Are Health Insurance Premiums Tax-Deductible? A Clear Guide for Consumers

Health insurance can be expensive, so it’s natural to ask: Are health insurance premiums deductible on taxes?

The honest answer is: sometimes yes, sometimes no — it depends on how you get your insurance, how you pay for it, and whether you itemize deductions.

This guide breaks it down in plain language so you can understand when health insurance premiums may reduce your tax bill, when they won’t, and what other medical costs might be deductible.

Big Picture: When Are Health Insurance Premiums Tax-Deductible?

In the U.S., health insurance premiums may be deductible as a medical expense if:

• You pay them with after-tax money (not pre-tax through your employer), and
• You itemize deductions instead of taking the standard deduction, and
• Your total qualified medical expenses are more than 7.5% of your adjusted gross income (AGI).

On the other hand, premiums generally are not deductible if:

• They’re already paid with pre-tax dollars (common with employer plans), or
• You don’t itemize your deductions, or
• The type of coverage doesn’t qualify (for example, some non-medical insurance products).

Let’s go step by step.

Understanding the Basics: How Medical Deductions Work

What counts as a medical expense?

For tax purposes, medical expenses can include:

• Health insurance premiums (in some situations)
• Doctor and hospital visits
• Prescription medications
• Certain dental and vision care
• Some long-term care services and premiums (within limits)
• Certain medical equipment and supplies

But the IRS only lets you deduct the portion of your total qualified medical expenses that exceeds 7.5% of your AGI, and only if you itemize.

Itemizing vs. standard deduction

You have two options when filing your taxes:

1. Take the standard deduction

   • Simple, no receipts needed.
   • Most people use this option.
   • If you choose this, you cannot also itemize medical expenses, including premiums.

2. Itemize deductions

   • You list individual deductions (like mortgage interest, charitable giving, and medical expenses).
   • This only makes sense if your total itemized deductions are higher than the standard deduction.

👉 Key takeaway:
Health insurance premiums only help your taxes as a “medical expense” if you itemize and meet the 7.5% AGI threshold.

Are Employer Health Insurance Premiums Tax-Deductible?

Many people get health insurance through their job. In these cases, premiums are handled differently.

Premiums paid through your employer (pre-tax)

If your employer takes health insurance premiums out of your paycheck before taxes are calculated (pre-tax):

• Those premiums are already tax-advantaged.
• You’ve effectively received a tax break upfront, because your taxable income was lower.
• You cannot deduct those premiums again on your tax return — that would be double-dipping.

This is the most common situation with employer-sponsored plans.

Employer-paid portion of premiums

If your employer pays part (or all) of your premium:

• The employer-paid portion is typically not taxable to you.
• You also cannot deduct the employer’s share as a medical expense — only money you personally pay with after-tax dollars might be deductible.

Are Individual Health Insurance Premiums Tax-Deductible?

If you buy your own health insurance (for example, through a state marketplace or directly from an insurer), the rules are a bit different.

Individual / marketplace plans (non-self-employed)

If you are not self-employed and you:

• Buy your own health insurance policy, and
• Pay premiums out of pocket with after-tax money,

then those premiums may be deductible as a medical expense if:

• You itemize deductions, and
• Your total medical expenses (including premiums) are more than 7.5% of your AGI.

If your income-based premium tax credit (from the health insurance marketplace) helps pay part of the premium:

• Only the portion you actually pay out of pocket can potentially be treated as a medical expense.

Are Self-Employed Health Insurance Premiums Deductible?

For people who are self-employed, there is a special rule that can be very valuable.

Self-employed health insurance deduction

If you qualify as self-employed (for example, you run a sole proprietorship, freelance, or are a partner in a partnership), you may be able to:

• Deduct 100% of the health insurance premiums you pay for yourself, your spouse, and your dependents, as an “above-the-line” adjustment to income (sometimes called an adjustment rather than a regular itemized deduction).

Key points:

• This deduction is taken on your tax return even if you do not itemize.
• It can apply to medical, dental, and qualified long-term care insurance premiums.
• The deduction generally cannot exceed your net self-employment income.
• You usually cannot take this for any month you were eligible for an employer-subsidized health plan (through your own or a spouse’s job), even if you chose not to enroll.

👉 For many self-employed people, this is one of the most valuable health insurance tax breaks available.

What About Medicare Premiums?

Medicare premium deductibility can be confusing, but the basic idea is:

Medicare Part A

• If you or your spouse paid enough into the system while working, Part A is often premium-free.
• If you do pay a Part A premium (some people do), that premium may count as a medical expense on Schedule A if you itemize and meet the 7.5% AGI threshold.

Medicare Part B, Part D, and Medicare Advantage

Premiums for:

• Medicare Part B (medical insurance)
• Medicare Part D (prescription drug plans)
• Medicare Advantage (Part C)

may count as qualified medical expenses if:

• You itemize deductions, and
• Your total medical expenses exceed 7.5% of AGI.

If you are self-employed, Medicare premiums you pay may also qualify for the self-employed health insurance deduction in many cases, subject to specific rules.

Are COBRA Premiums Tax-Deductible?

COBRA lets you continue employer-sponsored health coverage after leaving a job, usually at a higher cost.

• COBRA premiums you pay with after-tax dollars may be treated as a medical expense.
• They can be deductible if:
  • You itemize deductions, and
  • Your total medical expenses (including COBRA) are above 7.5% of your AGI.

If you’re self-employed, COBRA premiums may also qualify for the self-employed health insurance deduction, if other requirements are met.

Are Dental, Vision, and Long-Term Care Insurance Premiums Deductible?

Dental and vision insurance

• Dental and vision insurance premiums you pay with after-tax money may be included as medical expenses.
• As with other premiums, they’re only tax-deductible if:
  • You itemize deductions, and
  • You exceed the 7.5% AGI threshold.

Long-term care insurance

Long-term care insurance is treated a bit differently:

• Premiums may be deductible as a medical expense.
• There are annual limits based on your age, meaning only part of the premium may count.
• These amounts are combined with your other medical expenses for the 7.5% AGI rule.

When Health Insurance Premiums Are Not Deductible

Some types of insurance and payment arrangements do not qualify as deductible medical expenses.

Common examples:

• Premiums already paid with pre-tax dollars through an employer cafeteria plan
• Life insurance or disability insurance premiums
• Accident or income replacement policies that pay you cash rather than paying medical providers
• Non-medical coverage (like hospital indemnity policies that pay a flat amount per day, depending on policy design)

These typically do not count as deductible medical expenses.

Quick Reference: Common Situations and Deductibility

“Possibly” usually means: you pay after-tax, you itemize, and your medical costs exceed 7.5% of AGI.

How the 7.5% AGI Threshold Works (Simple Example)

To see why many people don’t actually get a deduction for medical expenses, including health insurance, it helps to look at an example.

1. Suppose your AGI is $60,000.
2. 7.5% of $60,000 is $4,500.
3. Only the portion of your qualified medical expenses above $4,500 is deductible.

If you have:

• $5,500 in total medical expenses (including premiums),
• Then only $1,000 ($5,500 – $4,500) counts as an itemized deduction.

On top of that, itemizing only makes sense if your total itemized deductions (medical, mortgage interest, charitable giving, etc.) are more than your standard deduction.

Health Savings Accounts (HSAs) and Premiums

Many people wonder if they can pay health insurance premiums with HSA funds tax-free. The answer is usually no, with a few important exceptions.

When you generally cannot use HSA funds for premiums

In most everyday situations, HSA money cannot be used for regular health insurance premiums without penalty.

When you can use HSA funds for premiums

HSA funds are allowed for certain specific premium types, such as:

• Medicare premiums (with some restrictions)
• COBRA premiums
• Health coverage while receiving unemployment compensation

HSAs have their own set of rules, which are separate from the medical expense deduction on Schedule A.

Practical Tips for Consumers

Here are some practical steps if you’re trying to understand whether your health insurance premiums might help you at tax time:

1. Check your pay stub or benefits summary

   • See whether your premiums are deducted before or after tax.
   • If they’re pre-tax, you typically cannot deduct them again.

2. Gather your annual premium totals

   • For marketplace plans, Medicare, COBRA, or individual policies, keep records of what you actually paid out of pocket.

3. Add up all medical expenses

   • Include premiums, copays, deductibles, prescriptions, eligible dental and vision care, and other qualified costs.

4. Compare to 7.5% of your AGI

   • If your total is far below that threshold, itemizing for medical expenses alone may not be worthwhile.

5. Consider your filing strategy

   • If your mortgage interest, property taxes, charitable gifts, and medical expenses together exceed the standard deduction, itemizing may help.

6. If you’re self-employed, review the special rules

   • You may qualify for the self-employed health insurance deduction, which can be significant.

Key Takeaways: Are Health Insurance Premiums Deductible on Taxes?

• Yes, health insurance premiums can be tax-deductible — but not in every situation.
• Premiums paid through an employer with pre-tax dollars are already tax-advantaged and generally not deductible again.
• Premiums you pay out of pocket with after-tax money may count as medical expenses if:
  • You itemize deductions, and
  • Your total medical expenses exceed 7.5% of your AGI.
• If you are self-employed, you may be able to deduct health insurance premiums even if you do not itemize, subject to limits and eligibility rules.
• Different types of coverage — employer plans, marketplace plans, Medicare, COBRA, dental, vision, and long-term care — each have specific rules, but they generally fit into the same broad framework.

Understanding these basics can help you make more informed decisions about your health insurance costs and how they may affect your tax situation.