If you're self-employed, you can deduct 100% of health, dental, and long-term care insurance premiums you paid for yourself, your spouse, and your dependents. This deduction reduces your adjusted gross income (AGI) directly and does not require you to itemize.
Who Qualifies for the Self-Employed Health Insurance Deduction?
You qualify if you had net profit from self-employment reported on Schedule C, Schedule F (farming), or as a partner with self-employment earnings. S-corporation shareholders who own more than 2% of the company also qualify, but the deduction works differently for them (more on that below).
You do NOT qualify in any month where you or your spouse were eligible to participate in a subsidized health plan through an employer, including your own C-corporation. Eligibility, not enrollment, is what disqualifies the month.
What Premiums Are Deductible?
Qualifying premiums include:
- Health, dental, and vision insurance for you, your spouse, and dependents
- Long-term care insurance premiums (subject to age-based limits under IRC Section 213(d)(10))
- Medicare Part B and Part D premiums
- Marketplace (ACA) plans purchased in your own name
Premiums paid through a Health Reimbursement Arrangement (HRA) funded by an employer are not deductible. The premiums must come from your own pocket.
How Much Can You Deduct?
The deduction is capped at your net self-employment income for the year. If your Schedule C shows a $15,000 net profit and you paid $20,000 in premiums, your deduction is limited to $15,000. The remaining $5,000 is not lost, it may be deductible as an itemized medical expense on Schedule A (subject to the 7.5% AGI floor).
Long-term care premiums have separate annual limits based on age. For 2026, the eligible long-term care premium amounts (per IRS Publication 502) range from $470 for age 40 and under to $5,880 for age 71 and older.
Where to Claim It
Report the deduction on Schedule 1 (Form 1040), Line 17. This reduces your AGI before any other deductions are applied, making it one of the most valuable deductions available to self-employed taxpayers.
Special Rules for S-Corp Owner-Employees
If you own more than 2% of an S-corporation, the corporation must pay the premiums and then include them in your W-2 Box 1 wages. This creates taxable wages on your W-2, but you then claim the deduction on Schedule 1, Line 17 on your personal return. The net effect is zero income tax on those premiums, but you do owe payroll taxes (FICA) on the amount at the S-corp level. See our guide on how to pay yourself from an S-corp for the full payroll setup.
If the premiums are not reported on your W-2, you cannot claim the deduction. Make sure your S-corp payroll is set up correctly before year-end.
Interaction with the Premium Tax Credit
If you purchase coverage through the ACA Marketplace, the self-employed health insurance deduction and the Premium Tax Credit (PTC) interact in a circular calculation. The deduction reduces your MAGI, which affects your PTC, which in turn affects your deduction. The IRS provides a worksheet (in Publication 974) to resolve this loop. Tax software handles the calculation automatically.
OBBBA and This Deduction
The One Big Beautiful Bill Act (signed July 4, 2025) did not change the IRC Section 162(l) framework. The self-employed health insurance deduction remains unchanged for 2026.
Questions about whether your premiums qualify or how to structure your S-corp payroll to claim this deduction? Contact TS CPA for a free consultation. We respond within the same day.