Quick answer
If you’re self-employed and show a net profit, you can deduct 100% of the premiums you pay for medical, dental and qualifying long-term care insurance for yourself, your spouse, your dependents and your children under 27. You claim it on Form 7206 and Schedule 1. It’s an «above-the-line» deduction, so you get it even if you take the standard deduction.
Two limits matter: the deduction can’t exceed your business profit, and you can’t claim months when you or your spouse could have joined an employer-subsidized health plan.
Who qualifies
- Sole proprietors and single-member LLC owners with a profit on Schedule C.
- Partners with self-employment earnings from the partnership.
- S-corp shareholders owning more than 2%, if the premiums are included as wages on their W-2.
You don’t qualify for any month when you were eligible for a subsidized plan through your own or your spouse’s employer, even if you chose not to enroll. The test is month by month. If you left a job in April, you can deduct premiums from May onward.
Which premiums count
| Premium | Deductible? |
|---|---|
| Marketplace (ACA) or private health insurance | Yes, the part you pay after any premium tax credit |
| Dental and vision insurance | Yes |
| Medicare Parts A, B, C and D and Medigap | Yes |
| Qualified long-term care insurance | Yes, up to age-based limits |
| COBRA premiums | Yes, if not eligible for another employer plan |
| Health sharing ministries | No (not insurance) |
| Premiums paid with pre-tax money or reimbursed | No |
2026 long-term care premium limits
| Age at year-end | Maximum deductible premium |
|---|---|
| 40 or under | $500 |
| 41 to 50 | $930 |
| 51 to 60 | $1,860 |
| 61 to 70 | $4,960 |
| Over 70 | $6,200 |
The net profit limit
The deduction can’t exceed your net profit from the business, minus the deductible half of your self-employment tax and any SEP, SIMPLE or Solo 401(k) contributions for yourself. If your business made $4,000 and you paid $7,000 in premiums, most of the rest may go to Schedule A as a medical expense, where only amounts over 7.5% of AGI count.
It doesn’t reduce self-employment tax
The deduction lowers your income tax and your AGI, but not your 15.3% self-employment tax. It also reduces your QBI deduction slightly, because it’s treated as connected to your business.
Worked example
Chris is a freelance developer with $80,000 net profit. He pays $650 a month for a marketplace plan for himself and his daughter, plus $40 a month for dental: $8,280 for the year. No employer plan was available.
- Deduction on Form 7206: $8,280.
- In the 22% bracket, that saves him about $1,820 in federal income tax.
Health insurance and the premium tax credit in 2026
If you buy marketplace coverage, two 2026 changes matter:
- The enhanced subsidies expired. Since January 1, 2026, the premium tax credit again stops at 400% of the federal poverty level. People just above that line now pay full price.
- No repayment cap. If your income ends up higher than you estimated, you may have to repay the entire excess credit when you file. Freelancers with uneven income should update their marketplace estimate during the year.
You can only deduct premiums you actually paid after the credit. Because the deduction lowers your income, which changes the credit, the two are calculated together. Tax software handles it using the method in IRS Publication 974.
Pair it with an HSA
Starting in 2026, all bronze and catastrophic marketplace plans are HSA-eligible. If you have one, you can also contribute to a Health Savings Account and deduct it separately:
- $4,400 self-only coverage.
- $8,750 family coverage.
- +$1,000 catch-up if you’re 55 or older.
HSA money grows tax-free and comes out tax-free for medical costs.
How to claim it
- Complete Form 7206 (Self-Employed Health Insurance Deduction).
- Carry the result to Schedule 1, line 17.
- Don’t put the premiums on Schedule C. They go on Schedule 1 instead.
Keep your premium statements, Form 1095-A (marketplace) and proof of payment.
Frequently asked questions
Can I deduct health insurance if my business had a loss?
No. The deduction is limited to net profit. You may be able to include the premiums as an itemized medical expense instead.
My spouse has employer coverage but I’m on my own plan. Can I deduct it?
Not for months when you were eligible to join your spouse’s subsidized employer plan, even if you declined it.
Can I deduct premiums for my adult child?
Yes, for a child who is under 27 at the end of the year, even if they aren’t your dependent.
Is the health insurance deduction the same as the HSA deduction?
No. They’re separate. You can claim both if you qualify.
This article is general information, not tax advice. Consult a CPA or Enrolled Agent for your situation.
Sources
Instructions for Form 7206; IRS Publication 974, Premium Tax Credit; IRS Publication 969, Health Savings Accounts; 2026 long-term care premium limits (ElderLawAnswers); HealthCareInsider: HSA-eligible marketplace plans in 2026; ACA changes for 2026. Example figures are FreelancerTaxHQ illustrations.