Are Cobra premiums tax deductible for self-employed?
Asked by: Kylee Walker DVM | Last update: November 5, 2025Score: 4.6/5 (20 votes)
Can I deduct COBRA if self-employed?
Am I eligible for the self-employed health insurance deduction if I have COBRA? If you chose to take COBRA health insurance after leaving a previous job, you may be able to deduct any premiums paid out-of-pocket.
Can I write off health insurance premiums if I am self-employed?
If you're self-employed, you may be eligible to deduct premiums that you pay for medical, dental, and qualifying long-term care insurance coverage for yourself, your spouse, and your dependents.
Can I get a premium tax credit for COBRA?
The same rules that apply to people who are eligible for retiree coverage apply to people who are eligible for COBRA. Like retiree coverage, an offer of COBRA does not bar someone from being eligible for a premium tax credit. It is only a barrier to receiving the credit if the person actually enrolls.
Do you have a deductible with COBRA?
Your election of COBRA is a continuation of the exact same health plan you had through your employer. Because it is the same insurance policy, if you've met your deductible already, you will not have rollback to $0 out-of-pocket after you've started COBRA.
Can I deduct my premiums if I'm self-employed and bought health insurance through the marketplace?
What is the COBRA loophole?
If you decide to enroll in COBRA health insurance, your coverage will be retroactive, meaning it will apply to any medical bills incurred during the 60-day decision period. This loophole can save you money by avoiding premium payments unless you actually need care during this time.
Is COBRA a taxable benefit?
COBRA premiums may be paid to the employee, and the employee would pay the insurance company directly. Since there is no guarantee that the employee will use the funds to pay the premiums, the funds are considered wages and subject to applicable taxes.
Are COBRA payments reported on W-2?
In general, each employer providing coverage will have to report the prorated cost on the employee's W-2. If the employee is terminated, the employer can also include the COBRA payment amounts paid by the employee after termination.
What disqualifies you from the premium tax credit?
For tax years other than 2021 and 2022, if your household income on your tax return is more than 400 percent of the federal poverty line for your family size, you are not allowed a premium tax credit and will have to repay all of the advance credit payments made on behalf of you and your tax family members.
Are health insurance premiums tax deductible for employers?
The Internal Revenue Service (IRS) allows employers to deduct a few healthcare benefits. The following are common types of tax-deductible plans and contributions: Group health insurance premium payments. Health reimbursement arrangement (HRA) reimbursements.
What is deductible for self-employed individuals?
You can calculate a deduction for a home office and a vehicle used for business purposes. Meals with clients and business travel are deductible, but meals included with entertainment may not be. Premiums for insurance that you pay for to protect your business and health insurance are legitimate deductions.
Can I deduct my health insurance premiums from my taxable income?
If you get insurance in the Health Insurance Marketplace: You can deduct the full cost of your health care premiums from your taxable income — even if you don't itemize your taxes.
Is it worth claiming medical expenses on taxes?
The medical expense deduction covers a wide variety of expenses. However, because of the high Standard Deduction and the 7.5% of AGI threshold requirement, it can be difficult to benefit unless you have a lot of out-of-pocket costs.
Can I take the premium tax credit and self-employed health insurance deduction?
“… the amount of the [self-employed health insurance premium] deduction is based on the amount of the … premium tax credit, and the amount of the credit is based on the amount of the deduction – a circular relationship.
Are 1099 employees eligible for COBRA?
Yes, contractors can fall under COBRA as long as they were enrolled in a qualified employer health plan before they lost their job. This includes any family members covered under that plan.
Can you use HSA for COBRA premiums?
Can you use HSA for COBRA premiums? The short answer is yes. You can use funds from your Health Savings Account (HSA) to pay for COBRA premiums. This option is particularly beneficial for individuals who want to maintain their health insurance coverage but face the financial burden of COBRA premiums.
Is COBRA eligible for premium tax credit?
Does my eligibility for COBRA or other continuation coverage affect my eligibility for premium tax credits or cost-sharing reductions in the Marketplace? No, just being eligible for COBRA doesn't affect your eligibility for premium tax credits or cost-sharing reductions if you enroll in a Marketplace plan.
Can I deduct COBRA premiums if unemployed?
Yes they are tax deductible as a medical expense.
Do wealthy people have health insurance?
Wealthier people have a lot of advantages when it comes to health care; they are more likely to have insurance, more likely to have access to specialty care, and on average live longer and healthier.
Can COBRA be written off on taxes?
According to the Federal tax laws, your unreimbursed COBRA payments are, in fact, deductible as medical expenses on your 1040 tax return in the same way that you can deduct unreimbursed payments for legal medical services provided by physicians, surgeons, dentists, and other medical practitioners, as well as any ...
Does COBRA payments count as self-employed health insurance?
Tax professionals who say COBRA premiums are not eligible argue that COBRA policies do not meet the requirements for claiming the self-employed health insurance deduction because they are set up under the name of you or your spouse's prior employer which violates the requirement for the policy to be set up under your ...
Is there a tax form for COBRA payments?
If you had job-based health coverage. Depending on the kind of job-based coverage you had (including COBRA or retiree coverage), you may get one of these from your employer or insurance company: Form 1095-B, Health Coverage. Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.
Can COBRA premiums be refunded?
Request a Refund for Amounts Paid in COBRA Premiums Exceeding Federal Employment Tax Liability: The employer may claim the Credit through an employment tax refund on the applicable employment tax return, generally Form 941, Employer's Quarterly Federal Tax Return.
Are health insurance premiums tax deductible?
You can include health insurance premiums in your medical expense calculations. However, certain premiums are not eligible for medical expense deductions. You cannot include the following premiums in your tax deductions: Life insurance policies.
Are COBRA premiums reported on w2?
If the employer charges a COBRA premium for such coverage, then it must be included in the aggregate reportable cost on the Form W-2.