Across America, a wide variety of unique employment situations have materialized. Some people work multiple jobs. Some have ceased their commutes to work from home indefinitely. And others still have left the corporate setting completely to become entrepreneurs, or even self-employed “solopreneurs.”1
Going from having employer coverage to purchasing your own individual health insurance policy can come with a certain amount of confusion about the process and variation in costs. Indeed, health insurance premiums have been increasing over the last 10 years.2
Premium tax credits, or subsidies, can be helpful for the self-employed, who have traditionally had to foot the entire bill. If you’re self-employed, you may be eligible for the self-employed health insurance deduction.3
How Do I Get Insurance If I Am Self-Employed?
Like any other Affordable Care Act-approved plan on the individual Health Insurance Marketplace, self-employed health insurance plans can only be purchased during an Open Enrollment Period unless you have a qualifying life event.6
No matter what, learning about the self-employed health insurance deduction can be helpful for those who will need to cover the cost of health insurance on their own.
The self-employed health insurance deduction is a tax benefit allows 100% of health insurance premiums for you and your dependents to be deducted on your tax return.7 Self-employed health insurance deductions are applicable to insurance premiums for medical, dental, or long-term care insurance.8
Deduction Eligibility
According to the IRS, you may qualify for the self-employed health insurance deduction if one of the following applies to you:8
- You had a net profit from self-employment.
- You had self-employment earnings as a partner.
- You used an optional method to figure your net earnings from self-employment.
- You were paid wages reported on Form W-2 as a shareholder who owns more than 2% of the stock of an S-corporation.
Long-Term Care Premium Deductions
There is a set limit on how much you can deduct for your long-term care insurance premiums. As of 2020, the total deduction was as follows:8
- Age 40 and younger: $420
- Age 41-50: $790
- Age 51-60: $1,580
- Age 61-70: $4,220
- Age 71 and older: $5,270
How Can a Self-Employed Person Get Health Insurance?
A self-employed person can get health insurance by applying during the Open Enrollment Period,4 which occurs November 1 - December 15. If you do not enroll during this window, you may only apply for coverage if you qualify for a Special Enrollment Period.9 When you do apply, be sure to check your eligibility for a self-employed health insurance deduction.
HealthMarkets can help you compare your health insurance options. With our FitScore® technology, we can search thousands of plans from hundreds of insurance companies to help you find the plan that fits your needs. Start comparing your options and find a self-employed health insurance plan today.
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References:
1.Forbes.
December 2020. Retrieved from //www.forbes.com/sites/henrydevries/2021/12/29/how-solopreneurs-reap-the-rewards-of-repeat-business/?sh=ca7a91615427 | 2.ValuePenguin. January 2021. Retrieved from //www.valuepenguin.com/average-cost-of-health-insurance | 3.IRS. January 2021. Retrieved from //www.irs.gov/taxtopics/tc502 | 4.HealthCare.gov. Retrieved from //www.healthcare.gov/self-employed/coverage/ Accessed on January 7, 2021 | 5.IRS. May 2020. Retrieved from
//www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues | 6.HealthCare.gov. Retrieved from //www.healthcare.gov/small-businesses/learn-more/self-employed/ Accessed on January 7, 2021 | 7.UHC. Retrieved from //www.uhc.com/individual-and-family/health-insurance-plans/self-employed-plans Accessed on January 7, 2021 | 8.IRS. March 2020. Retrieved from //www.irs.gov/publications/p535#en_US_2019_publink1000208843 |
9.HealthCare.gov. August 2020. Retrieved from //www.healthcare.gov/blog/open-enrollment-2021-dates/
Disclaimer:
The information in this article is not offered as legal or tax advice. We suggest that you seek the advice of your tax advisor, attorney, and/or financial planner to make certain you obtain the tax deduction(s) you are entitled to. All material is presented solely as educational information.