Are Medical Insurance Premiums Tax Deductible?

When Health Insurance Premiums Are Tax Deductible

Many medical expenses are deductible, but health insurance premiums have special rules. 

Health insurance premiums are the amounts you pay to maintain medical coverage.

Are health insurance premiums tax deductible? It depends on how you pay for your coverage.

If you pay your health insurance premiums with after-tax money, you may be able to include them as a medical expense deduction. To qualify, you must have paid for the policy yourself. If your employer provides coverage or your premiums are paid with pre-tax dollars through payroll deductions, you cannot deduct those premiums because the tax benefit has already been applied.

Vision and dental insurance premiums work the same way: you can deduct them only if you pay the premiums yourself with after-tax dollars and they aren’t part of an employer-sponsored pre-tax plan.

You can also deduct other types of health insurance premiums, including:

• Medicare Part B, C, and D premiums paid by retirees
• COBRA premiums
• Marketplace (ACA) health plan premiums you pay out of pocket

IRS Publication 502 (Medical and Dental Expenses) also notes that you cannot deduct any insurance premiums if you are already claiming a separate deduction or credit for the medical expenses those premiums covered. This prevents taxpayers from receiving “double benefits” for the same expense.

Next Steps: If you think your health insurance premiums and other medical expenses qualify, total your deductible expenses for the year. Then compare that amount to the standard deduction for your filing status. If your combined expenses exceed the standard deduction (and pass the 7.5% AGI threshold for medical deductions), itemizing may lower your tax bill.

Qualifying vs. Non-Qualifying Health Insurance Premiums (At a Glance)

Source: IRS Pub. 502

When Premiums Are Not Deductible

There are situations when your health insurance premiums are not considered tax-deductible under Internal Revenue Service rules.

The most common non-deductible premiums are those paid with pre-tax dollars through an employer-sponsored plan. Employers usually pay your premiums using a pre-tax payroll deduction. This means the money used to pay the premiums has not been taxed before it is applied to the plan, and it is not counted as part of the employee’s taxable income. Because the tax benefit is already received upfront, these premiums cannot be deducted on your tax return.

Group insurance plans paid by an employer also follow the same rule. If your employer covers some or all of the premium, the amount paid on your behalf is not deductible.

The following types of insurance policies are also not eligible for a medical expense deduction:

• Life insurance policies
• Disability insurance policies
• Insurance policies that only cover cosmetic medical procedures

So What? Knowing which premiums are not deductible can help you understand how your health coverage is taxed and guide your decision on whether to itemize deductions in the future.

Self-Employed? How the Health Insurance Deduction Works

Are you currently self-employed? If you buy your own health insurance, such as a Marketplace plan or a private policy, you may qualify for the self-employed health insurance deduction. This is an above-the-line deduction, which means:

• You do not have to itemize, and
• You do not have to meet the 7.5 percent AGI threshold for most medical expenses.

If you pay for your own health insurance with after-tax dollars, and your business earns a net profit, you may qualify for the self-employed health insurance deduction. You cannot claim it if you are eligible for a spouse’s employer plan, if you use pre-tax premiums, or if you try to deduct the same expense twice.

You may qualify for this deduction if you are any of the following:

• A sole proprietor
• An independent contractor
• A partner in a partnership
• A more-than-2-percent S corporation shareholder

You are eligible as long as:

• Your business has a net profit for the year
• The insurance plan is established under your business (or S corporation)
• The deduction does not exceed your earned income from that business
• You do not claim the same premiums again as a Schedule A medical deduction

You also cannot claim this deduction for any month when you or your spouse were eligible for an employer-subsidized health plan, even if you chose not to sign up for that plan. But if there are months when neither of you is eligible for employer coverage, you can deduct the Marketplace premiums or other qualifying premiums you paid out of pocket for those months.

Next Step: Review how you pay for your coverage, make sure your business shows a profit, and check whether you or your spouse were eligible for any employer plan during the year. Then use Form 7206 (Self-Employed Health Insurance Deduction) and the instructions for Schedule 1 and Form 8962 (Premium Tax Credit), if you also claim the Premium Tax Credit, to calculate how much you can deduct.

Long-Term Care and COBRA Premiums

Health insurance costs, including qualified long-term care premiums and COBRA, will count as medical expenses when self-paid. Long-term-care premiums are subject to age-based limits.

Next Step: Identify if you qualify for additional tax benefits and claim them by itemizing any COBRA premiums or qualified long-term-care premiums that you pay for yourself.

Where to Claim the Health Insurance Premium Deduction

Have you determined that your insurance premiums and other medical expenses are deductible? If so, your first step is to total the full amount of your potential medical expense deduction. To do this, add together all qualified medical expenses and any deductible insurance premiums. Include medical and dental expenses you paid out of pocket, along with payments for medically necessary vision care, treatments, or equipment.

Next, calculate your adjusted gross income. Use the income you plan to report on your tax return along with any allowable adjustments. Multiply your AGI by 0.075. Only the portion of your Schedule A medical expenses that is greater than this 7.5% amount is considered tax deductible.

You can claim these expenses by itemizing on Form 1040, Schedule A. Each itemized deduction should be listed with the amount paid and the type of expense.

Self-employed individuals calculate the deduction on Form 7206 and carry the result to Schedule 1 (Form 1040), Part II, as instructed.

Next Steps: Taxes for the self-employed can be complex, but the general rule is that insurance premiums are deductible only when paid with after-tax dollars and meet IRS requirements.

Source: Form 7206 Instructions

Health Insurance Premium Deduction Examples (With Numbers)

Here, we’ll provide a numeric example of what it would look like to deduct medical expenses associated with insurance premiums on your return.

The hypothetical taxpayer earned $60,000 in adjusted gross income in the tax year we’re filing under. The first step for the taxpayer is to calculate how much of their adjusted gross income is subject to the 7.5% threshold, since taxpayers are eligible to deduct only expenses that exceed that threshold.

In our example, we will multiply $60,000 by 7.5% to get $4,500. Any medical expenses and deductible insurance premiums that exceed $4,500 are deductible.

Next, the taxpayer must calculate the sum of all their medical expenses, post-tax premiums, and other potential deductions. For the sake of our example, let’s say the taxpayer paid out over $7,000 in these categories. Because only expenses exceeding $4,500 are deductible, the taxpayer can deduct $2,500 on their return.

For returns filed for tax year 2025, the standard deduction is $15,750 for Single or Married Filing Separately and $31,500 for Married Filing Jointly.

Next Step: Use this numeric example and formula to calculate your own AGI, total medical expenses, and potential deduction amount.

Source: IRS Rev. Proc. 2024-40

Are Medical Insurance Premiums Tax Deductible?

If you paid for your own health insurance policy and weren’t reimbursed through a pre-tax plan, you may qualify for valuable tax deductions. Self-employed taxpayers can often claim the full premium directly.

The medical insurance deduction is available for premiums paid for oneself, one's spouse, dependents, and non-dependent children under age 27.

Tax deductions can reduce your taxable income, which may lower your tax bill or increase your refund, depending on your overall situation. You might also experience other benefits, such as qualifying for additional tax credits or moving into a more favorable tax bracket.

Use our Medical Deduction Flowchart to see if your expenses qualify and learn how to claim them on Schedule A or Schedule 1.