Taxorly AI Tax Advisor
Answered May 14, 2026
Okay, here's a breakdown of the self-employed health insurance deduction, geared towards freelancers and 1099 workers:
**What it is:** This deduction allows self-employed individuals to deduct the premiums they pay for health insurance for themselves, their spouse, and dependents. It's an *above-the-line* deduction, meaning you can take it even if you don’t itemize.
**Key Requirements:**
* **Not eligible if:** You (or your spouse) are eligible to participate in an employer-sponsored health plan. It *doesn't* matter if you decline the employer's coverage, simply being *eligible* disqualifies you.
* **Self-employed income:** You must have net profit from self-employment.
* **Not a Medicare or long-term care policy:** It must be a medical care insurance policy.
**How it Works:**
* **Calculate your net profit:** This is your business income minus business expenses.
* **Deduction Limit:** You can deduct the *lesser* of:
* The amount of your health insurance premiums paid.
* Your net profit from self-employment.
* **No AGI limit (for 2023/2024):** Previously, the deduction was limited based on your Adjusted Gross Income (AGI); this limitation is currently suspended.
**Example:**
Let's say Sarah is a freelance graphic designer.
* Net profit from self-employment: $60,000
* Health insurance premiums paid: $12,000
Sarah can deduct $12,000 because it's less than her net profit of $60,000. This reduces her AGI, potentially lowering her overall tax liability.
**Where to Claim It:**
You claim this deduction on **Schedule 1 (Form 1040), line 16**, as an adjustment to income.
**Important Note:** The deduction *does not* include amounts paid for dental or vision care if they aren't considered medical care under IRC section 213.
⚠️ Disclaimer: This is for educational purposes only. Always consult a licensed CPA for personalized advice.