If you or a member of your household did not have qualifying health coverage for the full year, California may allow you to claim a coverage exemption on Form 3853, Part III. Coverage exemptions can help reduce or eliminate the California Health Care Shared Responsibility Tax penalty for eligible taxpayers.
Program Pathway
- State
- Edit California Return (click the three dots)
- Select Health Care Shared Responsibility Tax (Form 3853)
- Part III - Coverage Exemptions
What Is Part III?
Part III of Form 3853 is used to report health coverage and claim exemptions for individual household members. Complete this section if you, your spouse, or any dependent either:
- Had qualifying health coverage for only part of the year.
- Qualified for a coverage exemption for one or more months during the tax year.
Coverage and exemption codes
Part III requires you to indicate whether each household member:
- Had minimum essential coverage (MEC)
- Qualified for a coverage exemption
- Had neither coverage nor an exemption
Common exemptions include:
- Coverage considered unaffordable
- Certain short coverage gaps
- Marketplace-approved exemptions associated with an Exemption Certificate Number (ECN)
- Other exemptions permitted under California law
How to Complete Part III?
Step 1: Determine whether everyone had full-year coverage
If all household members had minimum essential health coverage for the entire year, select Yes to the question:
"Did the taxpayer have full year minimum essential health coverage for all members of the household?"
If you answer Yes, you do not need to enter coverage exemptions in Part III.
If you answer No, continue to complete Part III for any individual who needs a coverage exemption.
Step 2: Select the individual
The program will automatically display individuals included on the return. Select the applicable individual from the dropdown list.
If the individual is not included on the return, select Enter California Coverage Exemptions for Household Members Not Claimed on the Federal Return. You will be prompted to enter the individual's:
- Name
- Social Security Number (SSN)
Step 3: Choose the exemption code
Select the applicable exemption code from the dropdown menu.
- If the individual qualified for the same exemption for the entire year, select the exemption code in the Full Year section.
- If the exemption only applies to specific months, select the exemption code for each month the individual did not have qualifying health coverage.
The process is the same for individuals included on the return and household members entered separately.
Step 4: Enter an ECN if applicable
If Covered California granted an exemption and issued an Exemption Certificate Number (ECN), enter the certificate number in the Shared Responsibility Payment section.
Important Notes
Affordability exemptions
If you are claiming an exemption because health coverage was unaffordable, additional calculations may be required to determine eligibility.
Keep supporting records
Retain any Forms 1095, Covered California documentation, ECNs, and other records that support your coverage or exemption claim. These documents are generally not filed with your return but should be kept for your records.
Additional Information
Refer to the California Form 3853 instructions for complete eligibility requirements and descriptions of available coverage exemptions.