Can I write off health insurance, and should I open an HSA?
Short answer
Self-employed creators can usually deduct health insurance premiums for themselves and their family. If you have a high-deductible health plan, a health savings account adds another deduction that grows tax-free for medical costs.
Otavio Mayole, Co-founder, DeCypher FinancialsUpdated
Health insurance
- Sole proprietor or single-member LLC: premiums are usually deductible on your personal return, even if you don't itemize.
- Not for months you could join an employer plan, including your spouse's.
- S-Corp owners: the business pays or reimburses the premiums and they're added to your salary, then you take the deduction. Set it up correctly or you lose it.
HSA
- Only available with a qualifying high-deductible health plan.
- Contributions are deductible, growth is tax-free, and withdrawals for medical costs are tax-free.
- The money stays yours year after year and can be invested.
- Yearly limits are set by the IRS.
If you buy coverage on the marketplace with a subsidy, rising creator income can change what you owe. See the question on health insurance subsidies.