8803 / How is health insurance coverage for partners and sole proprietors taxed?

Partners and sole proprietors are self-employed individuals, not employees, and the rules for personal health insurance, rather than employer-provided health insurance, usually apply. Partners and sole proprietors, are, therefore, entitled to deduct 100 percent of amounts paid during a taxable year for insurance that provides medical care for the individual, spouse, and dependents during the tax year.

The insurance can also cover a child who was under age 27 at the end of the tax year, even if the child did not qualify as the taxpayer’s dependent. A “child” for this purpose is defined to include a taxpayer’s child, stepchild, adopted child, or foster child. A foster child is any child placed with the taxpayer by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

In additional, certain premiums paid for long-term care insurance are eligible for this deduction.¹