8/21/2025
What You Can Deduct
You can generally deduct:
- Medical, dental, and vision insurance premiums
- Long-term care insurance premiums (limits apply)
- Coverage for yourself, your spouse, dependents, and children under 27
Limitations and Common Mistakes
- No Double-Dipping – You can’t deduct premiums if you’re eligible for coverage through a spouse’s employer.
- Deduction Limited to Business Income – You can’t deduct more than your net profit.
- Incorrect Reporting – Failing to report S-Corp premiums correctly on your W-2 can result in losing the deduction.
Group vs. Individual Coverage
- Group Plans – Often offer tax advantages for both employer and employees. Premiums are a deductible business expense, and employee contributions can be made pre-tax.
- Individual Plans – Still deductible if they meet IRS rules, especially for self-employed business owners.
Pro Tip: Use a Health Reimbursement Arrangement (HRA)
An HRA allows your business to reimburse employees (including yourself in certain cases) for qualified medical expenses, including premiums. This can increase tax savings and flexibility.
Example
A self-employed consultant pays $1,200/month for a private PPO. That’s $14,400/year. By deducting the full amount from her taxable income, she reduces her taxable income and saves thousands in taxes.
Final Thought: Understanding the tax rules around health insurance write-offs can put real money back in your pocket. Work with both your broker and your CPA to maximize savings and stay compliant.
Want to explore health insurance options that also maximize your tax benefits? Call (716) 503-1113 for a free consultation.