Is Health Insurance Deductible Thru My Business?

You may deduct health insurance paid for your employees as an employee benefit. However, you may not deduct medical insurance paid for yourself, since you cannot be your own employee.

For 2003. there is a provision in the tax code that allows 100% of your qualified health insurance premiums as an adjustment from gross to adjusted gross income. See the instructions for page one of Form 1040 for details. This was increased from 70% in 2002.

The medical insurance that is eligible for this special deduction is usually the same as you would otherwise claim as a deduction on Schedule A. (This would include insurance that covers long term health care, within the dollar limits for the age of the covered individual.) However, insurance premiums that are reduced due to an employer subsidizing them (such as the premiums paid through an employer of yours or your spouse's) would not qualify. Any payments made through a FORMER employer, under COBRA, would qualify.

Any medical insurance not deducted on the face of Form 1040 is carried to Schedule A as a medical expense.



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