Yes, Medicare policies count for the Self-Employed Health Insurance Deduction (SEHID). She can take the self-employed health insurance deduction for herself, spouse and dependents if her business Schedule C shows a profit and no one was eligible to participate in an employer-based health insurance plan. See - Medicare and the Self-Employed Health Insurance Deduction. The deduction is limited to net business profit reported. Anything that can't be included as a self-employed deduction can be claimed as an itemized medical deduction on Schedule A. @bgoldnyxnet
Since you are her spouse, you don't need to be employed by the business. Any health insurance policies should be in her name or the name of the business to deduct as a SEHID. However, Medicare does not have group policies, only individual policies. The IRS has recently ruled that Medicare recipients who have self-employment income may deduct the premiums they pay for Medicare coverage the same as the premiums for any other type of health insurance.
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