I am a sole proprietor. Can I write off my medical insurance premiums?

If you pay medical insurance premiums to cover your employees, you can deduct that amount as an ordinary business expense right on your Schedule C.

However, the premiums you pay for you and your family get special tax treatment. Deduct a portion of these premiums right on the first page of your Form 1040, and deduct the balance on Schedule A as an itemized deduction.

Special break for you and your family

If you meet the requirements, you can deduct up to the following percentages of your medical insurance premiums, right on the first page of your Form 1040, whether or not you itemize your deductions:

Year Up to
1998-2004 45% of the cost
2003 50% of the cost
2004 60% of the cost
2005 70% of the cost
2006 80% of the cost


Deduct the rest of the cost on Schedule A, just as non-self-employed individuals do.

To deduct a percentage of your premiums on your Form 1040, you must meet the following requirements:

  • You have sufficient net income from your self-employment business, and
  • Neither you nor your spouse have medical insurance through your employment with someone else.