The short answer
Yes, in most cases you can. If you work for yourself and show a profit, the IRS lets you deduct what you pay for health insurance for yourself, your spouse and your dependents. It comes off your income on your federal return, and you don't have to itemize to get it. There are a few rules, so let me walk you through them in plain words.
How the self-employed health insurance deduction works
The IRS calls this the self-employed health insurance deduction. You figure it on Form 7206, and the total goes on your Form 1040.
It covers medical and dental coverage. It can also cover qualified long-term care insurance, up to an age-based limit. Your kids count too if they were under 27 at the end of the year, even if they aren't your dependents. That detail comes straight from the IRS instructions for Form 7206.
The big benefit is where it lands. It lowers your adjusted gross income. That's different from the medical expense deduction, which you only get if you itemize and your costs are high.
The rules that trip people up
Your business has to make a profit. The deduction can't be more than the earned income from the business you set the plan up under. If you had a loss year, you may not get it.
The other rule is about employer plans. You can't take the deduction for any month you were eligible for a subsidized health plan through an employer. That includes your spouse's job. The IRS says this applies even if you didn't actually sign up for that plan.
The IRS checks this month by month. So if your spouse had a job with benefits from January to June, and then left it, you might still deduct premiums for July through December.
Why this deduction gets missed
This deduction is easy to miss. It doesn't show up on Schedule C with your other business costs. It goes on Form 7206 instead, and the IRS treats it as an adjustment to income. If you only look at your business expenses, you can skip right past it.
I'm not a tax pro, and I always tell people to run this by whoever does their taxes. My part is helping you find coverage that fits your work and your family. Once you have it, your tax person can help you get the deduction right.
If you want the basics first, the common questions on my site are a good place to start. You can also see how I help self-employed people and families.
FAQ
Do I have to itemize to deduct my health insurance premiums?
No. The self-employed health insurance deduction is an adjustment to income. You can take it whether you itemize or use the standard deduction.
Can I deduct premiums if my spouse has insurance through work?
Not for any month you were eligible for your spouse's subsidized employer plan. That's true even if you chose not to join it. Months when you weren't eligible can still count.
Does dental insurance count?
Yes. The IRS includes dental coverage. Qualified long-term care insurance can count too, up to a limit based on age.
What if my business lost money this year?
The deduction can't be more than the earned income from your business. In a loss year, you may not be able to take it. Your tax preparer can tell you how it applies to you.
Where do I claim it?
You figure it on IRS Form 7206 and carry the amount to your Form 1040. The IRS page for Form 7206 has the form and instructions.