Can I deduct health insurance premiums as a self-employed sole proprietor?

Yes — under IRC §162(l), self-employed sole proprietors, single-member LLCs, and partners can deduct 100% of health insurance premiums paid for themselves, their spouse, dependents, and any child under age 27 (post-ACA). The deduction is taken above-the-line on Schedule 1, line 17.

What is the earned-income cap on the §162(l) deduction?

The deduction cannot exceed the net self-employment income reported on Schedule C (or partnership W-2 wages/S-corp K-1 for partners/shareholders). Premiums above the cap carry forward as an above-the-line adjustment in future years — the carryforward expires with the business.

Are Medicare premiums deductible under §162(l)?

Yes — Medicare Part B, Part D, and Medicare Advantage premiums paid by the self-employed taxpayer qualify. Premiums paid by Social Security withholding for Part B and Part A still count as paid by the taxpayer for the §162(l) deduction.

Can I deduct premiums my spouse’s employer paid?

No — premiums paid by a spouse’s employer or under a spouse’s §125 cafeteria plan are not deductible under §162(l). The deduction only applies to premiums the SE taxpayer (or the SE taxpayer’s business) actually paid, net of any employer subsidy or pre-tax payroll exclusion.

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Self-employed health insurance

Self-employed health insurance deduction explained

Sole proprietors and single-member LLCs can deduct health insurance premiums above-the-line on Schedule 1 — earned-income cap, anti-double-dip rules, and Form 1095-B eligibility.

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Citation backbone

This article rests on the IRC section below — every recommendation Taxerity.AI surfaces cites this same scaffolding.

IRC § 162(l)Schedule 1 (Form 1040) Instructions

Who can claim this

Who qualifies for the self-employed health insurance

Schedule C sole proprietor with paid health-insurance premiums under the SE health insurance deduction.

Form 1095-B (or carrier statement) on file for each month claimed — Medicare or marketplace, never a non-qualifying reimbursement plan.
Schedule 1 line 17 self-employed health insurance deduction ≤ Schedule C net profit (the §162(l)(1) earned-income cap).
Premiums not previously deducted as an employee on a W-2 wage return — the §162(l)(2) anti-double-dip rule is satisfied.

How to claim — step-by-step

How to claim the self-employed health insuranceon this year's return

Form 1095-B (or carrier statement) on file for each month claimed — Medicare or marketplace, never a non-qualifying reimbursement plan.
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Schedule 1 line 17 self-employed health insurance deduction ≤ Schedule C net profit (the §162(l)(1) earned-income cap).
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Premiums not previously deducted as an employee on a W-2 wage return — the §162(l)(2) anti-double-dip rule is satisfied.
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What catches practitioners off guard

The risk to review

Why AI + human review matters here

Premiums paid by the spouse’s employer or under an §125 cafeteria plan are not deductible here — only premiums paid by the SE taxpayer, net of any employer subsidy, count toward §162(l).

Taxerity.AI surfaces this and similar items for your firm's reviewer. The AI does the research; you keep the final judgment on whether the workload and evidence pattern warrant the deduction on a specific client's return.

FAQ

Common questions about the self-employed health insurance

Quick answers to the questions solo CPAs and enrolled agents ask us most often about this deduction.

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