California, including:

• Premium Assistance Subsidy (PAS)
• Advance Premium Assistance Subsidy (APAS)

Eligibility is based on:

• Household size
• Age of household members
• Household income
• Geographic region

Required California Health Care Forms

California health coverage reporting closely mirrors prior federal Affordable Care Act requirements.

Common Federal vs. California Form Comparison

Reporting Rules for Part‑Year Residents

Part‑year residents filing Form 540NR must:

• Report MEC status for the months they were California residents
• Reconcile APAS received during resident months using Form 3849
• Claim the nonresident exemption for months they were not California residents

Reporting Rules for Nonresidents

Full‑year nonresidents filing Form 540NR:

• Are not subject to the California Individual Mandate penalty
• Must still complete Form 3853
• Must indicate the nonresident exemption for the entire year

Additional Important Filing Considerations

• Filing federal Form 8962 does not eliminate the requirement to file California Form 3849
• Tax returns may include both Forms 3849 and 3853 if MEC coverage applied for only part of the year
• Individuals claimed as dependents do not file Forms 3849 or 3853
• A California return must be filed, even if otherwise not required, if:
  • PAS is being claimed
  • APAS was paid for anyone in the household
  • The Marketplace listed a household member not included on another return

Program Entry: Tax Software Navigation (Form 3853)

To complete California Form 3853, follow this path:

• State Section
• CA Return 
• Health Care Shared responsibility Tax (Form 3853)

Additional Resources