Health insurance premiums are tax deductible, but the IRS makes everyone jump through different hoops depending on their situation. Self-employed individuals can deduct 100% of their premiums right off the top. Employees with workplace coverage usually pay premiums pre-tax through payroll deductions. People buying their own insurance can deduct premiums only if their total medical expenses exceed 7.5% of their adjusted gross income—a threshold most won’t hit. The specifics get complicated fast, and understanding which category applies makes all the difference.
Design Highlights
- Health insurance premiums may be tax deductible depending on employment status and whether you have employer-sponsored coverage.
- Self-employed individuals can deduct 100% of premiums for themselves, spouses, and dependents on Schedule 1, line 17.
- Premiums paid by employers are tax-deductible for companies, while employee contributions through payroll are typically made pre-tax.
- Individual insurance premiums are deductible only if medical expenses exceed 7.5% of adjusted gross income as itemized deductions.
- Long-term care, Medicare Part B, dental, and vision premiums are deductible; disability and life insurance premiums are not.
When it comes to health insurance premiums and taxes, the rules are about as straightforward as a pretzel. The answer to whether premiums are deductible depends entirely on where the insurance comes from and who’s paying for it. Fun stuff.
For people with employer-sponsored health insurance, the situation is pretty simple. If the employer pays the premiums, those amounts are tax-deductible for the company but excluded from the employee’s taxable income. Nice deal. If employees chip in for premiums, those contributions are typically made pre-tax through payroll deductions. That means they’re already getting a tax break and can’t deduct them again. Only after-tax premium payments might qualify for a deduction, and even then, it gets complicated.
Self-employed individuals get a better shake. They can deduct 100% of premiums for medical, dental, and qualifying long-term care insurance for themselves, their spouse, and dependents. The deduction is claimed on Schedule 1, line 17. But there’s a catch. Actually, two catches. The deduction can’t exceed earned income from the business, and it’s not allowed if the person is eligible for an employer-subsidized health plan. So close, yet so far.
Self-employed? Deduct 100% of health premiums—unless you earn too little or have access to employer coverage. Classic tax code gymnastics.
For those buying insurance through the marketplace or individually, premiums paid out-of-pocket with after-tax dollars are deductible. But only if they’re not eligible for an employer-sponsored plan. And any premium tax credits received reduce the deductible amount. This deduction is claimed as an adjustment to income, not as an itemized deduction. Monthly premiums on the ACA Marketplace vary widely, with Bronze plans averaging around $380 and Platinum plans reaching approximately $540, though subsidies can significantly reduce these costs for eligible individuals.
Then there’s the itemized deduction route for medical expenses. Health insurance premiums can be lumped in with other unreimbursed medical and dental expenses. The problem? Total medical expenses must exceed 7.5% of adjusted gross income before anything is deductible. That’s a high bar for most people. Bunching medical expenses into a single tax year can help reach that threshold and maximize the deduction.
Long-term care insurance premiums are deductible up to annual IRS limits that vary by age. In 2025, those limits range from $480 for people 40 or under to $6,020 for those over 70. Only tax-qualified policies count. Linked benefit or hybrid life insurance policies typically do not qualify for these deductions.
Medicare beneficiaries can deduct Part B premiums, which run $185 per month in 2025, plus the $257 annual deductible. Medicare supplemental and Part D premiums are also deductible. Same rule applies: total medical expenses must clear that 7.5% AGI threshold.
Dental and vision insurance premiums are deductible. Disability and life insurance premiums are not. Because of course they’re not.
Frequently Asked Questions
Can I Deduct Premiums if My Employer Offers Health Insurance?
No, not really. If an employee pays premiums through pre-tax payroll deductions, those can’t be deducted again—that would be double-dipping.
Premiums paid with after-tax dollars might qualify as itemized medical deductions, but only if total medical expenses exceed 7.5% of adjusted gross income. That’s a high bar.
Opting out of employer coverage and buying insurance independently could make premiums deductible as qualified medical expenses.
But most employees paying through their employer plan? Out of luck.
Are Dental and Vision Insurance Premiums Also Tax Deductible?
Yes, dental and vision premiums are tax deductible—but there’s a catch. They need to be paid with after-tax dollars, and the taxpayer has to itemize on Schedule A.
Here’s the kicker: only expenses exceeding 7.5% of adjusted gross income actually count. So with $60,000 AGI, the first $4,500 goes nowhere.
Employer-paid premiums? Not deductible. The rules are pretty much identical to regular health insurance premiums.
Do HSA Contributions Count as Deductible Health Insurance Expenses?
HSA contributions are tax-deductible, but they’re not the same thing as health insurance premiums. Two completely different categories.
Contributions reduce taxable income whether made through payroll or individually—that’s the deduction part. But the money itself doesn’t pay premiums (with rare exceptions like COBRA or Medicare). It covers medical expenses like deductibles and copays.
What Documentation Do I Need to Claim Health Insurance Deductions?
Documentation varies by situation.
Self-employed folks need Form 7206 and proof they’re actually self-employed.
Everyone itemizing needs Schedule A and receipts showing premiums paid—bank statements, credit card bills, canceled checks. Forms 1095-A, B, or C from insurers prove coverage.
Pay stubs work if premiums were paid after-tax, not pre-tax through employer plans. W-2s show what employers contributed.
Anyone claiming Premium Tax Credit needs Form 8962.
Long-term care insurance? Age verification required for deduction limits.
Can Retirees Under 65 Deduct Medicare Supplement Insurance Premiums?
Yes, retirees under 65 can deduct Medicare supplement premiums, but there’s a catch—actually several.
They must itemize deductions on Schedule A instead of taking the standard deduction. Their total medical expenses need to exceed 10% of adjusted gross income before any deduction kicks in. That’s higher than the 7.5% threshold for those 65 and older.
Only amounts above that 10% threshold are deductible. Self-employed retirees get better treatment with above-the-line deductions.
