The Self-Employed Health Insurance Deduction: Who Qualifies and How to Claim It

Employees get health insurance paid with pre-tax dollars. The self-employed health insurance deduction is how freelancers and business owners get a similar break — and many people who qualify never claim it.

Key takeaways

You can deduct medical, dental and qualifying long-term care premiums for yourself, your spouse and your dependents.
It’s an “above-the-line” deduction — you don’t have to itemize.
The deduction can’t exceed your net profit from the business.
You can’t take it for any month you were eligible for a subsidized employer plan — yours or your spouse’s.
It’s figured on IRS Form 7206 and reported on Schedule 1 of Form 1040.

Who qualifies

Generally, you can claim the deduction if you are:

A sole proprietor, independent contractor or freelancer with net profit reported on Schedule C or Schedule F;
A partner with net earnings from self-employment; or
A more-than-2% shareholder in an S corporation, when the corporation pays or reimburses the premiums and includes them in your wages.

The two big limits

1. The employer-plan rule

You can’t take the deduction for any month in which you were eligible to participate in a subsidized health plan through an employer — including your spouse’s employer — even if you didn’t actually enroll. This is calculated month by month, so if your spouse’s job (and plan eligibility) started in July, you might still deduct premiums for January through June.

2. The earned-income limit

The deduction can’t be more than your net earnings from the business the plan is established under (reduced by certain items like the deductible part of self-employment tax and retirement contributions). If your business had a loss, you can’t take the deduction for that business.

What premiums count

Medical insurance premiums, including Marketplace plans (the part you actually paid, after any premium tax credit).
Dental and vision insurance premiums.
Qualified long-term care insurance premiums, up to age-based IRS limits.
Medicare premiums (Parts A, B, C and D) you pay, if you’re self-employed.
Coverage for children who are under 27 at the end of the year, even if they’re not your dependents.

Marketplace plan + premium tax credit? The deduction and the credit affect each other, because the deduction lowers your income, which can raise your credit. IRS Publication 974 explains the calculation; tax software or a tax professional can do it for you.

A quick example

Maria is a freelance designer with $60,000 in net profit. She pays $5,400 a year for a Marketplace plan after her tax credit and has no access to an employer plan. She can deduct the full $5,400. In a 22% federal tax bracket, that saves her roughly $1,190 in federal income tax — though, like other above-the-line deductions, it doesn’t reduce self-employment tax.

Don’t double-dip

Premiums you deduct here can’t also be included in itemized medical expenses.
Premiums paid with tax-free HSA money can’t be deducted.

How to claim it

Total the premiums you paid for each month you qualified.
Complete Form 7206 (Self-Employed Health Insurance Deduction) if required, or the simplified worksheet in the Form 1040 instructions.
Enter the result on Schedule 1 (Form 1040).
Keep your premium statements and Form 1095-A (if you had a Marketplace plan).

Sources: IRS Form 7206 and instructions; IRS Publication 535; IRS Publication 974. Tax rules are complex — this article is for education only and isn’t tax advice. Consult a tax professional for your situation. Last reviewed October 2026.