Is private health insurance tax-deductible?

If you're wondering whether private health insurance is tax deductible, you should know that any private health insurance costs and premiums paid out-of-pocket are tax-deductible except for those paid to an employer-sponsored health plan. That's because those premiums are paid pre-tax and are not eligible for further deductions.

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Feb 15, 2022

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Quick Facts

  • Any private health insurance costs and premiums paid out-of-pocket are tax-deductible
  • The premiums you pay for an employer-sponsored health insurance plan are not tax-deductible because they are paid pre-tax
  • Itemized private health insurance deductions must be listed on an IRS Schedule A Form 1040

Is private health insurance tax deductible? Yes, as long as you spend more than 7.5% of your income on medical expenses.

Most private health insurance costs you pay out-of-pocket are tax-deductible, but some restrictions apply. These restrictions mainly depend on whether you are self-employed, eligible for coverage with your employer, or have an HSA. Health insurance tax deductions will also depend on if you qualify for government subsidies with a marketplace plan.

As a rule, remember that any insurance premiums paid pre-tax from your paycheck are not tax-deductible. That’s because anyone with an employer-sponsored health plan is already getting the best health insurance quotes. However, if you do not have coverage through work, you could be eligible for a deduction to help mitigate the more expensive rates. 

As long as you are paying your monthly or annual premiums out-of-pocket, your private health insurance is tax-deductible. Keep reading to learn what insurance premiums are tax-deductible and how you can itemize these deductions the next time you file taxes.

Is private health insurance tax-deductible? Keep reading to find out, or enter your ZIP code to start comparing private health insurance quotes from local companies for free.

Is private health insurance tax-deductible?

The short answer is yes, private health insurance is tax-deductible when it’s paid out-of-pocket. This includes premium payments and any other medical expense payments that were not covered by the insurance company or paid pre-tax.

However, if you’re enrolled in an employer-sponsored insurance plan, your premiums are already tax-free and not eligible for further deduction.

What insurance premiums are tax-deductible?

Private health insurance premiums paid out-of-pocket are tax-deductible. If you have COBRA or Medicare Parts B and D, you can apply this deduction directly to your income. Similarly, if you’re self-employed, you can also get this deduction.

However, if you qualified for any government subsidies from the health insurance marketplace and applied that amount to your premiums, then that amount is not tax-deductible. Only the amount you paid out-of-pocket can be claimed on your taxes. 

If you’re insured through an employer, your premiums may not be tax-deductible, but your medical expenses are.

What medical expenses are tax-deductible?

Both employer-sponsored and individual health insurance costs are tax-deductible when medical expenses are paid out-of-pocket. This includes any deductibles and procedures not otherwise covered by your health insurance policy. 

Typically, the following medical expenses are tax-deductible:

  • Payments to doctors and specialists
  • In-patient and out-patient hospital care
  • Rehabilitation
  • Nursing homes
  • Payments for prescription medications and treatments
  • Prescribed weight-loss programs
  • False teeth
  • Eyeglasses
  • Contact lenses
  • Wheelchairs.
  • Transportation costs to medical care facilities

Deductions can vary based on what kind of private health insurance plan you carry. For example, you may have an HMO plan that does not offer out-of-network coverage. But if you went out-of-network for specialist coverage, you would qualify for deductions on those out-of-pocket payments.

What type of health insurance is not tax-deductible?

Remember that any health coverage you do not pay for directly is not tax-deductible. Furthermore, any coverage you pay for pre-tax is also not eligible for deduction. This means that the premiums you pay to an employer-sponsored health plan cannot be deducted from your taxes.

If you’re enrolled in Medicare, you cannot claim your Part A payments on your taxes. However, payments for Parts B and D are still eligible for deduction.

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How do I deduct private health insurance premiums from my taxes?

Before you start deducting health insurance premiums, confirm how much you spent on medical expenses. Private health insurance is not tax-deductible unless you spend more than 7.5% of your income.

For example, if you make $100,000 per year and spend $10,000 on medical expenses, you could deduct $2,500 from your income when filing taxes that year.

You have two options when it comes to deducting private health insurance premiums from your taxes — standard or itemized deductions. Which one you choose will depend on your income and how much you spent on healthcare that year.

In general, standard deductions are the easiest and fastest way to file health insurance deductions, especially if you don’t have any expensive medical costs. The following is the standard deduction amount based on your filing status:

  • $25,100 for married couples filing jointly
  • $12,500 for individuals
  • $18,800 for heads of households

If you believe you spent this amount or less on medical expenses, then it would be safe to use a standard deduction. However, if you spent more or believe your other deductions combined with your medical expenses will exceed the standard amount, take the time to make an itemized deduction. 

Each itemized expense must be listed on your Schedule A Form 1040. This can seem tedious, but itemized deductions reduce your overall income. It will be worth it if you pay significant medical costs out-of-pocket.

How much does private health insurance cost?

How much does private health insurance cost? Private health insurance rates average at $450 per month or $5,400 per year. 

Your health insurance rates will depend on where you live and work, as well as your medical history, age, and gender. Take a look at the table below to see what factors will impact your private health insurance premiums:

ClassPersonal HealthFamily History
Preferred Nonsmokers in great health with a minor conditionMinor health conditions in family history
Preferred SelectNonsmokers in great healthNo family history of health conditions
Preferred SmokerSmokers in great healthNo family history of medical conditions
StandardNonsmokers with average healthSome medical problems in family history
Standard PlusNonsmokers in good health with a few minor health conditionsMinor conditions in family history
Standard SmokerSmokers in good healthSome medical conditions in family history
Table RatingPoor health Medical conditions in family history
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Private health insurance companies also offer different rates for different types of health insurance plans. For example, you will pay higher rates for a preferred provider organization (PPO) that lets you choose your doctors, as opposed to a health maintenance organization (HMO) that won’t.

To get the best rates, start comparison shopping online with different companies to see what’s available in your state. Some health insurance companies offer incentives for healthy living, including gym memberships, that can reduce your rates, so it pays to shop around.

Start shopping for free private health insurance quotes today with our free tool. Just enter your ZIP code to get free quotes from local companies in your neighborhood.

Private Health Insurance Tax Deductions: Frequently Asked Questions

For more clarification on what qualifies for private health insurance tax deductions, read these answers to the most frequently asked questions:

Is employee health insurance tax-deductible?

No, premiums for employer-sponsored group health insurance plans are paid for before your paycheck is taxed. Therefore, employee health insurance is not eligible for additional deductions.

Is dental insurance tax-deductible?

Yes, any dental premiums, deductibles, or treatments you pay for out-of-pocket can be deducted from your taxes.

Is health insurance tax-deductible if I’m self-employed?

Yes, if you are self-employed, all of your health insurance premiums and medical expenses are tax-deductible. However, if you applied any government subsidies to your premium rates, you can only deduct the amount you actually paid out-of-pocket.

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