Tax Deduction for Health Insurance
Tax Deduction for Health Insurance

Can You Claim a Tax Deduction for Health Insurance?

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We all know how expensive healthcare can be, so being able to claim a tax deduction for some of your insurance costs can help you save come tax time. Since there are specific rules and qualifications you must follow, here’s an overview of when you can and cannot claim a deduction on your health insurance.

When Health Insurance is Not Tax-Deductible

If you didn’t pay for health insurance, you can’t take a tax deduction for it. If your employer pays your health insurance premiums, you can’t deduct those costs. However, if an employer only pays for part of your premiums, you still may be able to claim a deduction for the portion you paid.

If you received a subsidy or premium tax credit to purchase a health insurance plan in the Health Insurance Marketplace, any advanced-payment subsidy that lowered the cost of your health insurance premiums cannot be claimed as a deduction. However, the money you paid out of your own pocket for your premiums might be tax deductible.

If you pay for health insurance with pre-tax money, you can’t take a deduction for health insurance. If you have insurance through your employer, the premiums you pay are usually taken out of your paycheck before you are taxed. Since these premiums are paid with pre-tax dollars, they’re already income-tax-free, meaning you can’t claim them as a tax deduction.

Also note, you cannot deduct health insurance unless you itemize your tax deductions or you are self-employed and have a net profit for the year. You don’t need to know if you qualify for itemized deductions, TurboTax will figure it out for you.

There Are Limits to the Amount of Your Health Insurance You Can Deduct When You Itemize. If you are able to write-off your health insurance, there are limits to how much of your premiums you can write off when you are not self-employed.

If you’re able to claim your health insurance as a medical expense deduction, you can only deduct medical expenses if you itemize your deductions and they exceed 7.5% of your adjusted gross income. If you’re self-employed and claimed the self-employed health insurance deduction, you don’t have to exceed the 7.5% threshold because you’re writing the premiums off as an adjustment to your self-employment income rather than as a tax deduction.

When Health Insurance is Tax-Deductible

If you’re self-employed, your health insurance premiums may be tax deductible. If you’re self-employed and not eligible for an employer-sponsored health plan through a spouse’s job, you may be eligible to write-off your health insurance premiums on your taxes. However, you can’t write off more in health insurance premiums than net profit you earned for the tax year.

Health insurance premiums paid with your own after-tax dollars are tax deductible. For example, if you purchased insurance on your own through a health insurance exchange or directly from an insurance company, the money you paid toward your monthly premiums can be taken as a tax deduction.

Generally, Medicare premiums can be tax deductible if you itemize your deductions and have qualifying medical expenses that exceed 7.5% of your adjusted gross income. 

If you’re self-employed, you might be able to deduct premiums for Medicare or other eligible health insurance from your income without having to itemize or meet the 7.5% threshold requirement.  If you qualify, you could deduct premiums for some Medicare plans that are tax deductible. This includes Medicare Part B and Part D prescription coverage.

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18 responses to “Can You Claim a Tax Deduction for Health Insurance?”

  1. Help! I’m self-employed and must buy my health insurance myself. When I try to enter the amount of the premiums into the software program, the program directs me to IRS publication 535 to figure out with pencil and paper how much of my health insurance I can deduct. This form is beyond confusing! In past years, the tax software figured the amount out for me. If I were any good at math, I wouldn’t need to use software! It wants me to enter amounts from schedule C in order to figure out my health insurance deduction, but the software hasn’t taken me to schedule C yet. What a headache. This just like being back in grade school and getting stuck on a story problem in the fifth grade (I wasn’t good at that, either!).

  2. I pay $1200 a month for Insurance Premiums. I pay out of pocket as my employer does not have the plans that i needed for my family. I cannot find anywhere on Turbo Tax where it lets me deduct this.

    any help?

  3. I have added a domestic partner to my insurance plan at work. They add $774.00 a month to my income and tax me on it, and then they remove it before I am paid. They list it as taxable health insurance. Can I claim this when I file my taxes? If so, where? It added about $10,000 to my total income, and it wasn’t actually paid to me. Thank you!

  4. I retired and kept the company insurance which I pay 100 percent of the cost which is around 15,000 per year our total income is approximately 70,000 so are you saying I can claim a 8,000 deduction for health insurance. I used Turbo tax last year and did not see where this was mentioned.

  5. May excess Premium Tax Credit owed on the 2015 return and reconciled in 2016 be taken as a medical expense deduction on the 2015 return, as long as the total medical expense are greater than 10% AGI?. If so, is there a specific citation regarding this process? Thank you.

  6. I pay $286.00 per month for insurance, I have Social Security and a retirement check, this is all the income I have. Is the insurance premium tax deductible?

  7. I see that all Medicare premiums can now be claimed as deductions related to the self employed health insurance deduction. Would this still be the case if the premiums are deducted from my social security and I do not make enough self employment incoem for my social security to be taxable?

  8. I have health insurance premiums to deduct. I have a schedule C that shows a net profit of more than the total I paid for the premiums, so they should be fully deductible, but I can’t find anyplace in TurboTax Freedom to enter the figure.

    • Hi Linda,
      In TurboTaxFreedon, go to the Wages & Income section. Go through that section until you come to your business section where you enter your Schedule C income. Continue to the “Enter Your Business Expenses” section. Scroll down and then enter the amount of your health insurance premiums in “Self-Employed Health Insurance Premiums”. There’s an Explain This help there so you can confirm you’re in the right area.
      Thank you,

  9. You say that “If you received a subsidy or premium tax credit to purchase an insurance plan in the Health Insurance Marketplace through the Affordable Care Act, any advanced-payment subsidy that lowered the cost of your health insurance premiums cannot be claimed as a tax deduction.” Now, how about if you decide to pay all the premiums on this subsidized Marketplace policy yourself upfront during the year and then claim the total subsidy tax credit when you file your return. Would you be able to deduct all of the premiums which you actually paid as part of your total medical expenses (over 10% of your AGI) on your Schedule A, even though you will ultimately get most of them effectively reimbursed by the total tax credit? Thank you.

  10. I would like to be informed to the specifics in how the Self-Employed Health Insurance Deduction is being figured by TurboTax. As of right now, if you are attempting to claim this deduction and you purchased insurance through the Marketplace, you are being directed to a Pub. 974 which is not currently available from the Forms and publications page with the IRS. I have seen instructions for determining the deduction but they are extremely difficult to follow and they only have a few examples. Using the TurboTax Freedom software, it came up with a $300 amount. That’s fine except I spent $335 out of pocket for my premiums including the first month 2015, paid in December. Since I didn’t provide any information as to the premiums paid I am curious how TurboTax made this determination for my deduction.

  11. My employer has been paying 60% of my health insurance premium while I pay the other 40%. They have been deducting my responsibility from my paycheck pre-tax. I have my own plan through and receive a small subsidy. Now my employer is telling me they should have been taxing me all along so to fix their error they are going to add the amount the office contributed to my annual income. They are currently amending my W2 to reflect a now higher income. Does this seem correct? Hoping someone can offer my some advice. I realize that if it is done this was I will be penalized due to my employer giving me the wrong info.

  12. Nice Post and very informative. I usually pay my premium before income taxes are calculated. NOw, you gave a great knowledge about this. Thanks for sharing.

  13. I am researching long-term care insurance and need to know if the money paid for annual premiums is tax deductible.
    B E Allen

  14. I would like legislators to look into passing law that people 66 and older may deduct and claim health insurance premiums, including Medicare b costs as a tax deductions and not limited to 7.5% of adjusted gross income. T.y.