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 YearApplicable Percentage of TQ LTCI Premium
Deductible as Self-Employed Health Insurance
2016100%

 

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 attained before the
end of the taxable year
Amount allowed as a medical expense in
20172018
40 or under$410$420
41-50$770$780
51-60$1,530$1,560
61-70$4,090$4,160
71 or older$5,110$5,200

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