Health Insurance Deduction for Self Employed

Those that are self employed (File a Sch C on their Federal 1040) are entitled to claim a deduction for the cost of the health insurance paid that has some tax advantages over other tax payers.  It is called an “above the line” tax deduction because the deduction occurs on the front page of the tax return and therefor reduces taxable income dollar for dollar.

Health insurance premiums that qualify include:

  • Long-term care Insurance premiums (up to the age-based maximum)
  • ACA marketplace premiums net of the advance premium tax credit (APTC)
  • Payback of any portions of the APTC in the year of the APTC
  • Employee costs for employer group coverage
  • Medicare parts B, C and D premiums
  • Medicare supplemental plan premiums
  • Dental insurance premiums
  • Vision insurance premiums
  • Lost or damaged contact lens premiums

Premiums can include those that cover the taxpayer as well as the taxpayer’s family.  However, if the self employed individual is able to participate in a subsidized (over 50% of the costs covered) plan for any month, then the costs for that month are excluded.  Any expenses disallowed due to income limitations can be utilized on Sch A.




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