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Are My Health Insurance Premiums Tax-Deductible?

By January 25, 2010

It's tax time again and you may be wondering if your health insurance premiums are tax-deductible. It depends on who you are and who you work for.

Self-Employed: If you are self-employed, the answer often is yes -- the premiums you pay to cover yourself and your dependents probably are tax-deductible. They are not, however, if you, your spouse, or your dependents are covered by another employer's group health insurance plan.

Health Savings Accounts: If you work for a company that offers health insurance as part of what's known as a cafeteria plan, you may have a health savings account (HSA). The contribution you make to yourHSA is 100% tax deductible up to a limit of $5950 forfamily coverage and $3,000 forindividual coverage -- for 2009.

If you arenot self-employed, and you don't work for a company that provides health insurance with a cafeteria plan,the Internal Revenue Service (IRS)allows you to count health and dental insurance premiums as part of the 7.5% of your adjusted gross income that has to be spent on health care before any out-of-pocket medical expenses can be deducted.

Health and dental insurance premiums can be counted toward that 7.5%. A long list of health-related expenses also can be deducted, including prescription medications and optional surgical procedures, like laser eye surgery to correct vision. The IRS has a list on its website.

Take a look at what the IRS allows you to deduct for health-related items and make sure to keep complete records. And, if you have any questions, speak with a tax advisor.

Please leave a comment below or in the Health Insurance Forum.

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Comments
January 27, 2010 at 6:05 pm
(1) CHP says:

Well said. Self-employed workers often don’t realize they can deduct their health insurance, which is often one of the most costly factors of being self-employed.

March 22, 2010 at 9:00 am
(2) Maria says:

I am not sure if they are tax deductible even if your spouse is “eligible” to participate in a employer sponsored group plan. I am have read conflicting statements and dont know which one is true. If one spouse is self employed and the other spouse is eligible to participate in a group policy, but does not, are the premiums still deductible?

March 22, 2010 at 2:22 pm
(3) healthinsurance says:

Maria:
I think a lot of it depends if you are deducting premiums as part of your personal deduction on Schedule A or deducting premiums as a business expense if you are self-employed. Take a look at the attached document from the IRS — both situations are covered.
IRS Publication 17

Personally, I am self-employed but I’m on Medicare, so I was not able to deduct any of the related premiums as a business expense. My wife is not employed and has private insurance. I was able to deduct both my Medicare premiums and her premiums on Schedule A.

April 18, 2010 at 7:13 pm
(4) Debbie says:

I am self-employed and am considering an HDHP and HSA. I know HSA contribution is deductible and out-of-pocket expenses can be paid through the HSA account, but are the premiums also deductible for the self-employed?

April 19, 2010 at 3:19 pm
(5) Dr. Mike says:

Debbie:
I don’t think you can pay for your health insurance premiums out of your HSA account. The following is from IRS Publication 969:
“Insurance premiums. You cannot treat insurance premiums as qualified medical expenses unless the premiums are for: Long-term care insurance. Health care continuation coverage (such as coverage under COBRA).
Health care coverage while receiving unemployment compensation under federal or state law. Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap).

However, your health insurance premiums may be deductible on Schedule A or on Schedule C as a business expense. You should talk to your accountant or lawyer about what is appropriate for you.

I hope this helps.

May 13, 2010 at 2:48 pm
(6) Susan says:

I am self employed and file as an S-Corp. Our payroll company did not included our health premium in our W-2 Box #1. We filed an extension. What is the best way to rectify this so we can can the deduction on our personal side?

May 14, 2010 at 3:26 pm
(7) Dr. Mike says:

Susan:
I’m afraid I can’t help with this one. I’m not a lawyer or tax expert and cannot provide you with any intellegent advice about this issue. You should discuss this with your accountant about how to proceed.
Mike

May 26, 2010 at 9:10 pm
(8) David says:

I know that I cannot deduct health care premiums, but what about long-term care insurance? Are those premiums deductible even though my regular health care is covered by a separate employer?

July 3, 2010 at 4:59 am
(9) Ramona Simson says:

A friend of mine told me about a site that offer 40% discount on health insurance.I tried this company.They are great.You can check their site.

http://www.MyBestHealthInsurance.Info

July 29, 2010 at 8:44 pm
(10) KS says:

I had a cafeteria plan for the first 5 months of 2010, then utilized Cobra to keep that same coverage when I became self-employed. Would I be eligible to deduct my Cobra premiums for the rest of 2010?

July 30, 2010 at 2:59 pm
(11) Dr. Mike says:

KS:
I strongly suggest that you speak with an accountant when you are ready to do your 2010 taxes.

According to the IRS (for 2009 taxes), you can deduct health insurance premiums as medical expenses, but only if you itemize on Schedule A, and even then you can only deduct the part of your medical expenses that is over 7.5% of your AGI. There’s no special category for COBRA payments its like any other medical insurance premiums. Also, since you are self-employed, please make sure to check with an accountant.

October 8, 2010 at 2:10 pm
(12) Heather says:

I am currently working as a contractor as an employee with the contracting house. They make available group health insurance for my family of which I have to pay the ENTIRE premium.

My husband runs his own business and neither of us is able to get private health insurance. Can we deduct the cost of my group health insurance for the family from his business expenses? We will not be doing any itemized deductions this year, so this is the only way to get it reimbursed. Is it allowed?

Thanks!

December 26, 2010 at 11:05 pm
(13) sophia says:

My 21 yr old daughter works two part-time jobs – and is not eligible for health insurance from either employer. She pays for health insurance out of pocket.

Are her premium payments tax deductible? Schedule A, or where?

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