Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

Posts: 1
Registered: ‎04-15-2018

I do not have an employer provided health plan. Can I deduct my premiums? Do I subtract the credits?

Council Member
Posts: 508
Registered: ‎04-06-2016

Re: I do not have an employer provided health plan. Can I deduct my premiums? Do I subtract the cred

Yes, but you may or may not receive a benefit from it.  How you deduct it depends on whether or not you're self employed, and if you were self-employed whether or not you had enough net profit from your business to cover the premiums.


1) If you're self-employed you can deduct them (up to the amount of your net-profit not taking the insurance premiums into account) as a Self Employed Health Insurance deduction in the Adjustments section on Page 1 of your 1040.  If you bought the insurance through the marketplace, this can get tricky and I won't go into the nuances here as there have been other threads with more info on this.

2) If you're not self-employed, you can take them as an itemized deduction as a medical expense.  I mentioned earlier that you may or may benefit from this.  This is because only the amount of total medical expenses over 7.5% of your income are taken as an itemized deduction (you'll enter the full amount and the program will calculate the deduction for you) AND your total itemized deductions must be higher than your standard deduction or the program will take the standard deduction for you since it will be the most advantageous.


Regarding subtracting the credits. I'm assuming you're talking about premium credits for a marketplace plan.  Yes. What you need to do to figure the amount you'll report as a deduction is take the amount you actually paid for your insurance during 2017. There's a good chance that this won't include payment for your January 2017 premium because you probably paid that in Dec 2016, but would include your payment for your January 2018 premium since you probably paid that in Dec 2017.  Once you have the amounts you paid out of pocket in 2017, you'll need to adjust that amount by the amount calculated on Form 8962 when your Advance Premium Tax Credits (APTC) are reconciled.  Any additional amount of premium tax credit (PTC) you're getting back with your 2017 return will need to be subtracted from the amount you paid out of pocket for the year (since they're giving that amount back to you. You'll find this amount on Line 69.). Any excess APTC that you're having to pay back will be added to the amount you paid out of pocket for the year (since that's the amount of the credits that you're now having to pay since you were ineligible for that part of the credit. It'll be found on Line 46 of Form 1040). It's this adjusted amount that you'll report as your itemized deduction for health insurance premiums.