Can You Deduct Health Insurance Premiums? A Practical Guide to What Really Counts

Many people are surprised to learn that in some situations health insurance premiums are tax-deductible, while in others they are not. The rules can feel confusing, especially when you factor in job-based plans, self-employment, Medicare, and marketplace coverage.

This guide walks you through when you can deduct health insurance premiums, when you can’t, and how those deductions generally work, so you can have an informed conversation with a tax professional or better understand your own return.

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

The short answer: It depends on your situation.

In the U.S., health insurance premiums can potentially be deductible:

As a self-employed health insurance deduction (above-the-line, no itemizing required), or
As part of itemized medical expenses, if they are high enough compared to your income.

However, premiums that are paid with pre-tax dollars—which is common for many employer plans—are usually not deductible again, because you already received a tax advantage.

Key Question #1: Are You Self-Employed?

If you are self-employed, you may qualify for a special tax deduction for health insurance premiums that can be very valuable.

Who Typically Qualifies for the Self-Employed Health Insurance Deduction?

You may qualify if you are:

A sole proprietor (file Schedule C)
A partner in a partnership
A member of an LLC treated as a sole proprietorship or partnership
An S corporation owner with more than 2% ownership and certain conditions met

In general, you must:

Have net profit from self-employment for the year, and
Not be eligible for an employer-sponsored health plan (through your own job or a spouse’s job) for the months you’re claiming the deduction.

What Premiums Can Self-Employed People Often Deduct?

Subject to limits, self-employed individuals may be able to deduct:

Medical health insurance premiums
Dental insurance premiums
Long-term care insurance premiums (up to age-based limits)
Medicare premiums (if they are self-employed and pay them)

This deduction is taken “above the line” on your tax return, which means:

You don’t need to itemize deductions to claim it, and
It can reduce your adjusted gross income (AGI).

However, it cannot exceed your net self-employment income. If your business has a loss, your deduction may be reduced or eliminated for that year.

Key Question #2: Do You Itemize Deductions?

If you are not self-employed (or if you have premiums that don’t qualify under the self-employed rules), you may still deduct some health insurance premiums as medical expenses, but only if:

You itemize deductions instead of taking the standard deduction, and
Your total qualifying medical expenses, including eligible premiums, are more than a percentage of your adjusted gross income (AGI).

This threshold is set by tax law and applies to the combined total of your eligible medical expenses, not just premiums.

What Counts as Medical Expenses for Itemizing?

Qualifying medical expenses may include:

Health insurance premiums you pay with after-tax dollars
Dental and vision insurance premiums
Certain long-term care insurance premiums (subject to maximums)
Out-of-pocket medical, dental, and vision costs:
- Copays, deductibles, and coinsurance
- Certain prescription costs
- Some medically necessary services and supplies

Only the portion of your total medical expenses that exceeds the AGI threshold can be deducted when itemizing.

Employer Plans: When Are Premiums Deductible?

Many people have health insurance through an employer. In these cases, your ability to deduct premiums depends on how they are paid.

Premiums Paid with Pre-Tax Dollars

If your share of the premium is taken from your paycheck before taxes (which is very common), you are already getting a tax benefit because those wages are not counted as taxable income.

In that case:

You cannot deduct those premiums again on your tax return.

Premiums Paid with After-Tax Dollars

If you pay your share of employer premiums with after-tax money (less common but possible), then:

Those premiums may be deductible as part of itemized medical expenses,
Subject to the AGI threshold and itemizing rules described earlier.

If you're unsure whether your premiums are pre-tax or after-tax, you can usually find clues on your pay stub or by asking your benefits or payroll department.

Marketplace Plans and Private Individual Policies

If you buy your health insurance:

Through a Health Insurance Marketplace, or
Directly from an insurer or broker as an individual or family plan,

then your premiums are typically paid with after-tax dollars, unless you are receiving advance premium tax credits.

Deductibility of Marketplace and Individual Plan Premiums

Your premiums may be:

Deductible as self-employed health insurance, if you qualify as self-employed and meet the rules, or
Deductible as itemized medical expenses, if your total qualifying medical costs are high enough relative to your AGI.

If you receive premium tax credits:

You can generally only count the amount you actually pay out-of-pocket as a medical expense, not the portion covered by the credit.

Medicare Premiums: Can You Deduct Them?

Many people are unsure whether Medicare premiums are deductible. The answer again depends on your situation.

Medicare and the Self-Employed

If you are self-employed and otherwise qualify for the self-employed health insurance deduction, you may generally deduct:

Medicare Part B premiums
Medicare Part D premiums
Medicare Advantage (Part C) premiums
Approved Medigap (supplemental) premiums

These can be treated similarly to other health insurance premiums for self-employed individuals, subject to income limits and other rules.

Medicare and Itemized Deductions

If you are not self-employed, your Medicare premiums may count as medical expenses for itemizing purposes, along with other qualifying medical costs. Again, you only benefit if your total qualifying medical expenses exceed the AGI threshold and you itemize.

Special Cases: COBRA, Long-Term Care, and HSAs

Some specific types of coverage have their own rules and nuances.

COBRA Coverage

COBRA premiums are often:

Paid with after-tax dollars, and
Can be treated like other health insurance premiums.

They may be:

Deductible as self-employed health insurance, if you qualify, or
Deductible as itemized medical expenses.

Long-Term Care Insurance

Premiums for qualified long-term care insurance can be deductible, but:

They are subject to annual maximum limits, which vary based on your age.
For self-employed individuals, they can potentially be included in the self-employed health insurance deduction (within the age-based limits).
For others, they are part of itemized medical expenses.

Health Savings Accounts (HSAs)

HSA contributions have their own tax treatment:

Contributions are generally tax-deductible or pre-tax, and
Qualified withdrawals for medical expenses are tax-free.

Important distinction:

HSA contributions, not health insurance premiums, are what’s often deductible.
In limited situations (such as unemployment compensation or certain continuation coverage), some people may use HSAs to pay premiums, but that is different from deducting the premiums directly on your tax return.

Quick Reference: When Health Insurance Premiums Are Usually Deductible

Use this simplified table as a general guide. Individual circumstances can vary, so personal tax advice is important.

Situation	Are Premiums Usually Deductible?	How They Might Be Deducted
Self-employed, buy your own health insurance	Often yes	Self-employed health insurance deduction
Employed, premiums paid pre-tax through employer	Generally no (already tax-advantaged)	Not deductible again
Employed, premiums paid after-tax through employer	Sometimes, if you itemize and exceed AGI threshold	As itemized medical expenses
Individual or family plan (no employer), after-tax	Sometimes	Self-employed deduction (if eligible) or itemized
Medicare (self-employed)	Often yes	Self-employed health insurance deduction
Medicare (not self-employed)	Sometimes	As itemized medical expenses
COBRA, paid out-of-pocket	Sometimes	Self-employed deduction (if eligible) or itemized
Premiums paid entirely by employer	No (you didn’t pay them)	Not deductible by the employee

Common Misunderstandings About Deducting Premiums

It’s easy to get tripped up by a few recurring myths. Here are some clarifications.

“I Have Health Insurance, So I Can Deduct the Premiums.”

Not necessarily. You need to:

Be self-employed and eligible, or
Have high enough total medical expenses and choose to itemize deductions.

Many people get no additional deduction because their premiums are already pre-tax or because they take the standard deduction.

“If I Don’t Itemize, I Can’t Deduct Health Insurance.”

This is not always true.
If you are self-employed and qualify, you may be able to deduct your health insurance premiums without itemizing through the self-employed health insurance deduction.

“I Can Deduct the Full Amount, No Matter What.”

There are limits:

For self-employed people: the deduction usually cannot exceed your net self-employment income.
For itemized deductions: only the portion of medical expenses over the AGI threshold is deductible.
Long-term care insurance has age-based caps on the deductible amount.

Practical Tips for Managing Health Insurance Premium Deductions

Here are some straightforward steps that often help people keep things organized and maximize what they’re legally allowed to deduct.

1. Keep Clear Records 🧾

Save:

Monthly premium statements
Year-end summaries from insurers
Pay stubs showing premium amounts and whether they’re pre-tax or after-tax
Marketplace or Medicare documentation

Clear records make it easier to calculate what you actually paid and what may be deductible.

2. Separate Pre-Tax and After-Tax Amounts

You only get a deduction for amounts paid with after-tax dollars, unless you are using the self-employed health insurance deduction for qualifying premiums.

If in doubt, check:

Your pay stub or year-end wage statement for taxable wages
Benefits or HR information that explains how premiums are handled

3. Review Whether Itemizing Makes Sense

Because the standard deduction is relatively high, many households do not itemize. If you are considering deducting medical expenses (including premiums):

Add up your mortgage interest (if any), state and local taxes (subject to limits), charitable contributions, and medical expenses above the AGI threshold.
Compare that total to the standard deduction for your filing status.

If the total is not higher, you may not benefit from itemizing, even if you have health insurance premiums and out-of-pocket medical costs.

4. Coordinate with Spouse’s Coverage

If you are married and one spouse has access to an employer plan, it can affect the self-employed health insurance deduction for the other spouse. Being eligible for employer coverage (even if you don’t enroll) can sometimes limit or eliminate the self-employed deduction for those months.

Putting It All Together: Can You Deduct Your Health Insurance Premiums?

To figure out where you stand, walk through these questions:

Are you self-employed with net profit?
- If yes, you may qualify for the self-employed health insurance deduction for your own, your spouse’s, and your dependents’ premiums, subject to certain limits and eligibility rules.
Are your premiums paid with pre-tax dollars through an employer?
- If yes, you generally cannot deduct them again.
Do you pay premiums out-of-pocket with after-tax money (employer, marketplace, or private policy)?
- If yes, they may be deductible as medical expenses if:
  - You itemize deductions, and
  - Your total qualifying medical expenses exceed the AGI threshold.
Are you on Medicare?
- If self-employed and eligible, Medicare premiums may be included in the self-employed deduction.
- Otherwise, they may count as itemized medical expenses.

Because tax rules can change and individual situations can be complex, many people find it useful to discuss these questions with a qualified tax professional. However, understanding these basic principles puts you in a stronger position to ask the right questions and recognize when a deduction might apply.

Once you know how your premiums are paid and how you file your taxes, it becomes much easier to see whether you can deduct your health insurance premiums—and if so, where that deduction might appear on your tax return.