How to Deduct an Insurance Premium

by Owen E. Richason IV ; Updated July 27, 2017
Tax form

Items you will need

  • IRS Schedule A, Form 1040
  • Calculator

The Internet Revenue Service allows for deduction of all qualified medical expenses. Deductions for other medical expenses might or might not be tax-deductible. Health insurance premiums for persons who are self-employed are 100 percent tax deductible, however, health insurance premiums paid in-part or entirely by an employer are not tax-deductible as these are considered gross income and are usually associated with a salary reduction employer-employee agreement.

Qualified health insurance premiums that are paid directly by the insured and not subject to an employer-employee benefits package are deductible. Expenses for qualified prevention, diagnosis and/or treatment of any legitimate physical or mental illness are likewise tax-deductible. But medical expense deductions must be itemized and must account for more than 7.5 percent of adjusted gross income.

Step 1

Using the appropriate itemization schedule, list all qualified medical expenses. These may include, but are not limited to, medical insurance premiums not paid wholly or in-part of an employee benefits package, medications, direct medical provider payments, laser eye surgery, dental treatment(s) and eyeglasses.

Step 2

Subtract all reimbursed medical expenses from the total amount of all itemized medical expenses listed on the schedule attachment for Schedule A, Form 1040.

Step 3

Calculate the percentage of itemized medical expenses, less any reimbursed expenses relative to the Adjusted Gross Income listed on Schedule A, Form 1040, line 38. This percentage must be equal to or greater than 7.5 percent of the AGI listed in line 38.

Step 4

Using IRS Form 1040, Schedule A, attach the appropriate sanctioned form with an itemization of all qualified medical expenses.

Tips

  • See IRS Publication 502 for a list of all qualifying medical expenses. Consult an accountant or tax professional before claiming deductions.

Warnings

  • Deductions for medical expenses must be itemized. Do not include reimbursed medical expenses.

About the Author

Owen Richason grew up working in his family's small contracting business. He later became an outplacement consultant, then a retail business consultant. Richason is a former personal finance and business writer for "Tampa Bay Business and Financier." He now writes for various publications, websites and blogs.

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