Is Health Insurance Tax Deductible in 2026 and 2027?

Higher health insurance premiums have resulted from Affordable Care Act (ACA) enhanced subsidies expiring at the end of 2025, which ended savings for millions of people. But that’s only some of the story. More than half of all people in the U.S. have employer-based health insurance, and many are also paying more in 2026 for coverage. One report projects that middle-income Americans could see ACA marketplace premiums increase by as much as 114% in 2026, which means monthly bills may rise from hundreds to thousands of dollars — particularly for family coverage.

If you are paying more for health coverage, you may be able to lower your tax bill. In some cases, health insurance premiums are tax deductible, but this depends on your income and employment status, as well as how you file your taxes. 

What factors determine if you can deduct health insurance premiums?

Whether you can deduct health insurance premiums on your taxes and how much you can deduct will depend on several factors. Here are a few to consider: 

How to claim the self-employed health insurance deduction

If you’re self-employed and pay for your own health insurance, you may be able to deduct your premiums on your tax return. This deduction helps lower your taxable income and can reduce how much you owe in taxes.

If you’re eligible, you can deduct premiums you pay for:

• Health insurance

• Dental policies

• Medicare

• Long-term care coverage, up to annual IRS limits based on age

How much can you deduct? 

You can deduct up to 100% of the premiums you paid for: 

• Yourself 

• Your spouse 

• Your dependents 

• Your children under age 27, even if they are not dependents

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But your deduction cannot exceed your net self-employment income for the year. If your business shows a loss, you can’t take this deduction. However, any unused premiums are eligible for itemized deductions, subject to the 7.5% AGI threshold.

Can you deduct premiums for employer-sponsored health insurance?

Your contributions to an employer-sponsored health insurance plan are made with pretax dollars. This means that these contributions are deducted from your gross income before any taxes are applied. As a result, your taxable income is reduced by the amount you contribute. Because these contributions are already tax-advantaged, you cannot claim them as a separate deduction on your tax return. 

But if you pay for your medical expenses, including health insurance premiums, out of pocket with after-tax dollars, you may be able to claim a deduction on your tax return if you choose to itemize.

Are COBRA premiums tax deductible?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to remain on your employer’s group policy when you lose your job. The coverage eligibility period ranges from 18 to 36 months, and you typically have 60 days from the date of your “election notice” or from the date you lose coverage to enroll. The premiums can be much higher than what you previously paid for your employer-sponsored plan, because you are responsible for paying your original premiums plus the amount your employer had been picking up on your behalf. There’s also a 2% administrative fee.

Since COBRA is part of an employer plan, you generally cannot take the self-employed health insurance deduction if you are eligible for other employer-sponsored coverage. This includes coverage through a spouse. However, you may be eligible to claim COBRA premium payments as an itemized deduction when you file your tax return.

Are ACA marketplace insurance plans tax deductible?

If you purchased health insurance through the ACA marketplace, you may be able to deduct premiums that were not reimbursed or paid on your behalf. That means you can’t deduct insurance premiums that were paid for with a premium tax credit, which helps lower your monthly insurance premium or reduce your tax bill at the end of the year. 

Let’s say you purchased insurance through the ACA marketplace and qualify for premium tax credits. If your premium tax credits cover 60% of your premiums, you won’t be able to deduct that portion. But if you pay the remaining 40% out of pocket with after-tax dollars, you may be able to deduct that amount on your tax return (subject to the 7.5% AGI threshold). Additionally, you cannot take the self-employed health insurance deduction for the credit amount.

However, there is an exception related to eligibility for employer-sponsored coverage. If you have access to an employer-sponsored group health plan, including through your spouse, you generally cannot claim the self-employed health insurance deduction for ACA premiums. This is the case even if you choose not to enroll in that coverage.

Can you deduct Medicare premiums?

Yes, you can claim Medicare premiums on your taxes if you take the self-employed health insurance deduction or itemize deductions. You can deduct the following types of Medicare premiums if you have to pay for them every month: 

• Medicare Part A (hospital insurance)

• Medicare Part B (medical insurance)

• Medicare Part C (Medicare Advantage) 

• Medicare Part D (prescription medication coverage)

• Medigap (Medicare supplement for original Medicare out-of-pocket costs) 

If you are not self-employed, these premiums are eligible as itemized medical deductions, subject to the 7.5% AGI threshold.

What health insurance premiums are not tax deductible?

If you are self-employed, you lose the health insurance deduction for each month you are:

• Eligible for your employer’s health plan

• Eligible for your spouse’s health plan

• Paying premiums for COBRA coverage while also eligible for other employer-sponsored coverage

You also lose the deduction if your business is unprofitable for the year. This includes any subsidies from premium tax credits.

Generally, health insurance premiums may be tax deductible if you're not receiving a reimbursement anywhere else. But if you are not self-employed, you can deduct only those premiums that exceed 7.5% of your AGI and only if you itemize deductions. You also cannot deduct the portion of your premiums for the following:

• The amount of insurance premiums paid on your behalf with premium tax credits

• Your employer’s payments for your premiums

• The amount your employer deducted from your paycheck pretax 

• Social Security’s payments for your Medicare Part A premiums

The IRS also does not allow deductions for the following premiums that you pay for:

• Life insurance policies

• Insurance policies offering compensation for loss of income

• Insurance covering losses such as life, limb, or sight

• Insurance policies that provide a fixed weekly sum for a predetermined number of weeks during hospitalization due to sickness or injury

• The portion of your auto insurance premium that covers medical insurance for everyone injured in or by your car, as the premium portion covering you, your spouse, and your dependents is not separately stated from the portion for medical care for others

• Health or long-term care insurance premiums, if they were paid with tax-free distributions from a retirement plan directly to the insurer, and these distributions would have otherwise been taxable income

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Written by:

Tom Taulli, EA

Tom Taulli, EA, founded and operates his own tax preparation and planning firm, Pathway Tax. He is a licensed enrolled agent and can represent taxpayers before the IRS. He can also prepare and advise on tax matters for all 50 states.

Edited by:

Cindy George, MPH

Cindy George, MPH, is the senior personal finance editor at GoodRx. She is an endlessly curious health journalist and digital storyteller.

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