If you are self-employed, you may be eligible for a self-employed health insurance deduction that allows you to deduct qualifying health insurance premiums for yourself, your spouse, your dependents, and certain children under age 27. This deduction can help reduce your taxable income and lower your overall tax liability.
Under IRS rules, you may be able to deduct the amount you paid during the tax year for qualifying medical, dental, vision, and qualified long-term care insurance premiums. These expenses may qualify when the insurance plan is established under your business and you meet the applicable requirements.
Health insurance coverage may also include a child who was under age 27 at the end of 2026, even if that child was not your dependent. A child includes your son, daughter, stepchild, adopted child, or eligible foster child. A foster child is any child placed with you by an authorized placement agency or by a court order, judgment, decree, or other order of a court of competent jurisdiction.
Can Self-Employed Individuals Deduct Health Insurance?
A common question is whether self-employed individuals can deduct health insurance premiums. In many cases, the answer is yes. Eligibility for the deduction depends on your business income and whether the insurance plan is considered established under your business.
Generally, one of the following must apply:
- You were self-employed and had a net profit reported on Schedule C (Form 1040) or Schedule F (Form 1040).
- You were a partner with net earnings from self-employment reported on Schedule K-1 (Form 1065), box 14, code A.
- You used one of the optional methods to determine net earnings from self-employment on Schedule SE (Form 1040).
- You received wages from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation must generally be included in wages reported on Form W-2.
The insurance plan must also be established under your business. Depending on your business structure, special rules may apply to determine whether a plan is considered established under the business.
Medical Insurance Deduction for Self-Employed Taxpayers
In addition to qualifying health insurance premiums, Medicare premiums that you voluntarily pay to obtain health insurance coverage in your name may qualify for the deduction.
You generally may deduct qualifying medical, dental, vision, and long-term care insurance premiums paid during the year. However, you cannot deduct expenses that were reimbursed by an insurance company or another source.
If certain medical insurance payments are not deductible as a self-employed health insurance deduction, they may still qualify as medical expenses on Schedule A (Form 1040) if you itemize deductions and otherwise meet the requirements.
Are There Any Limitations?
Yes. There are situations where the self-employed health insurance deduction may be reduced or disallowed.
You generally cannot include:
- Premiums for any month you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, or the employer of your dependent or child who was under age 27 at the end of 2026, even if you did not actually participate in the employer-sponsored plan.
- If you are a retired public safety officer, amounts excluded from gross income (up to $3,000) that were paid directly from your retirement plan to an insurer for qualified health insurance premiums or distributed to you and used to pay those premiums.
In general, the deduction cannot exceed your earned income from the business under which the insurance plan is established.
Taxpayers who claim the Premium Tax Credit and purchased insurance through the Health Insurance Marketplace may have additional limitations and calculation requirements.
Can I Deduct Long-Term Care Insurance Premiums?
Yes. As part of the self-employed health insurance deduction, you may include premiums paid for a qualified long-term care insurance contract. However, for each covered individual, you can include only the smaller of:
- The actual premiums paid for that person, or
- The applicable age-based limit shown below.
Long-Term Care Premium Limits for Tax Year 2026
| Age | Maximum Deductible Amount |
|---|---|
| 40 and younger | $500 |
| 41 to 50 | $930 |
| 51 to 60 | $1,860 |
| 61 to 70 | $4,960 |
| 71 or older | $6,200 |
Program Entry
To report your self-employed health insurance deduction in the program:
- Federal
- Deductions (Select My Forms)
- Adjustments to Income
- Self-Employed Health Insurance Coverage
Additional Information
If you have more than one self-employed business and separate health plans established under different businesses, you may need to complete a separate Form 7206 calculation for each business. Special rules also apply to partners, more-than-2% S corporation shareholders, and taxpayers claiming the Premium Tax Credit.
Claiming the self-employed health insurance deduction correctly can provide a significant tax benefit for business owners, freelancers, independent contractors, farmers, partners, and certain S corporation shareholders who pay for their own health insurance coverage.