Deduct Medicare premiums as a business expense if self-employed?

[Michael12600]

I am a self-employed sole proprietor with no employees and enrolled in Medicare last year.  I have seen conflicting information as to whether Medicare premiums can be taken as a business expense, or must rather be taken as part of the self-employed health insurance deduction.  If Medicare premiums can be taken as a business expense, where on Schedule C would they be entered?  Line 15 is out, since the line itself states "Insurance (other than health)," and the IRS instructions for line 14 state "Do not include on line 14 any contributions you made on your behalf as a self-employed person to an accident and health plan. However, you may be able to deduct on Schedule 1 (Form 1040), line 17, the amount you paid for health insurance...."  So how can Medicare premiums be taken on Schedule C?
 

[Bsch4477 · Accepted solution]

You can deduct your Medicare premium but not on Schedule C. 

enter the insurance premiums, you will do as follows:

1. Go to the Business category.
2. Go to the Business Income and Expense subcategory.
3. Choose the option "I'll choose what I work on"
4. On the screen labeled "Let's gather your business info", find the section labeled "Less Common Business Situations".
5. Click start or update next to the line labeled Self-employed Health Insurance. 
   Be sure not to include those premiums when reporting your social security since you can’t use the same expense for a medical expense deduction on Schedule A. Note that you can also deduct medicare premiums paid for your spouse.  However, if you or your spouse have access to an employer-subsidized health insurance plan through a job—even if you choose not to enroll—you're not eligible for this deduction.

[Michael12600]

Thanks!  So does this amount ultimately end up on the self-employed health insurance deduction line of  Schedule 1?

[Bsch4477 · Accepted solution]

Yes. 

[sharriswc]

The reply to question included a caveat that you are ineligible for the deduction if you participate in an "employer-subsidized health insurance plan through a job".  In my case, I participate in a medicare advantage program sponsored by the retirement system of my former employer.  Does that mean I cannot claim the Medicare deduction against my self-employment income?

[AmyC]

I am going to give you the rules so you can see how your plan fits into the insurance for the business to see if it qualifies. I am not sure if yours is subsidized or purely voluntary to give you an answer.

About Form 7206, Self-Employed Health Insurance Deduction states: The insurance plan must be established, or considered to be established, as discussed in the following bullets, under your business. • For self-employed individuals filing a Schedule C (Form 1040) or Schedule F (Form 1040), a policy can be either in the name of the business or in the name of the individual.

Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction.

But don't include the following. • Amounts for any month you were eligible to participate in a health plan subsidized by your employer or your spouse's employer or the employer of either your dependent or your child who was under the age of 27 at the end of 2024.

@sharriswc 

[sharriswc]

Thank you for your response.  My plan is partially subsidized.  But, I still have to pay Medicare Part B and Part D premiums.  Would these costs be eligible for the self-employed health insurance deduction?

[AmyC]

Yes, all parts counts. The IRS has 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. 

@sharriswc 

[marting90418]

My question is an expansion to this area. I'm self employed as an LLC. I'm collecting SS AND paying my Medicare premiums out of the monthly SS check. Can I deduct my Medicare insurance premiums on my 1040 form?

[VolvoGirl]

@marting90418   Are you filing Schedule C for your self employment?  

Medicare plan B payments are qualified as Self-employed medical insurance premiums and should be entered under Business instead of in the Social Security Benefits entry area.  So take it off your SSA-1099 entry.

You don't have to manually enter it or override anything.  Just don't enter it from the SSA-1099 and enter it in the interview steps as regular ins under business.

[Yyk1958]

I entered the insurance premiums into the insurance payments section, and it is reflected in the entry field.  However, the final number in the business expenses section does not reflect the amount entered.  why?

[VolvoGirl]

It will not show up on Schedule C and not reduce any SE Tax on a net profit.  It does reduce your 1040 total income for the regular income tax.  

Self-employed health insurance deduction goes on Schedule 1 line 17 (which goes to 1040 line 10), as long as the expense is not greater than your net self-employment income. If it does exceed your net self-employment income it gets split automatically. An amount equal to your net self-employment income goes on Schedule 1 and the remainder gets added in to medical expenses on Schedule A.

[Yyk1958]

The instructions were very clear, but unfortunately the instructions are no longer applicable in the 2025 tax year.  there is no more "Less Common Business Situations".  I entered the health payments in the relevant field and accepted, but the payment amount was not reflected in final business expenses and not deducted from the business income.  Why?

[Yyk1958]

Thank you for your suggestion.  I will follow your suggestion and see what happens.

[Yyk1958]

Thank you for your suggestion.  I went into Schedule 1.  The health insurance payment does appear in line 17.  However, what I don't understand is that such health insurance payment does not get deducted from my business income.  Now the question is where such health insurance payment will be deducted.