California Form 3853: Exemptions, Penalty, and Filing

California Form 3853 is the state tax form you attach to your California income tax return to report health coverage exemptions or calculate the Individual Shared Responsibility Penalty for any month your household went without qualifying insurance. You file it with Form 540, Form 540NR, or Form 540 2EZ. If everyone in your household had qualifying coverage for all twelve months, you simply check the full-year coverage box on your return and skip Form 3853 entirely.¹

When You Need to File Form 3853

You need the form only when you cannot check the full-year health coverage box on your California return. That means at least one person in your tax household went at least one month without qualifying insurance.¹

A few rules narrow who actually files:

Only one Form 3853 is filed per tax household, covering everyone on the return.
If someone else claims you as a dependent, you don’t file Form 3853 or owe any penalty. The person claiming you handles it.
If your income falls below California’s filing threshold and you aren’t required to file a return at all, your household is automatically exempt. You don’t need to file a return just to claim the exemption.¹

Exemptions You Can Claim

California recognizes more than a dozen exemptions. Some you apply directly on the form using a one-letter code. Others require you to apply to Covered California first and receive an Exemption Certificate Number (ECN) that you then enter on the form.

Exemptions You Claim Directly

These are the common ones, entered as codes in Part III for the months they apply:²

Short coverage gap (code C): a gap of three consecutive months or fewer. If the gap runs longer, only the first three months qualify unless another exemption covers the rest.
Unaffordable coverage (code A): the cheapest Bronze plan through Covered California, or the cheapest employer-only plan available to you, cost more than 8.05% of household income for tax year 2026.³
Income below the filing threshold (code B, Part II).
Incarceration after the disposition of charges, not while awaiting trial (code H).
Membership in a recognized health care sharing ministry (code F).
Living abroad or nonresident status (codes D and E): U.S. citizens physically present in a foreign country at least 330 days in a 12-month period, residents of a U.S. territory, or bona fide residents of another state.
Membership in a federally recognized Indian tribe or eligibility for Indian Health Service (code G).
Birth, adoption, or death (codes I and J): a member born or adopted during the year is exempt for the months before and including the month they joined the household; a member who died is exempt for the months after the month of death.

Exemptions That Require Covered California Approval

Three categories require you to apply through Covered California before filing. If approved, you’ll receive a notice with an ECN to enter on Form 3853:³

Religious conscience (code L): membership in a recognized religious sect that objects to insurance benefits.
Affordability based on projected income (code M): Covered California determined you lacked access to affordable coverage based on your projected income.
General hardship (code K): circumstances such as eviction, domestic violence, the death of a close family member, a natural disaster, or another event that prevented you from getting coverage.

Covered California has up to 30 calendar days to process a complete application, so apply well before your filing deadline.³

Filling Out the Form

Before you start, gather Social Security numbers and dates of birth for everyone in your tax household, any ECN letters from Covered California, and your federal Forms 1095-B or 1095-C. Those federal forms come from your insurance provider and show the exact months each person was enrolled.¹

Part I: Applicable Household Members

List every person in the tax household, regardless of coverage or exemption. For each, enter name, Social Security number, date of birth, and modified adjusted gross income. If someone received an ECN from Covered California, enter it here. The form provides space for up to three ECNs per person.⁴

Part II: Household-Level Exemption

Part II is a single checkbox for households whose income falls below California’s filing threshold. Check it and the whole household is exempt. If your income is above the threshold, skip Part II and go to Part III.⁴

Part III: Monthly Coverage and Exemption Codes

This is the heart of the form. Each household member gets a row with columns for January through December plus a full-year column. In each month’s column, enter the one-letter code that applies, either a coverage code showing insurance or an exemption code from the chart in the instructions. Any month left blank counts as uninsured and feeds the Part IV penalty calculation.¹

Codes are where most errors happen. Use the current year’s instructions, since the FTB updates codes and affordability thresholds annually. If you’re claiming the short coverage gap (code C), count carefully. The gap must be three consecutive months or fewer, and if you had two separate gaps in the same year, only one qualifies.

Part IV: Penalty Calculation

If any household member has uncovered months without an exemption, Part IV walks through the math. The worksheet computes two amounts and charges the larger, subject to a cap:²

Flat dollar amount: $950 per adult (18 and older) plus $475 per child under 18, up to a household maximum of $2,850.
Income percentage: 2.5% of gross household income above California’s filing threshold for your filing status.

Whichever figure is larger is then capped at the state average Bronze plan premium for your household size. For a single person, that annual cap is $4,524; for a family of five or more, it reaches $22,620.¹ The penalty is prorated by month, so three uninsured months out of twelve produces roughly a quarter of the annual amount. The final figure transfers to your Form 540, 540NR, or 540 2EZ.

For most households, the flat amount drives the penalty. Higher earners can see the 2.5% calculation produce a significantly larger bill, especially when multiple family members are uninsured. Run both before assuming you know the number.

Part-Year Residents

If you moved into or out of California during the year, the mandate applies only to the months you were a California resident. File Form 3853 with your Form 540NR and use exemption code E (“Non-resident/Part-year resident”) for each month you were a bona fide resident of another state. For the months you lived in California, report your actual coverage or claim any applicable exemption the same way a full-year resident would.¹

Attaching and Filing the Form

Form 3853 is attached to your California income tax return: Form 540 for full-year residents, Form 540NR for part-year or nonresidents, or Form 540 2EZ.⁴ Tax software typically generates and transmits the form automatically when you indicate that someone in your household lacked full-year coverage, and most e-file products won’t let you submit the return without completing it if a coverage gap is detected.

If you’re mailing a paper return, print the completed Form 3853 and include it with your Form 540. Make sure the exemption codes and ECNs are consistent with what you entered elsewhere on the return. Mismatches can trigger a notice from the FTB asking for additional documentation.

If the FTB Assesses a Penalty You Dispute

If the Franchise Tax Board assesses a penalty you believe is wrong, whether because you had coverage, qualified for an exemption, or the math is off, you can protest. The FTB sends a Notice of Proposed Assessment (NPA) before the penalty becomes final, and you have 60 days from the date on the NPA to submit your protest.⁵

You can protest online through your MyFTB account or by mail. Include supporting documents: copies of your 1095-B or 1095-C, the ECN letter from Covered California, or proof of residence in another state for the disputed months. You can be represented by a CPA, enrolled agent, or tax attorney, but you’ll need to file a Power of Attorney declaration (Form FTB 3520 PIT) to authorize them.⁶ If you need more time to gather documents, file the protest on time with what you have and supplement it later. Once the 60-day window closes and the NPA becomes final, your options narrow considerably.

1
Franchise Tax Board. 2025 Instructions for Form FTB 3853
2
Franchise Tax Board. Health Care Mandate – Personal
3
Covered California. Exemptions
4
Franchise Tax Board. California Form 3853 – Health Coverage Exemptions and Individual Shared Responsibility Penalty
5
Franchise Tax Board. FTB 7275 Publication Personal Income Tax Notice of Proposed Assessment
6
Franchise Tax Board. Audit, Protest, and Appeals the Process