tax-468440_1920When tax season rolls around everyone, especially small business owners, is looking for ways to reduce their tax burden. If you’re currently evaluating possible write-offs, deductions, and credits, you may have asked the question “Can I write off my health insurance costs?”

While the answer to that question isn’t a definitive one in every case, there are some expenses and situations that qualify you for some substantial tax advantages. Here are the tax deductions and credits that may apply specifically to businesses, their employees, and the self-employed.


Tax Deductions Available for Businesses

Whether your company offers employees the option of enrolling in a group health insurance plan, or even if you offer contributions to employees’ individual healthcare costs, those payouts can usually be written off as a business deduction when filing your taxes. Here are the most common types of tax-deductible contributions:

  • Group health insurance premiums
  • Contributions made to Health Savings Accounts (HSAs)
  • Reimbursements made through Healthcare Reimbursement Plans (HRPs) or Healthcare Reimbursement Arrangements (HRAs)

In these situations, employees also benefit from tax advantages since premiums and HSA contributions are paid pre-tax and HRP/HRA reimbursements are not taxable.

Tax Credits Available for Businesses

Aside from these deductions, small businesses may also qualify for certain tax credits, provided they meet all three of the requirements below:

  • They must employ less than 25 employees, who earn $50,000 or less per year.
  • They must offer a group health insurance plan and cover at least half the cost of its premiums.
  • They must purchase the policy through the Small business Health Options Program (SHOP) Marketplace, if available.

Businesses who do meet these requirements may be eligible to receive up to 50{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} of what they pay towards their employees’ health insurance premiums.

Tax Credits Available for Employees

Workers who purchase health insurance on their own can also qualify for health insurance tax credits that may lower the cost of health insurance. To be eligible they must:

  • Purchase a policy through their state’s Marketplace
  • Earn below a certain income limit
  • Not have access to health insurance through their employer
  • Not be eligible for Medicaid or other government-provided coverage

Tax Deductions Available for Self-Employed

Individuals who are self-employed may also have opportunities to qualify for health insurance deductions, including premiums for long-term care coverage. Among other criteria, they must:

  • Show a profit for their business
  • Not have access to employer-provided coverage, for example through a spouse or another side job

In a time when health care costs are constantly on the rise, it’s important to look for every opportunity to save money or reduce your tax burden. Click here to read more information on this topic.