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Are Health Insurance Premiums Tax-Deductible?
The deduction is limited, but you might be eligible. Here’s what to know
4-minute read
Health care costs can hurt. A tax deduction might ease the pain.
Pete Ryan
Key takeaways
- Employer-subsidized premiums generally aren’t deductible because most workers already pay them with pretax income.
- Generally, you must itemize your taxes in order to be eligible for a tax deduction for health insurance premiums.
- Self-employed taxpayers may deduct eligible premiums without itemizing, but the deduction cannot exceed their net business income.
Health insurance is probably one of the biggest expenses in your monthly budget, so it’s natural to wonder whether the IRS offers any tax relief. The answer is yes, but only in certain situations.
If you have health insurance through your employer, your premiums likely aren’t tax-deductible. Most workers with employer-provided coverage have their premium contributions withheld from their paychecks on a pretax basis. Deducting those premiums is considered double-dipping, which the IRS does not allow.
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Health insurance that you purchase on your own may be deductible, but there are some significant limitations. First, you must itemize on your tax return. In 2026, the standard deduction is $16,100 for single taxpayers or $32,200 for married couples who file jointly, plus an additional $1,650 for each spouse who is 65 or older. Most taxpayers get a lower tax bill by claiming the standard deduction.
Even if you have enough deductions to make itemizing worthwhile, the medical expense tax deduction is limited to unreimbursed medical expenses that exceed 7.5 percent of your adjusted gross income (AGI), which is your total income for the year, minus specific adjustments, such as deductible contributions to a health savings account (HSA), deductible contributions to an individual retirement account (IRA) or 401(k) and interest on student loans.
For example, if your AGI is $50,000 and your health insurance premiums, along with other unreimbursed medical expenses, totaled $5,000 in 2026, your deduction would be capped at $1,250. If your expenses totaled less than $3,760, you wouldn’t be able to deduct any of those costs.
If you purchased insurance through the Affordable Care Act marketplace and received a subsidy, you can only deduct the portion of the premium you paid — not the portion paid with a premium tax credit, which is designed to lower the cost of premiums for eligible individuals and families. The tax credit can be claimed when you file your taxes, or it can be received as an advance credit, in which case the government pays the credit directly to your insurance provider, reducing or eliminating your premium.
Medicare premiums are deductible if you itemize and your premiums, along with other unreimbursed medical expenses, exceed 7.5 percent of your AGI, which is a high bar. However, the list of eligible expenses is long: In addition to premiums for Medicare Part B and Part D, Medicare Advantage and Medigap, you might be able to deduct copayments, coinsurance and health care costs that aren’t covered by Medicare.
Eligibility requirements for the self-employed
The rules are different for self-employed taxpayers. Even if you work part-time, you may be eligible to deduct 100 percent of health insurance premiums purchased for you, your spouse and your dependents. This deduction is claimed as an adjustment to your gross income on Schedule 1 of Form 1040, and it’s available whether you claim the standard deduction or itemize.
The amount of the deduction can’t exceed the net income from your business. For example, if your net income for the year was $5,000 and you spent $8,000 on health insurance, your deduction will be limited to $5,000. (Some fine print: You can’t deduct your health insurance premiums if you or your spouse has access to an employer-subsidized group plan, even if you opt not to participate.)
The deduction for health insurance premiums is a tax break that older Americans who have a side gig often overlook. If you have self-employment income, you may be eligible to deduct premiums paid by you and a spouse for Medicare Part B and Part D, Medicare Advantage and Medigap.
In 2026, Medicare beneficiaries paid $203 a month for standard Part B premiums; retirees subject to the high-income surcharge paid from $284 to $690 a month, depending on their 2024 modified adjusted gross income (MAGI). Part D premiums vary by plan; retirees subject to the surcharge pay an additional $15 to $91 a month, depending on their 2024 MAGI.
As is the case with the self-employment deduction for other types of health insurance, you can’t deduct premiums that exceed your self-employment income. So if you made a few hundred dollars walking your neighbors’ dogs, you probably won’t be eligible for this tax break. But if you’re supplementing your retirement income with a part-time job — for example, you spend 10 to 20 hours a week tutoring — deducting your Medicare premiums could significantly reduce your AGI, which may make you eligible for other tax breaks.
The bottom line
While health insurance premiums can sometimes lower your tax bill, the rules are restrictive. But if you have significant unreimbursed medical expenses, it’s worth taking a close look. Keeping good records throughout the year and reviewing your options at tax time can help ensure you don’t miss a deduction you’re entitled to claim.
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