I'm married and filing jointly which I have done for the past several years, my wife had to stay away for whole of 2013 with her parents due to some health issues, now since she was not here I didn't buy health insurance for her (which is logical, given that she is not around). But when I file my Massachusetts return I'm being penalized for not buying health insurance, Please advise on how to file.
You are not penalized on your MA return if you file separately from your wife. Moreover, the MA tax system doesn't have a progressive rate, so it's likely not to cause you any additional tax to file separately. But if you lose some exemptions or deductions because she doesn't have medical insurance, that's between you and her.