California Form 3853: Exemption Codes, Penalty, and Filing

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

When You Have to File Form 3853

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

A few rules decide whether the responsibility is yours:

Only one Form 3853 is filed per tax household, and it covers everyone on the return.
If someone else claims you as a dependent, you do not file the form or owe the penalty. The person claiming you handles it.
If your income is below California’s filing threshold, you are automatically exempt. You do not need to file a return just to report that.¹

What to Gather First

Before you open the form, pull together the Social Security numbers and dates of birth for everyone in your household, any Exemption Certificate Number (ECN) letters you received from Covered California, and your federal Forms 1095-B or 1095-C. The 1095 forms come from your insurance provider and show the exact months each person was enrolled, which is what you’ll report in Part III.¹

Walking Through the Four Parts

Part I — Applicable Household Members

List every person in your tax household, whether or not they had coverage. For each one, enter name, Social Security number, date of birth, and modified adjusted gross income. If anyone received an ECN from Covered California, enter it here too. The form provides space for up to three ECNs per person.²

Part II — Household-Level Exemption

Part II is a single checkbox. If your household’s income or gross 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.²

Part III — Monthly Coverage and Exemption Codes

This is the center of the form. Each household member gets a row with a column for every month plus a full-year column. In each month’s column you enter a one-letter code showing either that the person had coverage or that they qualified for an exemption. Any month left blank counts as uninsured and feeds into the penalty calculation in Part IV.¹

Most mistakes happen here. Use the exemption code chart from the current year’s instructions, because the FTB updates codes and affordability thresholds annually. If you’re claiming the short coverage gap, count carefully: the gap must be three consecutive months or fewer, and if you had two separate gaps in the same year, only one of them qualifies.

Part IV — Penalty Calculation

If any member had uncovered months without an exemption, Part IV walks you through the math and the result transfers to Form 540, 540NR, or 540 2EZ.

Exemption Codes You Can Claim Yourself

Most exemptions you apply directly in Part III by entering the right one-letter code for the months in question:³

Short coverage gap (code C): three consecutive months or fewer without insurance. A four-month gap means only the first three months are exempt.
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 the 2026 tax year.⁴
Income below the filing threshold (code B in Part II).
Incarceration (code H), for time served after disposition of charges, not while awaiting trial.
Health care sharing ministry membership (code F).
Living abroad or out of state (codes D and E): a U.S. citizen physically present in a foreign country at least 330 days in a 12-month period, a resident of a U.S. territory, or a bona fide resident of another state.
Member of a federally recognized Indian tribe or eligible for Indian Health Service (code G).
Birth, adoption, or death in the household (codes I and J): a new member is exempt for the months before and including the month they joined, and a member who died is exempt for the months after their death.

Exemptions That Require Covered California Approval First

Three exemptions you can’t just claim on the form. You have to apply through Covered California, and if approved, you receive an ECN by mail that you enter on Form 3853:⁴

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 projected household income.
General hardship (code K): circumstances such as eviction, domestic violence, death of a close family member, a natural disaster, or another event that prevented you from obtaining coverage.

Covered California has up to 30 calendar days to process a complete application, so apply well before your filing deadline.⁴

How the Penalty Is Calculated

When uncovered months are left without an exemption, the Part IV worksheet computes two figures and charges you the larger one, up to a cap:³

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

Whichever is larger is then capped at the state average Bronze plan premium for your household size. A single person’s 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 uncovered months out of twelve produces roughly one-quarter of the annual amount.

For most households the flat amount drives the penalty. Higher earners can see the 2.5% calculation produce a significantly larger bill, so if your household income is well above the filing threshold and multiple family members were uninsured, run both numbers before assuming you know what you owe.

Part-Year Residents

If you moved into or out of California during the year, the mandate only applies to the months you were a California resident. File Form 3853 with Form 540NR and use code E for each month you were a bona fide resident of another state. For the California months, report your coverage or claim an exemption the same way a full-year resident would.¹

Filing the Form With Your Return

Form 3853 attaches to your California return: Form 540 for full-year residents, Form 540NR for part-year or nonresidents, or Form 540 2EZ.² E-file software typically generates and transmits the form automatically once you indicate someone lacked full-year coverage, and most packages will refuse to submit the return without it. If you file on paper, print the completed form and include it with your Form 540. Confirm that the exemption codes and ECNs on Form 3853 match the entries on your Form 540; inconsistencies can trigger a notice from the FTB asking for 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 amount was miscalculated, you have the right to 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 file your protest.⁵

You can file the protest online through MyFTB or submit it by mail with supporting documents such as copies of your 1095-B or 1095-C, your ECN letter, or proof of residence in another state during the disputed months. You also have the right to be represented by a CPA, enrolled agent, or tax attorney.⁶

Missing the 60-day window is a common and expensive mistake. Once the NPA becomes final, your options narrow to the FTB’s collections process, which is considerably harder to navigate. If you need more time to gather documents, file the protest on time with what you have and supplement it later.

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