Self-Employed Health Insurance Deduction Calculator

Under IRC §162(l), self-employed taxpayers (Schedule C, Schedule F, or a partner with Schedule K-1 box 14 code A self-employment earnings) can deduct premiums paid for medical, dental, vision, and qualified long-term care insurance for themselves, their spouse, dependents, and children under age 27 — even if the child isn't a dependent. Medicare premiums (Parts B and D, plus Medigap) also count. It's an above-the-line deduction claimed on Schedule 1 (Form 1040), line 17, so you don't need to itemize to get it. As of 2023, the calculation is done on Form 7206, which replaced the old worksheet in IRS Pub. 535.

Your deduction can't exceed the net profit from the specific business under which the insurance plan is established, minus two further reductions: (1) the deductible half of self-employment tax attributable to that business, and (2) SEP, SIMPLE, or solo 401(k) contributions attributable to that business. This is Form 7206's line 4 → line 7 → line 8 → line 9 → line 10 chain. If your requested premiums exceed this ceiling, the excess simply isn't deductible this year — it doesn't carry forward to a future year. A business with a small or zero net profit (e.g., a startup year) can end up with little or no deduction even if the owner paid substantial premiums.

IRC §162(l)(2)(B) disallows the deduction for "any month for which the taxpayer participates in a subsidized health plan maintained by the employer of the taxpayer or the taxpayer's spouse." This applies to ELIGIBILITY, not just enrollment — if you turned down subsidized coverage from your spouse's employer, you still can't deduct premiums for the months that coverage was available to you. Form 7206's instructions extend this rule to any month your dependent or a child under 27 (whose coverage you're claiming) was eligible for a subsidized employer plan through their own job. The rule applies separately to LTC-only plans and non-LTC plans.

Qualified LTC insurance premiums are includible only up to an IRS age-based annual limit under IRC §213(d)(10), using your age at the end of the tax year. For 2025 (Rev. Proc. 2024-40 §2.28): $480 (age 40 or younger), $900 (41–50), $1800 (51–60), $4810 (61–70), $6020 (71+). For 2026 (Rev. Proc. 2025-32 §4.27): $500, $930, $1860, $4960, $6200 respectively. Premiums above the cap for your age aren't lost entirely — they may still count as a Schedule A itemized medical expense, subject to the 7.5% AGI floor.

No. Form 7206's instructions are explicit: "You can't subtract the self-employed health insurance deduction when figuring net earnings for your self-employment tax." Self-employment tax (Schedule SE) is calculated on your net profit BEFORE this deduction. The health insurance deduction only reduces your federal (and usually state) income tax by lowering AGI — it has zero effect on the 15.3% self-employment tax base. This calculator's "estimated tax savings" figure reflects only the income-tax effect at your marginal rate.

If you obtained coverage through the Health Insurance Marketplace and either received advance payments of the premium tax credit or are claiming the premium tax credit (Form 8962), see IRS Pub. 974. The self-employed health insurance deduction and the premium tax credit interact circularly — the deduction reduces your AGI, which can change your PTC-eligible income, which changes the credit, which changes the net premiums you actually paid, which changes the deduction. Pub. 974 provides an iterative worksheet to resolve this. This calculator does not model the Marketplace/PTC circular calculation — treat its output as an estimate if you receive PTC.

Not directly. More-than-2% S-corp shareholders use a parallel path on Form 7206 (lines 11–13) based on Medicare wages (Form W-2 box 5) reported by the S-corp, rather than Schedule C/F net profit. The premiums must be paid or reimbursed by the S-corp and included in the shareholder's W-2 wages to qualify. This calculator models the Schedule C/F/K-1 self-employment path only.