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Sole Proprietor

Deductibility of Employer-Paid Premiums

Sole Proprietors who purchase and pay for Tax-Qualified Long-Term Care Insurancepolicies for themselves, their spouses and their tax dependents may claim a deduction for the premiums paid as medical care expenses (IRC Sec. 162(l)(1)(A) and Sec. 213).

Prior to tax year 2003, only a percentage of the eligible Tax-Qualified Long-Term Care Insurancepremiums paid by a self-employed individual were deductible as medical care expenses. However in tax year 2003 and thereafter, the full amount of the Tax-Qualified Long-Term Care Insurance premiums paid by the self-employed individual may be deducted (IRC Sec. 162(l)(1)(B). See the following table for more information.

 

Tax Year Applicable Percentage of TQ LTCI Premium
Deductible as Self-Employed Health Insurance
2016 100%

 

Further, as in the case of individual taxpayers, the amount of the Tax-Qualified Long-Term Care Insurance premiums that a self-employed individual may deduct as Self-Employed Health Insurance is subject to the following dollar limits.

Age Eligible Premium 2016 Limit Eligible Premium 2015 Limit
40 and Younger $390 $380
41 - 50 $730 $710
51 - 60 $1,460 $1,430
61 - 70 $3,900 $3,800
71 and Older $4,870 $4,750

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