Can You Deduct Health Insurance Premiums as Self-Employed

Yes — most self-employed people can deduct 100% of the health insurance premiums they pay for themselves, a spouse, and dependents. It's an above-the-line deduction, meaning it reduces taxable income directly, without needing to itemize.

Who qualifies

Generally, you need to show a net profit from self-employment for the year, and you (and your spouse, if applicable) must not be eligible to participate in a subsidized health plan through an employer — including a spouse's employer plan. If you meet those conditions, premiums for medical, dental, and certain long-term care coverage typically qualify.

How much can be deducted

The deduction can't exceed your net self-employment income for the year — if your business shows a loss, you generally can't use this deduction that year (though the premiums might be deductible elsewhere depending on your situation). For most profitable freelance businesses, the full premium amount for a Marketplace or private plan is deductible.

How this interacts with Marketplace subsidies

If you buy coverage through the ACA Marketplace and receive a premium tax credit (subsidy), the math gets more intertwined: the deduction lowers your taxable income, which can affect your subsidy eligibility, which in turn affects your net premium cost, which affects the deduction amount. This circular calculation is exactly the kind of thing tax software or a preparer is built to handle correctly — attempting to estimate both by hand independently often produces the wrong number.

Where to claim it

The deduction is claimed on Schedule 1 of Form 1040, referencing the Self-Employed Health Insurance Deduction Worksheet to calculate the exact allowable amount, especially in years where Marketplace subsidies are also involved.

Frequently asked questions