Can I deduct health insurance premiums from my taxes. When tax season rolls around, many people start looking for ways to reduce their taxable income—and health insurance premiums often come up in that conversation. But can you actually deduct what you pay for health coverage? The answer: it depends on a few key factors. Let’s break it down.
When Are Health Insurance Premiums Tax Deductible?
Health insurance premiums can be tax deductible, but the rules vary based on your employment status, income, and how you purchase your insurance. Here’s a breakdown of common scenarios:
1. Self-Employed Individuals
If you’re self-employed and not eligible to participate in a health plan through your spouse’s employer, you may be able to deduct 100% of your health insurance premiums—including premiums paid for your spouse, dependents, and even children under 27, even if they aren’t dependents on your tax return.
Important notes:
- This deduction applies to federal income tax, not self-employment tax.
- You don’t have to itemize deductions to claim this; it’s considered an “above-the-line” deduction.
2. Employees With Employer-Sponsored Health Plans
If your premiums are paid with pre-tax dollars (which is typical for employer-sponsored plans), they’re already excluded from your taxable income. This means you can’t deduct them again on your tax return.
If, for some reason, you pay your health insurance premiums with after-tax dollars, you might be able to include them as part of your medical expenses deduction—but only if you itemize your deductions and your total medical expenses exceed 7.5% of your adjusted gross income (AGI).
3. COBRA or Marketplace Coverage
If you’re paying for COBRA or a plan from the Health Insurance Marketplace (often referred to as Obamacare), your premiums can be deductible if you itemize and they, along with other medical expenses, exceed the 7.5% AGI threshold.
If you’re self-employed and paying for Marketplace coverage, you may also qualify for the above-the-line deduction, just like with other self-paid plans.
4. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)
If you contribute to an HSA or FSA, you’re already receiving a tax advantage. Health insurance premiums generally can’t be paid through an HSA or FSA, with a few exceptions (like long-term care insurance or premiums paid while receiving unemployment benefits).
What Counts as a Medical Expense?
According to the IRS, medical expenses include payments for:
- Health insurance premiums
- Doctor and hospital visits
- Prescription medications
- Dental and vision care
- Certain transportation costs related to medical care
If you itemize, you can include qualified medical expenses that exceed 7.5% of your AGI. But remember, you can’t include any expenses that were reimbursed or paid with pre-tax dollars.
Final Thoughts
The ability to deduct health insurance premiums from your taxes hinges on your individual situation. If you’re self-employed, you’re in luck—you can usually deduct them outright. If you’re employed and using an employer-sponsored plan, your premiums are likely already giving you a tax benefit. And for everyone else, it may come down to whether your total medical expenses are high enough to make itemizing worth it.
If you’re unsure about what applies to you, it’s always smart to talk to a tax professional or CPA. They can help you make sure you’re getting every deduction you qualify for—and staying compliant with IRS rules.
Disclaimer: This blog is for informational purposes only and should not be taken as tax advice. Always consult with a licensed tax professional for personalized guidance.
