Self-Employed Health Insurance Deduction
Self-employed health insurance deduction is above-the-line — reduces AGI before standard/itemized deductions. Covers medical, dental, LTC, Medicare premiums. Limited to business net income.
| Health + dental premiums | — |
| LTC premium (age-capped) | — |
| Medicare premiums (if applicable) | — |
| Total premiums | — |
| Net SE income (limit) | — |
| Allowable deduction | — |
Self-employed health insurance deduction (Schedule 1, line 17) lets sole proprietors, partners, and S-corp 2%+ shareholders deduct health, dental, LTC, and Medicare premiums above-the-line — reducing AGI dollar-for-dollar. It's one of the biggest deductions self-employed often miss.
Eligible Premiums
Medical insurance for taxpayer, spouse, dependents, and under-27 children. Dental and vision insurance. Long-term care insurance (subject to age cap). Medicare Parts A (only if voluntarily paid), B, C, D, and Medigap. Cannot deduct if eligible for subsidized employer-sponsored plan (yours or spouse's).
Income Limitation
Deduction cannot exceed net self-employment income minus 1/2 SE tax minus retirement plan contributions. Example: $80K Schedule C, $5,652 SE tax, $5,000 SEP. Max deduction = $80K - $5,652/2 - $5,000 = $72,174. Excess premiums above this cap are wasted (not carried forward).
LTC Age-Based Caps (2026)
Age 40 or less: $480. Age 41-50: $900. Age 51-60: $1,800. Age 61-70: $4,810. Age 71+: $6,020. Per IRS Revenue Procedure annual update. Premium above cap is NOT deductible above-the-line; can claim on Schedule A subject to 7.5% AGI floor.
S-Corp Owners' Special Rules
S-corp 2%+ shareholders must include health premiums in W-2 wages (Box 1). Then deduct on Schedule 1 as self-employed health insurance. Net effect: no income tax cost, FICA still applies. Must be paid by S-corp not shareholder personally.
Last updated May 2026. Sources: IRS Self-Employed Health, IRS Pub 535.