The Self-Employed Health Insurance Tax Deduction, Explained
You can deduct your premiums above the line if you're self-employed. Here's who qualifies, what counts, and how it works with a group plan.
The self-employed health insurance deduction is one of the better tax breaks available to 1099 workers. It lets you deduct the full cost of your health insurance premiums from your gross income before you calculate adjusted gross income. Unlike the medical expense itemized deduction, this one doesn't require you to itemize and doesn't have a floor.
Who qualifies
You qualify if you have net self-employment income and you weren't eligible for subsidized employer-sponsored coverage (yours or a spouse's) during the months you're deducting. Sole proprietors, single-member LLCs, S-corp owners who take a reasonable W-2, and partners in a partnership all qualify.
What premiums count
Medical, dental, and long-term care premiums for yourself, your spouse, and your dependents. Group health plans, ACA marketplace plans, and direct-carrier plans all qualify. The premium must be paid with after-tax dollars. Monthly premiums on a Working Owner group plan count.
The deduction cap
You can't deduct more than your net self-employment income. If your Schedule C shows $20,000 in profit and your premiums were $9,600, you deduct $9,600. If your premiums were $24,000 and profit was $20,000, you deduct $20,000 (the rest can't be carried forward).
How to claim it
It goes on Schedule 1, Line 17 of Form 1040, not on Schedule A. That matters because it reduces AGI, which reduces your tax bill and can also open up other credits that phase out at higher AGI.
What this isn't
This isn't tax advice. It's a high-level summary. The specifics of your situation, including S-corp treatment and the two-employee rule, can change the math. Talk to a CPA or tax professional before filing.