Deducting COBRA payments

[mrmcmurry]

I am a owner/partner in an S-Corp that I actively work for and receive W2, also receive a K1 from the company that I "pass thru" income/loss on my personal return. I have included COBRA payments in my Itemized Deductions as a Medical expense but now completing Wages/ & Income section under Federal Taxes and have come to "Self-employed Health Insurance Premiums" question where TT is asking for my W2 "Medicare wages" and then my "Health Insurance premiums I paid personally"...can/should I enter payments I made out of pocket for COBRA insurance coverage in this box?  Or would this be "double claiming" the COBRA payments?

[MinhT1 · Accepted solution]

COBRA premiums are not deductible if you're self-employed because the IRS requires that the insurance plan is under your name or the name of your business, which cannot be the case for Cobra premiums.

Cobra premiums can be deducted as Medical expenses in Itemized deductions (Schedule A).

[mrmcmurry]

I was certainly beginning to think that was the case but guess I needed to hear someone else say it...thanks very much MinhT1!

[raymondkim]

It is disallowed if subsidized.  Most COBRAs are in person's name, an aftertax individual policy, and 100% premium (i.e. no subsidy).  So it would be deductible under IRC wording.

[raymondkim]

Not accurate.  Only if subsidized or have ability to subscribe to a subsidized employer plan.  They no longer have an employer if on COBRA.  Plan is then individual as assigned by the underwriter and group plan no different than an ACA exchange.  If you were an employee then it would truly be an employer-sponsored pre-tax benefit as eligible by IRS and not taxable (the IRS is looking for two things - to force you under an ACA mandated plan, and to not get double the tax benefit).  

[NCperson]

@raymondkim - COBRA is a federal requirement of a GROUP plan.  COBRA is not insurance; it is a law. 

The test for self-insurance is whether the PLAN is subsidized, not whether the premium charged to the individual insured is subsidized.  Group plans are subsidized even if the COBRA premium payments are not. 

There is no individual plan created under a COBRA mandate.  it is not deductible if self-employed. 

https://www.dol.gov/general/topic/health-plans/cobra

[WA-CPA]

How are group health insurance plans subsidized?  As a CFO, I have never negotiated a group plan that was subsidized.  Many factors go into the rates, but I don't recall a subsidy component.