Form 3849 is not required after tax year 2021.
This information applies to tax years 2020-2021.
Beginning with tax year 2020, the state of California requires residents and their dependents to obtain qualifying health care coverage, also referred to as Minimum Essential Coverage (MEC). Individuals who purchase a qualified health care plan through Covered California, the California health insurance marketplace, may be eligible to receive financial assistance to help pay the insurance premiums, known as the Premium Assistance Subsidy (PAS).
The amount of PAS available to a household is calculated when the taxpayer enrolled in the qualified health care plan based on the projected household income for the year. Advance Premium Assistance Subsidy (APAS) paid throughout the year will need to be reconciled at the end of the year with the actual PAS allowed based on the actual household income for the year, less federal Premium Tax Credit (PTC) amounts. PAS and APAS are reconciled on Form 3849, Premium Assistance Subsidy. (Covered California refers to APAS as "California premium subsidy".)
While there are several different tax documents that give evidence of MEC, including federal Forms 1095-A, 1095-B, and 1095-C, only the information on Form 3895 is required to be entered in the tax return on Form 3849 for the purpose of reconciling APAS received versus PAS allowed. Additionally, federal Form 1095-A should not be used to complete Form 3849, since the PAS is in addition to the federal APTC.
The California Marketplace is required to provide Form 3895 to the individual identified as the "tax filer" in the Marketplace enrollment application by January 31 of the year following coverage. The tax filer is the person who is expected to file a tax return, claim dependents, and take the PAS for the year of coverage. If the taxpayer is expecting to receive Form 3895 and doesn't have it by early February, they should log into their account at Covered California to see if it's available there or contact Covered California by phone at 800.300.1506.
An individual who otherwise wouldn't be filing either Form 540 or 540NR must file a return if any of these scenarios applies:
- they are taking PAS.
- APAS was paid to them or another individual in their household.
- they told the Marketplace that an individual was in their household, and no other tax return includes or will include that individual in their household.
Overview of the Form 3849 menu
The menu begins with two Yes/No questions:
- Did you, your spouse, or a dependent enroll in health insurance through the CA marketplace/exchange? - Select Yes.
- Is Form FTB 3895 'Repayment cap may not apply' checked? - Select Yes if true.
Household Income - The Household Income submenu is used to adjust the "applicable household size", i.e., tax family size, in unusual situations as well as include certain dependent income in the calculation of household income. Two important points:
- Don't enter a tax family size number unless you intend to change the number that is automatically calculated based on the data in the return.
- Do enter the four dependent amounts (AGI, tax-exempt interest, Form 2555 amounts, and nontaxable SS) for all dependents in the household who also filed their own return indicating they are a dependent on this taxpayer's return.
Premium Assistance Subsidy Claim and Reconciliation of Advance Payment of Premium Assistance Subsidy (Part 2) - Enter in this menu the amounts for each month showing on Form 3895, and for taxpayers whose household income is between 200% and 600% of the federal poverty line indicate for each month how many individuals were covered under the policy.
Important shortcut: if each month's numbers in each column on Form 3895 didn't change through the whole year, answer the first question on the page Yes, then enter only the column totals from Form 3895.
Allocation of Policy Amounts (Part 4) - If this tax return includes an individual on someone else's Form 3895, this and the other taxpayer will need to determine between them how they will allocate the individual's enrollment premiums, SLCSP premiums, and/or APAS between this taxpayer's applicable household and the other applicable household if both of these conditions are true:
- The policy covered at least one individual in the taxpayer's applicable household and at least one individual in another applicable household, and
- Either:
- The taxpayer received Form 3895 that doesn't accurately represent the members of their applicable household who were enrolled in the policy, i.e., it either lists someone who is not in their applicable household or does not list a member of their applicable household who was enrolled in the policy, or
- The other applicable household received Form 3895 for the policy that includes a member of the taxpayer's applicable household.
Alternative Calculation for Year of Marriage (Part 5) - Using the "Alternative Calculation for Year of Marriage" can potentially lower the amount of APAS to repay in the year the taxpayer and spouse were married. You can check this check box to utilize this calculation if all of the following statements are true:
- The taxpayer and spouse were unmarried on January 1.
- The taxpayer and spouse were married on December 31.
- The taxpayer and spouse are filing a joint return.
- One or more individuals in the applicable household was enrolled in a qualified health plan before they married.
- APAS was paid for someone in the applicable household during the year.
When starting the California tax return, you are asked two healthcare coverage questions in succession:
- Did the Taxpayer have Full year minimum essential health care coverage for all members of the household? - If answered No, you will be given the opportunity to complete Form 3853 to calculate the penalty, if any, for the taxpayer not having full-year healthcare coverage for themselves and everyone in their household.
- Did you, your spouse, or a dependent enroll in health insurance through the CA marketplace/exchange? - If answered Yes, you will be given the opportunity to complete Form 3849 to calculate the allowable PAS and reconcile with the APAS already received.
Otherwise, to access Form 3849 in TaxSlayer Pro, from the California Tax Return Menu select:
- Healthcare Coverage Forms
- Premium Assistance Subsidy Repayment (Form 3849)
Additional Information: