Orlando Harmon
Health insurance costs may be tax-deductible, but this depends on a variety of factors, including how much you spent on medical care for the year, how you get health insurance, and whether you are self-employed. If you are self-employed and pay all your health insurance premiums, you can deduct the cost from your taxable income. If you are not self-employed, you can only deduct the out-of-pocket portion of your employer-sponsored health insurance premium if you take the itemized deduction on your tax return. In addition, to be eligible to claim the deduction, you'll need to have spent a significant portion of your income on healthcare costs and have paid these medical expenses out of pocket, not through a health savings account (HSA) or flexible spending account (FSA).
| Characteristics | Values |
|---|---|
| Can you write off medical insurance on taxes? | Yes, but only if they meet certain criteria. |
| Who is eligible? | Self-employed individuals, retired public safety officers, and those with a net profit for the year. |
| What expenses are deductible? | Medical and dental expenses, unreimbursed expenses for preventative care, treatment, surgeries, prescription medications, glasses, contacts, false teeth, hearing aids, travel expenses, and meals at a hospital. |
| What expenses are not deductible? | Cosmetic procedures, non-prescription drugs (except insulin), general health purchases (toothpaste, vitamins, diet food), medical expenses paid in a different year, and expenses paid through a flexible spending account or health savings account. |
| How to claim deductions? | Itemize deductions on Schedule A (Form 1040) and ensure expenses exceed 7.5% of adjusted gross income (AGI). |
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What You'll Learn
Self-employed health insurance premiums
If you are self-employed, you can deduct the health insurance premiums you pay to help offset the cost of medical expenses. This is called the self-employed health insurance deduction. It is a tax benefit that helps people who own a business pay for health insurance. It is an "above-the-line" deduction, meaning you don't have to itemize deductions to claim it. This deduction can be applied to premiums paid for yourself, your spouse, dependents, and any non-dependent children under 27 at the end of the tax year. It covers medical, dental, and vision insurance, as well as qualifying long-term care coverage and Medicare premiums.
To be eligible for the self-employed health insurance deduction, you must meet certain Internal Revenue Service (IRS) criteria. You must be self-employed, have a profitable business, and not have access to an employer-sponsored health coverage plan. If you are eligible for a premium tax credit under the Affordable Care Act (ACA), you cannot claim the full health insurance deduction and the tax credit on the same premiums. Additionally, you cannot claim your own health insurance premiums on Schedule C as a business expense.
The self-employed health insurance deduction is claimed as an adjustment to your gross income on Schedule 1 of Form 1040. You can claim this deduction regardless of whether you choose to claim the standard deduction or itemize your deductions. It is important to note that there is a limit on what you can deduct for long-term care insurance, and the IRS adjusts these limits annually for inflation. For example, for the 2024 tax year, the limit for age 40 or under is $470, while for age 71 or over, the limit is $5,880.
If you don't claim 100% of your paid premiums, you can include the remainder with your other medical expenses as an itemized deduction on Schedule A (Form 1040). The IRS allows taxpayers to deduct their qualified unreimbursed medical care expenses that exceed 7.5% of their adjusted gross income. This includes unreimbursed expenses for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, and prescription medications. Transportation expenses primarily for and essential to medical care, such as mileage on your car, bus fare, and parking fees, may also be deductible.
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Medical expenses exceeding 7.5% of AGI
If your medical expenses are more than 7.5% of your adjusted gross income (AGI), you may be able to deduct the expenses that exceed this threshold. This applies to medical and dental expenses for yourself, your spouse, and your dependents. It also includes medical expenses for a non-dependent child under the age of 27.
The deduction only applies to out-of-pocket expenses that are not reimbursed by insurance or other means. This includes unreimbursed expenses for preventative care, treatment, surgeries, dental and vision care, and visits to psychologists and psychiatrists. Unreimbursed payments for prescription medications and appliances such as glasses, contacts, false teeth, and hearing aids are also deductible.
Transportation costs essential to medical care, such as mileage on your car, bus fare, and parking fees, can also be deducted. Additionally, premiums paid for health insurance coverage can be deducted, but there are specific rules regarding this. For example, if you are self-employed, you may be eligible for the self-employed health insurance deduction, which is an adjustment to income rather than an itemized deduction. However, if you are a retired public safety officer, you cannot include health or long-term care insurance premiums that you elected to pay with tax-free distributions from a retirement plan.
It is important to note that you must itemize your deductions on Schedule A (Form 1040) to deduct medical expenses. You should also keep records of your medical and dental expenses to support your deduction.
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Medical travel expenses
If you have medical bills that aren't fully covered by your insurance, you may be able to take a deduction for those to reduce your tax bill. The IRS allows you to deduct unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, appliances such as glasses, contacts, false teeth and hearing aids, and expenses that you pay to travel for qualified medical care.
The IRS allows all taxpayers to deduct their total qualified unreimbursed medical care expenses that exceed 7.5% of their adjusted gross income (AGI) if the taxpayer uses IRS Schedule A to itemize their deductions. Your adjusted gross income (AGI) is your total income subject to tax from your tax return minus any adjustments to income, such as contributions to a traditional IRA and deductible student loan interest. For example, if you have an AGI of $45,000 and $5,475 of medical expenses, you would multiply $45,000 by 0.075 (7.5%) to find that only expenses exceeding $3,375 can be included as an itemized deduction. This leaves you with a medical expense deduction of $2,100 ($5,475 minus $3,375).
Amounts paid for transportation that are essential to medical care qualify for the medical expense deduction. This includes out-of-pocket expenses for your personal car such as gas and oil, or the standard mileage rate for medical expenses, plus the cost of tolls and parking; taxi, bus, or train fare; and ambulance costs. Amounts paid for insurance premiums to cover medical care or qualified long-term care can also be included.
Certain costs related to nutrition, wellness, and general health are considered medical expenses. However, you typically cannot deduct the cost of nonprescription drugs (except insulin) or other purchases for general health, such as toothpaste, health club dues, vitamins, diet food, and nonprescription nicotine products.
Any medical expenses you get reimbursed for, such as by your insurance or employer, cannot be deducted. Additionally, if you pay for your medical expenses using money from a flexible spending account or health savings account, those expenses aren't deductible because the money in those accounts is already tax-advantaged.
If you are a self-employed individual with a net profit for the year, you may be eligible for the self-employed health insurance deduction. This is an adjustment to income, rather than an itemized deduction, for premiums you paid on a health insurance policy covering medical care, including a qualified long-term care insurance policy for yourself, your spouse, and dependents. The policy can also cover your child who is under the age of 27 at the end of the year even if the child wasn't your dependent.
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Non-deductible medical expenses
You cannot deduct medical expenses that have been reimbursed, either by your insurance or employer. This includes any medical and dental expenses paid by an employer-sponsored health insurance plan, unless included on your Form W-2, Wage and Tax Statement.
You also cannot deduct the cost of non-prescription drugs (except insulin) or other purchases for general health, such as toothpaste, health club dues, vitamins, diet food, and non-prescription nicotine products.
If you are a retired public safety officer, you cannot include as medical expenses any health or long-term care insurance premiums that you elected to have paid with tax-free distributions from a retirement plan. This also applies to distributions that would otherwise be included in your income.
You cannot deduct medical expenses paid in a different year. If you pay for your medical expenses using money from a flexible spending account or health savings account, those expenses are not deductible because the money in those accounts is already tax-advantaged.
You cannot deduct pre-tax salary contributions you make to an employer-sponsored health insurance plan. You also cannot deduct premiums you pay for certain types of policies that are not tied to the actual cost of the medical care you received. For example, policies that pay you a certain amount, such as $200 a day while hospitalized.
If you are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program, you cannot deduct the premiums paid with that money. This is because your insurance premiums are paid with money that is never included in your gross income.
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Medical insurance for dependants
If you itemize your deductions for a taxable year on Schedule A (Form 1040), you may be able to deduct the medical and dental expenses you paid for yourself, your spouse, and your dependents. This only applies to expenses not compensated by insurance or otherwise, regardless of whether you receive the reimbursement directly or payment is made on your behalf to the doctor, hospital, or other medical provider.
The deduction is only available if your itemized deductions are greater than your standard deduction. The IRS allows you to deduct unreimbursed expenses for preventative care, treatment, surgeries, and dental and vision care as qualifying medical expenses. You can also deduct unreimbursed expenses for visits to psychologists and psychiatrists. Unreimbursed payments for prescription medications and appliances such as glasses, contacts, false teeth, and hearing aids are also deductible.
The IRS also lets you deduct the expenses that you pay to travel for medical care, such as mileage on your car, bus fare, and parking fees. Amounts paid for transportation include your out-of-pocket expenses for your personal car, such as gas and oil, or the standard mileage rate for medical expenses, plus the cost of tolls and parking. You can also deduct amounts paid for admission and transportation to a medical conference relating to a chronic illness of yourself, your spouse, or your dependent, as long as the costs are primarily for and essential to necessary medical care.
If you are self-employed and have a net profit for the year, you may be eligible for the self-employed health insurance deduction. This is an adjustment to income for premiums you paid on a health insurance policy covering medical care, including a qualified long-term care insurance policy for yourself, your spouse, and dependents. The policy can also cover your child who is under the age of 27 at the end of the year, even if the child is not your dependent.
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Frequently asked questions
If you are self-employed and pay all your health insurance premiums, you can deduct the cost from your taxable income. If you are not self-employed, you can only deduct the out-of-pocket portion of your employer-sponsored health insurance premium if you take the itemized deduction on your tax return.
To be eligible to claim the deduction, you may need to itemize your taxes, spend a significant portion of your income on healthcare costs, and pay these medical expenses out of pocket.
You can write off unreimbursed expenses for preventative care, treatment, surgeries, and dental and vision care as qualifying medical expenses. You can also write off unreimbursed expenses for visits to psychologists and psychiatrists.
You cannot write off the cost of non-prescription drugs (except insulin) or other purchases for general health, such as toothpaste, health club dues, vitamins, diet food, and non-prescription nicotine products.
