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George Saenz, the Tax Talk columnistDeducting health insurance premiums

Dear Tax Talk,
I am self employed and have net profit from consulting work. I would like to take the health insurance premium deduction, but the policy is under my husband's name. He works on W-2, but he did not get the insurance from his employer, so we took the individual insurance. My question is, can I take this deduction since we are filing jointly even though the policy is under my spouse's name and we paid it from our pocket? Thanks in advance.
-- Ana

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Dear Ana,
Self-employed individuals can claim, as a deduction to adjusted gross income, the amount paid for health insurance premiums for themselves, their spouse and dependents for a plan established under that business. No deduction is allowed for costs during a month in which the taxpayer is eligible to participate in any subsidized health plan maintained by any employer of the taxpayer or of the spouse of the taxpayer. Based on the letter of the law, you have two obstacles to overcome:

  1. The plan has to be established under your business.
  2. You cannot be eligible to participate in a subsidized plan.

In ILM 200524001, the IRS held that a sole proprietor who purchases health insurance in his or her own name has established a plan under his or her business and can, therefore, claim a deduction for self-employed health insurance. In your case, your husband purchased the policy, and you say it is in his name. While this differs from the facts in the internal legal memorandum, it would seem that since the policy covers both of you that this is not a significant detriment to its deductibility.

The other question is whether your husband is eligible to participate in a subsidized plan. To see if you're eligible to claim the self-employed health insurance deduction, you have to determine if your husband's employer contributes to the cost of the insurance it offers, if any. If so, then you would not be eligible for the deduction.'s corrections policy -- Posted: Jan. 24, 2006
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