54 Self-Employed Medical Expense Deductions That You May Be Eligible For

If you're running your own business or are a freelancer, you probably know that you can write off many of your work-related costs. But one category that’s often overlooked is healthcare costs such as premiums and qualified medical expenses. 

One approach is to claim the self-employed health insurance deduction. This allows you to deduct insurance premiums you pay for yourself, your spouse, and/or your dependents, if you meet certain criteria. 

If you end up with a lot of medical expenses during the year, it may make sense for you to itemize deductions so you can claim those expenses on your tax return. And if you pair a health savings account (HSA) with a high-deductible health plan (HDHP), you can deduct any contributions you make to the account with after-tax dollars.  

Keep receipts for all of your qualified expenses so you can maximize your deductions. If you don’t know if an expense qualifies, consult with your tax advisor for guidance. 

Here, we’ll look at common medical expense deductions and the tax rules that every self-employed individual should consider.  

What counts as a qualified medical expense for business owners?

Qualified medical expenses are defined as products or services that help diagnose or treat any type of sickness or injury. Examples of common medical expenses include blood pressure monitors and prescription glasses. Insurance copays and deductibles also qualify.  

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• Did you pay veterinarian bills during the year? Find out if you can deduct pet expenses on your tax return. 

• Gym memberships are generally not tax deductible as medical expenses. But you may be able to use a health savings account (HSA) to pay for a gym membership tax-free.   

• Looking for ways to save on your medications? Keep your receipts. Some medications may be tax deductible, if they meet certain requirements.

The IRS provides a full list of qualified medical and dental expenses that anyone, including self-employed individuals, can deduct if they meet certain requirements. One requirement is that you have to itemize deductions to claim medical expenses on your tax return. 

Here are some popular medical expenses that may be tax deductible: 

• Acne treatments

• Acupuncture 

• Ambulance rides

• Artificial limbs

• Artificial teeth

• Bandages

• Birth control pills

• Breast pumps and supplies

• Capital expenses, such as at-home exit ramps that serve a medical purpose

• Chiropractor visits

• Crutches

• Diagnostic devices

• Doctor visits

• Eye exams 

• Fertility treatments

• Hearing aids

• Lab work

• Lactation expenses

• Osteopath visits

• Oxygen

• Pregnancy test kits

• Psychiatric care

• Psychologist visits

• Prescription contact lenses

• Prescription glasses

• Prescription medications

• Vaccinations

• Vasectomies

• Vision correction surgery

• Wheelchairs

• X-rays

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If you need to travel to receive healthcare services, you can deduct the following transportation costs: 

• Car mileage 

• Parking fees

• Toll fees

• Bus fare 

• Lodging (up to $50 each night for each person)

• Rideshare services

You may also be able to deduct physical therapy. IRS Publication 502 lists this as a qualified expense. But it must be prescribed by a healthcare professional for medical treatment — for example, physical therapy after a fracture or a stroke.

Although the above items qualify as IRS-approved medical expenses, you will still have to meet certain requirements to deduct them on your tax return.

What doesn’t count as a qualified medical expense?

While the IRS allows a wide range of medical expenses that may be deducted on your tax return, there are certain costs that don’t qualify even if they’re health-related. 

Here are some medical costs that are excluded because they’re already paid for using tax-advantaged accounts or insurance: 

• Expenses that are reimbursed by your health insurance

• Eligible items that were paid for with an HSA 

• Eligible items that were paid with a flexible spending account (FSA)

• Expenses covered by a health reimbursement arrangement (HRA)

Can you deduct dental expenses and orthodontics?

Dental and orthodontic expenses are deductible if you itemize your deductions on your tax return. And the expenses must be related to the prevention or treatment of dental disease. They cannot be everyday items like a toothbrush or nonprescription mouthwash or serve a cosmetic purpose like teeth whitening.  

Here’s a list of common dental expenses that may be deductible:

• Braces

• Crowns

• Dental bridges

• Dental checkups

• Dental implants

• Dentures

• Extractions

• Fillings

• Fluoride treatment to prevent tooth decay 

• Gum surgery 

• Invisalign

• Night guards

• Root canals

• Teeth cleanings 

• Dental X-rays

Can you claim insurance premiums on your taxes?

If you’re self-employed, you may be eligible to deduct up to 100% of the health insurance premiums you pay for yourself, your spouse, and your dependents through the self-employed health insurance deduction. This is an above-the-line deduction, which means you can claim it whether you take the standard deduction or itemize deductions. 

Let’s say you pay $300 a month for health insurance out of your own pocket. You may be eligible to deduct $3,600 (i.e., $300 for 12 months) for the year. By claiming an above-the-line deduction, you will lower your adjusted gross income (AGI), which means a lower amount of your income will be subject to taxes.

Qualifications to claim the self-employed health insurance deduction 

To claim this deduction, you must meet the following requirements: 

• You must report a net profit from self-employment activities. The amount of your deduction cannot exceed your profits for the year. For example, if you only earned $2,000 in self-employment income, your self-employed health insurance deduction would be limited to $2,000. If your premiums exceed that amount, the remaining portion may still be deductible if you itemize medical expenses. 

• You must not be eligible for another group health plan. This includes coverage available through your own employer or a spouse’s employer. If you qualify for another plan, even if you don’t enroll, you can’t claim the deduction. 

• You must reduce your deduction if you received a premium tax credit. You can only deduct the portion of premiums you actually paid out of pocket. For example, if the premium tax credit covered $1,000 of your premium, that amount can’t be included in your self-employed health insurance deduction.

You can also qualify for this deduction if you received wages from an S corporation in which you were at least a 2% shareholder. But your insurance premiums must have been reimbursed or paid for by the S corporation and reported as taxable compensation on a Form W-2.

How do you itemize medical expenses on your taxes?

Another option is to itemize deductions to get tax benefits. This makes sense if the sum of your itemized deductions exceeds the standard deduction for your filing status. 

Below are the standard deduction amounts for 2024 and 2025. Taking either a standard or an itemized deduction will reduce the amount of income you are taxed on for the year. But you may be able to get more tax benefits from itemizing deductions if you had significant medical expenses. To determine which type of deduction to take, keep track of your expenses throughout the year.

Source: IRS

How do you claim medical expense deductions?

If you choose to itemize deductions on your personal return, you can write off unreimbursed qualified medical expenses on Schedule A of Form 1040. Here are the steps you need to take to claim medical expense deductions: 

• Gather all your receipts for medical expenses for the year. Then, determine which charges qualify as IRS-approved medical expenses. 

• Add up all of the qualified medical expenses to get a total dollar amount for your potential deduction. 

• Review your tax return to determine your AGI for the year.

• Multiply your AGI by 7.5%. This is your medical expense AGI threshold. You can deduct expenses that exceed 7.5% of your AGI on your tax return. 

• Compare your totaled medical expenses to your medical expense AGI threshold. If your totaled expenses exceed 7.5% of your AGI, then you can take a deduction for the excess amount.

For example, let’s say your AGI is $100,000. The first $7,500 (i.e., 7.5% of $100,000) of unreimbursed medical expenses that you incur will not be deductible. If you have $25,000 worth of qualified medical expenses, you are eligible to deduct $17,500 (i.e., $25,000 in total expenses minus the $7,500 threshold). If you choose the standard deduction, you will not be able to deduct any of these medical expenses.  

If you are filing your tax return electronically, most programs will perform the medical expense calculation for you. 

Do you have to itemize deductions to claim medical expenses on your taxes?

Yes, you have to itemize deductions to claim medical expenses on your taxes in most cases. If you have business profits, you may be able to claim the self-employed health insurance deduction.

Can you deduct contributions to an HSA? 

Yes, if you are self-employed and contribute directly to an HSA during the year, you can deduct those contributions on your tax return. You don’t need to itemize to claim this deduction. You will use IRS Form 8889 to report your total contributions and calculate your deduction.  

HSAs also come with other tax advantages. Your money grows tax-free, and spending on qualified medical expenses is also tax-free. To qualify, you must be enrolled in an HSA-eligible HDHP. If you contribute pretax dollars through an employer, those contributions aren’t deductible on your return.

Which is better: medical expense deductions or the self-employed health insurance deduction?

It is usually better to deduct health insurance premiums than actual medical expenses. You don’t have to itemize to deduct your health insurance premiums. There also isn’t an AGI threshold that you have to exceed. The self-employed health insurance deduction allows you to deduct 100% of your premiums, but you can only claim medical expenses that exceed 7.5% of your AGI. 

For example, let’s say you are self-employed and have an AGI of $100,000. You pay $400 a month for health insurance, which is an annual cost of $4,800. You also incur $6,000 of unreimbursed medical expenses during the year. You can deduct the $4,800 you paid in premiums, but you can’t deduct your medical expenses because they are less than 7.5% of your AGI. 

What records should you keep to claim eligible expenses on your taxes?

You will need to keep all receipts and documentation related to your medical expenses. This includes itemized invoices or receipts from healthcare professionals and receipts for purchases you make, such as prescription medications or medical supplies.  

If you purchase an item based on a healthcare professional’s recommendation, be sure to keep your letter of medical necessity for your records. This can help support your deduction if you’re ever asked to verify your expense.

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Written by:

Mark P. Cussen, CMFC

Mark P. Cussen, CMFC, has over 25 years of experience in the financial services industry. He has worked as a stockbroker in the full-service, discount, and banking arenas.

Edited by:

Charlene Rhinehart, CPA

Charlene Rhinehart, CPA, is a personal finance editor at GoodRx. She has been a certified public accountant for over a decade.

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