Since retiring in 2014, I chose to remain on my employer's group plan; however, I pay the full premium amount. It is not connected to my current self-emloyment income. Can I deduct any of the annual $12,000 premium? plan

[Opus 17]

You can deduct insurance premiums if you pay them with after-tax money.  If you take it as a personal deduction on schedule A it is subject to the 10% rule so your benefit may be reduced.  

I'm pretty sure you can deduct the premiums directly as a schedule C expense (instead of a schedule A itemized deduction) even if you obtained the plan from someplace other than the small business marketplace.  But someone else may correct me.

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If you pay the premiums with before-tax dollars (such as, they are deducted pre-tax from your pension) then you can't deduct them again.

[Lisa995]

I think they're asking if they can use the self employed health insurance deduction for those premiums.

[Opus 17]

Right, I changed my answer to a comment and left that issue open just as you were leaving your comment.

I *think* it doesn't matter where they buy the insurance, as long as they have SE income to deduct it against.

[SweetieJean]

I've seen this lots of places:

You cannot take the deduction for any month you were eligible to participate in any employer (including your spouse’s)  health plan at any time during that month, even if you did not actually participate.

The simple part of the equation is this: if you are covered by a group plan through an employer, you cannot take your insurance premiums as the above-the-line deduction; you can only claim it as part of your Schedule A itemized deductions (if you itemize).

[Opus 17]

@SweetieJean but this is an ex-employer (retirement benefit or COBRA benefit).

[SweetieJean]

But it sounds like part of his retirement benefits, as opposed to COBRA.

[dmertz · Accepted solution]

Health insurance premiums you pay for your own health insurance are never deductible on Schedule C.  The health insurance deduction on Schedule C is only for what you pay for health insurance you provide to your employees, if any.

Self-employed health insurance is deductible on Form 1040 line 29.  However, to be deductible on line 29, the health insurance must be established under your business.  (A health insurance policy established in the name of your business or in your own name qualifies as being established under your business.)  Because you are participating in a subsidized health plan, a plan not established under your business, you are not eligible to deduct health insurance premiums on line 29, however, they can be included on Schedule A when figuring your medical-expense deduction.

See the instructions for Form 1040 line 29:

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

[SweetieJean]

@dmertz  "I pay the full premium amount."  Does that make a difference?

[dmertz]

The instructions for Form 1040 line 29 say, "If you are filing Schedule C, C-EZ, or F, the policy can be either in your name or in the name of the business."  I don't see how a group plan established under another business would be a policy established in the name of the self-employment business or the in the name of the individual.  It appears to me as though the policy would be a policy in the name of the other business.

[SweetieJean]

Then the TT Tax Pro CPA answer cited below is wrong.

[dmertz]

Perhaps.  Some people choose to interpret "established under the business" more loosely to mean just about any insurance that the self-employed individual "deems" to have been paid for with income derived from the self-employment business.  It appears that the original intent of the deduction was to make it more equitable for the self-employed individual by providing that the amount paid for health insurance would be excluded from income in a manner similar to the way the amount that an employer pays for health insurance is not taxable income to an employee.  But I have difficulty interpreting the line 29 instruction as meaning that the policy can be the insurance plan of another business.  Perhaps the line 29 instruction as written is more restrictive than actually permitted by law.

[Opus 17]

The concept is that even if the retiree is paying both the employee and employer share, it is still a group plan and likely has lower rates than an individual plan thanks to the employer's power to negotiate favorable terms with the insurance company.  

Presumably, the group plan is still cheaper than any individual plan the taxpayer could buy on their own, which is why they are using the group plan.  If they dropped the group plan and bought something on the private market or the ACA small business marketplace, they would then be eligible to deduct the premiums; that may or may not make up for the non-deductibility of the cheaper group plan.

[SweetieJean]

This seems to say YES:

https://ttlc.intuit.com/questions/3031933-health-care-deduction-for-sole-proprietor-retired-paying-h...

[SweetieJean]

But this seems to say NO
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