How to Avoid the California Health Insurance Penalty

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Updated: October 26, 2026

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Key Takeaways
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If you're a California resident required to file a state return and you go without qualifying coverage, you owe the penalty unless an exemption applies.

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The Franchise Tax Board charges $950 per uninsured adult or 2.5% of household income above the state filing threshold, whichever is higher, for 2025.

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Covered California plans, employer coverage, full-scope Medi-Cal and TRICARE all qualify. Short-term plans and Medicare Part B on its own don't.

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California’s 2025 Form 3853 lists 15 exemptions, including unaffordable coverage and one uninsured period of three months or less each year. Hardship and religious exemptions require approval from Covered California.

Is Health Insurance Required in California?

California requires every resident to have minimum essential coverage for each month of the year or pay a penalty to the California Franchise Tax Board. The state individual mandate took effect January 1, 2020, after the federal individual mandate penalty dropped to zero in 2019.   

California's mandate stands apart from federal law. The federal penalty has been zero since 2019, so only California's rules decide whether you owe a penalty for going uninsured. Everyone who files a California state income tax return must report their coverage status.

California’s mandate covers the enrollee’s spouse or domestic partner and all dependents claimed on the California return. Coverage must be active in each calendar month, and eligibility without enrollment doesn’t satisfy the requirement. One day of coverage in a month counts for the whole month.

Job-based plans, Covered California plans and plans bought directly from an insurer all count as minimum essential coverage. Medicare Part A and full-scope Medi-Cal count too. Every Covered California plan must also cover the Affordable Care Act’s essential health benefits, a federal list of 10 categories of care that includes hospital stays, prescription drugs and mental health services. Short-term plans and policies limited to dental, vision or a single disease don’t count.

What Is the California Health Insurance Penalty?

The California Franchise Tax Board calculates the penalty two ways and charges whichever is higher. For 2025, the most recent year the board has published, the flat amount is $950 per uninsured adult and $475 per uninsured child under 18. A household’s flat amount is capped at $2,850.

The income-based amount is 2.5% of household income above your state filing threshold, which is the income level at which California requires you to file a return. The threshold depends on your filing status, age and number of dependents. For 2025, it’s $22,941 for a single filer under 65 and $73,595 for a married couple filing jointly, both under 65, with two or more dependents. A single adult with $80,000 in household income owes $1,426 under this method, $476 more than the $950 flat amount. The board updates these figures each year and hasn't released 2026 amounts as of October 2026.

Single adult (full year)
$950

2.5% of household income above $22,941

Dependent child under 18 (full year)

$475

Counted in the household’s single 2.5% calculation

Two adults, two children under 18 (full year)

$2,850 (household maximum)

2.5% of household income above $73,595

Single adult (three months uninsured)

$317 (one-third of $950)

One-third of the full-year income-based amount

*Thresholds shown are for 2025 filers under 65. Other filing statuses and ages use different thresholds, listed in the Form 3853 instructions at ftb.ca.gov.   

The flat amounts above apply to a full year without coverage. For shorter periods, the Franchise Tax Board charges one-twelfth of the annual amount for each uninsured month. A single adult uninsured from January through April owes $317 under the flat method for 2025, and a family of four uninsured for the same four months owes $950. The first uninsured period of three months or less in a year is exempt, so report each uninsured month on Form 3853 before you file.

Who Has to Pay the California Health Insurance Penalty?

Every California resident required to file a state tax return must keep minimum essential coverage for each calendar month or owe the Franchise Tax Board penalty. The requirement covers the filer, their spouse or domestic partner and all dependents listed on the state return.

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MONEYGEEK EXPERT TIP

The most common Form 3853 mistake I see is filers paying a full year’s penalty for a few uninsured months. Because the penalty is prorated, a single adult uninsured for four months in a row owes $317 for 2025, and a first uninsured period of three months or less costs nothing. Count your uninsured months before you file, and check your filing threshold in the Form 3853 instructions at ftb.ca.gov.

What Coverage Counts to Avoid the California Penalty?

California's mandate accepts only minimum essential coverage (MEC), and the table below shows which types count. Employer group plans, Covered California Marketplace plans and government programs such as full-scope Medi-Cal and TRICARE all qualify. Short-term, limited-benefit and standalone dental or vision plans don't.

Employer-sponsored group health plans
✓ Qualifies. Any group plan an employer offers counts, and so do self-insured plans, COBRA and retiree coverage, whatever the insurer’s home state.
Covered California Marketplace plans (Bronze, Silver, Gold, Platinum)
✓ Qualifies. All four tiers purchased through Covered California or a participating insurer such as Kaiser Permanente or Anthem Blue Cross qualify.

Medicare Part A (hospital insurance)

✓ Qualifies. Medicare Part A satisfies the mandate on its own. Enrollees who also have Medicare Advantage (Part C) are covered by that plan instead.
Medicare Advantage (Part C)
✓ Qualifies. Any Medicare Advantage plan satisfies the mandate for every month it’s active.
Medi-Cal and CHIP
✓ Qualifies. Medi-Cal covers low-income adults and families. CHIP, the Children’s Health Insurance Program, covers children in households with income too high for Medi-Cal that can’t afford private coverage. Full-scope Medi-Cal and CHIP both satisfy the mandate at no premium cost. Limited-scope Medi-Cal doesn’t qualify, but enrollees can claim an exemption on Form 3853.
COBRA continuation coverage
✓ Qualifies while premiums are paid and the plan stays active. Months after COBRA lapses are subject to the penalty unless an exemption covers them.
Tricare
✓ Qualifies for active-duty service members, military retirees and their eligible family members. Comprehensive VA health care also counts as minimum essential coverage.

Student health plans

✓ Qualifies. A student health plan offered through a college or university counts as minimum essential coverage.
Federal Employee Health Benefits (FEHB) plans
✓ Qualifies for enrolled federal employees and their enrolled dependents.
Short-term health plans
✗ Does not qualify. These plans aren’t minimum essential coverage and aren’t required to cover pre-existing conditions or essential health benefits.
Limited-benefit, fixed indemnity or accident-only plans
✗ Does not qualify. These pay a fixed dollar amount per event and don’t meet the MEC definition.

Medicare Part B alone

✗ Does not qualify. Part B without Part A or Medicare Advantage doesn’t satisfy the mandate.
Health care sharing ministry memberships
✗ Does not qualify as coverage. Members can claim an exemption on Form 3853 for each month of membership instead, as long as the ministry has shared members’ medical costs continuously since December 31, 1999.
Standalone dental or vision plans
✗ Does not qualify. These cover specific services only and don’t count as minimum essential coverage.
Critical illness or hospital indemnity policies
✗ Does not qualify. These policies pay set amounts for a specific illness or hospital stay and don’t count as minimum essential coverage.

*Coverage types reflect California’s minimum essential coverage standards per the Franchise Tax Board. Short-term plans and policies limited to dental, vision or a single disease don’t satisfy California’s mandate. Verify current MEC definitions at ftb.ca.gov.

How Do You Avoid the California Health Insurance Penalty?

California's individual mandate has required residents to keep qualifying health coverage every month since 2020. The Franchise Tax Board enforces it through your state tax return each year. It calculates the penalty for each month you lacked coverage or an approved exemption.   

Retroactive enrollment doesn’t satisfy the mandate for months already passed. Enroll before your coverage lapses, or confirm that an exemption applies to the months you’ll be uninsured.

  1. 1
    Enroll Through Covered California Before December 31

    Covered California's open enrollment opens November 1 and closes January 31. A plan selected by December 31 takes effect January 1, so your coverage continues into the new year without a lapse.

  2. 2
    Join Your Employer Health Plan During Open Enrollment

    Employer group health plans qualify as minimum essential coverage under California’s mandate, whatever the insurer. Most employer open enrollment windows open in October or November for January 1 coverage.

    Employees who decline employer coverage without enrolling in an alternative qualifying plan remain subject to the Franchise Tax Board penalty for each month without coverage.

  3. 3
    Apply for Medi-Cal if Your Income Is Eligible

    Medi-Cal, California's Medicaid program, covers residents with household incomes up to 138% of the federal poverty level at no premium cost. For 2026, that limit is $22,025 for a single person and $45,540 for a family of four. Confirm current limits at dhcs.ca.gov.

    Apply through Covered California, your county social services office or BenefitsCal.gov. Coverage starts as early as the month of approval for qualifying households.

  4. 4
    Use a Special Enrollment Period After a Life Event

    Losing job-based coverage, getting married or having a child all open a 60-day special enrollment period through Covered California. Moving to a new coverage area within California, such as a different county where different plans are available, also triggers this window.

    Qualifying life events that open this window also include adoption, a change in immigration status and release from incarceration, per Covered California.

  5. 5
    File for an Exemption on Your State Tax Return

    California residents who qualify for a health insurance exemption owe no penalty for the months the exemption covers. You claim 12 of the state’s 15 exemptions directly on Form 3853 with your state return. General hardship, religious conscience and projected-income affordability exemptions come only from Covered California, which issues an exemption certificate number you enter on the form.

    The Franchise Tax Board adjusts the penalty calculation retroactively to apply approved exemptions to the specific months they cover.

  6. 6
    Report Your Coverage Status on California Form 3853

    Every California tax filer reports their health coverage status for the year on Form 3853, filed with the state return. Filers who had qualifying coverage for all 12 months check the full-year coverage box and owe no penalty.

    People who were uninsured for any month report those months on Form 3853, apply any exemptions and calculate any remaining penalty on the same form before submitting to the Franchise Tax Board.

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MISSED COVERED CALIFORNIA OPEN ENROLLMENT?

Covered California's enrollment window closes January 31. After that date, you can't enroll until November unless a qualifying life event opens a special enrollment period. COBRA, which lets you keep your employer health plan for up to 18 months after leaving a job at your own expense, employer coverage through a new job and Medi-Cal for income-eligible residents are the main options.

What Exemptions Let You Skip the California Penalty?

California residents who qualify for an exemption owe no penalty for the months the exemption covers. Residents claim 12 exemptions directly on California Form 3853 with the state tax return. Three others require approval from Covered California first. These are general hardship, religious conscience and affordability based on projected income.

The 2025 Form 3853 instructions list 15 exemptions, including the affordability, hardship, short uninsured period, religious and incarceration exemptions covered below. A resident can qualify for more than one in a single calendar year.

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    Affordability Exemption

    A California resident qualifies for the affordability exemption when the lowest-cost coverage available to them costs more than 8.05% of household income in 2026 (7.28% for 2025). For residents without a job-based offer, that cost is the premium for the cheapest Bronze plan where they live, after any premium tax credit they’d qualify for. Bronze plans have the lowest premiums on Covered California and the highest out-of-pocket costs. Residents offered a job-based plan use the cheapest employee-only option instead.

    Covered California sets premiums by pricing region. The state has 19 regions made up of single counties or county groups, and Los Angeles County is split into two. Claim the exemption on Form 3853 for past months, or apply through Covered California for future months of the current year.

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    Short Uninsured Period Exemption

    California exempts one uninsured period of three consecutive months or less each year. Residents claim it with code C on Form 3853, and it requires no documentation. A resident uninsured in January, February and March who got a Covered California plan by April 1 owes no penalty for those months. Uninsured months at the end of the previous year count toward the three.

    Only the first short uninsured period in a calendar year is exempt. A second period of any length incurs the standard monthly penalty, and a period longer than three months gets no exemption for any of its months.

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    Hardship and Religious Exemptions

    California grants hardship exemptions for documented circumstances such as domestic violence, eviction, natural disaster, the death of a close family member or bankruptcy. Members of religious sects whose beliefs oppose health insurance as a matter of doctrine can get a religious conscience exemption.

    Both exemptions require documentation. Covered California approves them and issues an exemption certificate number, which you enter on Form 3853 with your state return.

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    Incarceration and Immigration Exemptions

    Residents jailed after a court has ruled on their charges, and residents who aren’t U.S. citizens or nationals and aren’t lawfully present, can claim an exemption on Form 3853 for those months. Jail time while awaiting a court decision doesn’t qualify. Each exemption applies only to the specific months when the qualifying condition was in effect. Find current eligibility details and documentation requirements at ftb.ca.gov.

Bottom Line

California’s health insurance penalty is $950 per uninsured adult for the 2025 tax year, or 2.5% of household income above the state filing threshold if that’s higher. A Covered California plan, employer coverage or Medi-Cal chosen by December 31 removes the penalty for every month it covers.

After open enrollment closes, a special enrollment period or a qualifying exemption can still eliminate the charge.

Avoiding California Health Insurance Penalty: FAQ

Uninsured California residents without an exemption owe the $950 flat penalty or the 2.5% income-based amount for 2025, whichever is higher. These answers address the situations that change that calculation.

About Mark Fitzpatrick

Mark Fitzpatrick, Licensed P&C Insurance Expert, MoneyGeek

Mark Fitzpatrick is a licensed Property and Casualty (P&C) Insurance Producer and MoneyGeek's resident expert in insurance and economics. In nearly a decade covering the insurance market at LendingTree and MoneyGeek, he's analyzed hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.

His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships affect his recommendations.

Mark studied at Boston College and later earned a master's in economics and international relations from Johns Hopkins University. He worked in financial risk management at State Street before joining MoneyGeek. He's also a five-time “Jeopardy!” champion.

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