Can You Really Deduct Health Insurance Premiums As An LLC Owner? Yes – But Avoid This Mistake + FAQs

Is your LLC allowed to write off your personal health insurance? This question causes a lot of confusion among business owners. Many entrepreneurs aren’t sure if those hefty health insurance premiums can be deducted through their LLC.

You’re not alone – nearly 1 in 5 small business owners rely on individual health plans (not a traditional employer plan) for coverage, so it’s a common dilemma. With the average self-only health plan costing around $8,400 per year (and family coverage even more), understanding the tax rules can mean big savings.

Let’s clear up the confusion with facts and strategies for each type of LLC.

Yes, You Can Deduct Health Insurance – But How Depends on Your LLC Type

The good news is LLC owners can deduct health insurance premiums, but the method varies based on your LLC’s tax structure. An LLC isn’t taxed as its own thing by default – it will be treated as either a sole proprietorship, partnership, or can elect to be taxed as an S-corporation or C-corporation. Each classification has different rules for deducting health insurance. In all cases, you’re generally allowed to deduct 100% of health insurance premiums you pay for yourself, your spouse, and dependents (including medical, dental, and even qualifying long-term care insurance premiums). However, you must meet a few key conditions first:

• Business Profit Requirement: You can only deduct premiums up to the amount of net income your business earned. (No business profit = no health premium deduction above the line.)
• No Other Coverage: You cannot take the deduction for any month you were eligible for another employer-subsidized health plan (for example, through a spouse’s job). In other words, if you could’ve been covered by someone else’s employer plan, the IRS won’t allow the write-off for that period.
• Policy Setup: The health insurance policy should be established under your business in some way (details on this vary by LLC type). This typically means the business should pay the premiums or reimburse you, especially for partnerships and S-Corps.
• No Double Dipping: You can’t double-claim the same premiums in multiple ways. For instance, if you deduct them as a business expense (like in a C-Corp) you can’t also deduct them on your personal return. And if you get a government subsidy (premium tax credit) for your insurance, you can only deduct the out-of-pocket portion you paid.

Keep these conditions in mind as we break down each scenario. Now, let’s explore how health insurance premium deductions work for each type of LLC owner: single-member LLCs, multi-member LLCs, S-Corps, and C-Corps.

Single-Member LLC (Sole Proprietor) – Deducting Health Insurance as a Sole Owner

If you’re the sole owner of an LLC (no partners), the IRS by default treats your business as a sole proprietorship. That means for tax purposes you and the LLC are the same. You’ll report business income/expenses on Schedule C of your personal tax return. So, can a single-member LLC owner deduct health insurance premiums? Yes! But the deduction doesn’t happen on the Schedule C itself – it happens on your personal tax return as an “above-the-line” deduction.

How it works: As a sole proprietor (single-member LLC), you qualify for the Self-Employed Health Insurance Deduction. This lets you deduct 100% of your health insurance premiums for yourself (and your family) before calculating your taxable income. It’s called “above-the-line” because it reduces your Adjusted Gross Income directly, rather than being an itemized deduction. The result: you pay less income tax. (Do note, however, this deduction does not reduce self-employment tax – more on that in a moment.)

Steps to claim the deduction as a single-member LLC owner:

• Pay the premiums: Pay your health insurance premiums out-of-pocket or from your business account. (It’s fine to use business funds, but the IRS ultimately views it as you paying for personal insurance since a sole proprietorship isn’t separate from you.)
• Have sufficient business income: Ensure your business has net profit for the year. You can deduct up to the amount of your net self-employment income. For example, if your LLC earned $50,000 net and you paid $6,000 in health premiums, you can deduct the full $6,000. But if your LLC had a loss or very low profit, your deduction may be limited or zero.
• No other coverage available: Make sure you (or your spouse) weren’t eligible for a health plan through an employer during the months you’re claiming. If you were, you can’t deduct premiums for those months.
• Take the deduction on Form 1040: On your personal tax return (Form 1040), you’ll list the total eligible premiums on Schedule 1 (adjustments to income, “self-employed health insurance deduction”). This directly reduces your taxable income. Do not deduct the premiums on Schedule C as a business expense; that’s a common mistake. Remember, Schedule C is for business expenses, but health insurance for yourself is a personal adjustment to income.

Example: Alice is the sole owner of an LLC consulting business. Her LLC earned $50,000 in net profit this year. Alice bought her own health insurance policy (not through any employer) and paid $5,000 in premiums in 2024. Alice can take a $5,000 self-employed health insurance deduction on her Form 1040. This reduces her adjusted gross income from $50,000 to $45,000, saving her a nice chunk in federal income taxes. Note: Alice will still pay self-employment (Social Security/Medicare) tax on the full $50,000 profit because the health insurance deduction doesn’t reduce her Schedule C income – it only reduces income tax, not SE tax.

Key point: For a single-member LLC, health insurance premiums are not deducted on the LLC’s own forms (since a disregarded LLC doesn’t file a separate business return). Instead, the benefit comes on your personal return. This is straightforward, but easy to mess up if you put the deduction in the wrong place. Don’t try to write it off on Schedule C. The IRS expects it as an adjustment on Schedule 1. As long as you do that, you get the full deduction (income-tax-wise).

Common mistake to avoid (Single-member LLC): Because you likely pay the premium from a personal account, you might forget to deduct it at all! Keep good records of your insurance payments. Also, if using business funds, remember that for tax purposes it’s still a personal deduction, not a business expense. The money taken out for premiums should not reduce the profit on your Schedule C. Always claim it separately on your 1040.

Multi-Member LLC (Partnership) – Health Insurance Deductions for LLC Partners

What if your LLC has more than one owner? By default, a multi-member LLC is taxed as a partnership (Form 1065). Partnerships don’t pay income tax themselves; instead, they pass through income to partners via K-1 forms. Partners (including LLC members in a multi-member LLC) are considered self-employed, not employees of the partnership. This means partners aren’t eligible for “employee benefits” in the same way a regular employee would be. However, partners can still deduct health insurance premiums – the mechanism is just a bit different than for sole proprietors.

Here’s how health insurance deductions work for a partnership (multi-member LLC):

• The LLC (partnership) can pay or reimburse the premiums for each partner, but that amount must be treated as a special kind of income to the partner. Typically, the partnership will label health premium payments for partners as “guaranteed payments” or include them in the partner’s K-1 income. Guaranteed payments are basically payments to partners that are deductible by the partnership and taxable to the partner, regardless of profit sharing.
• Include premium in partner’s income: By paying the premium on a partner’s behalf (or reimbursing them), the partnership will take a deduction on the business return as a business expense (insurance cost or guaranteed payment), but simultaneously that amount is added to the partner’s taxable income on their K-1. In essence, the IRS wants it to count as if the partner received that money as compensation and then paid the insurance themselves.
• Partner takes the personal deduction: Once the premium amount is reported on the partner’s K-1 (most often as a guaranteed payment), the partner can then deduct that amount on their personal tax return (Form 1040) as a self-employed health insurance deduction (just like a sole proprietor would). The same conditions apply – it’s limited to the partner’s share of business profit, and they must not be eligible for other coverage.
• If the partner pays the premiums out-of-pocket, the partnership should reimburse them to satisfy the “policy established by the business” rule. Then report that reimbursed amount on the K-1. (If the partnership can’t reimburse by year-end, there’s a workaround of still reporting it as if it did, but it’s cleaner to actually reimburse.)
• On the partnership’s tax return, the health insurance payments for partners are deductible to the partnership (reducing the partnership’s taxable income) because they’re treated as guaranteed payments (a business expense). So effectively, the partnership gets a deduction and the partner gets a deduction – how can that be? The trick is the partner’s K-1 income went up by the amount of the payment, so it washes out. The real tax benefit ultimately lands on the partner’s personal return, not double-dipping at the partnership level.

In summary: The partner ends up with an above-the-line deduction on their personal return for the premiums, similar to a sole proprietor. The partnership’s role is mainly to funnel the expense through correctly.

Example: Bob and Carol are equal partners in BC LLC (taxed as a partnership). The LLC pays $6,000 for Bob’s health insurance premiums and $6,000 for Carol’s premiums during the year. On the LLC’s books, it treats each $6,000 as a guaranteed payment to that specific partner. This means the LLC will deduct $12,000 of expenses on its Form 1065, and Bob’s K-1 will show an extra $6,000 of income (guaranteed payment) to him, and similarly $6,000 for Carol. Come tax time, Bob and Carol each report their K-1 income on their personal returns. They each also take a $6,000 self-employed health insurance deduction on their individual 1040s. Net effect: The LLC’s taxable income passed through is lower by the premiums (good for them), but Bob and Carol picked up that income and then deducted it, reducing their own taxable incomes (good for them). They’ve effectively written off their health insurance costs, just via the personal route.

A few tips for partnership LLC owners:

• Make sure the partnership agreement or at least the year-end accounting clearly reflects these health premium payments as guaranteed payments or partner distributions tied to health insurance. This documentation helps if the IRS ever asks whether the insurance plan was “established under the business.”
• Just like sole proprietors, partners’ deductions are limited by their earnings from the partnership. If the partnership had a loss (or a partner’s share is a loss), that partner can’t take the health insurance deduction above the line for that year beyond what they earned. (They might carry it or use it as an itemized medical expense if possible.)
• Partners also pay self-employment tax on their partnership earnings including those guaranteed payments. So, similar to sole owners, you still pay Social Security/Medicare taxes on the health premium amount, but at least you avoid income tax on it by taking the deduction.

Common mistake to avoid (Partnerships): A frequent mistake is deducting partner health insurance premiums on the partnership return without adding it to the partner’s K-1 income. If you do that, you gave the partnership a deduction but the partner didn’t pick up income or take a personal deduction – that’s not allowed because it becomes an untaxed benefit to the partner (which the IRS disallows for partners). Always remember the two-step: add to partner’s K-1 income, then partner deducts personally. Also, don’t try to run partner health premiums through a Section 125 cafeteria plan or as a regular employee benefit – partners aren’t employees and don’t get that tax-free treatment up front.

LLC Taxed as an S-Corp – Deducting Owner Health Premiums the Right Way

Some LLCs choose to elect S-Corporation status for tax purposes (by filing Form 2553 with the IRS). If your LLC is taxed as an S-Corp, the way you handle owner health insurance is unique. In an S-Corp, owner-shareholders who own more than 2% of the company’s shares (which is typically all LLC owners in an S-Corp, since you likely own a big chunk of your small company) are not treated as regular employees for certain benefits. Health insurance is one of those benefits. You can still deduct it, but you have to follow the IRS’s procedure closely.

Here’s the proper procedure for S-Corp owners to deduct health insurance:

1. Policy in Company Name (or Reimbursement): The health insurance policy should be established under the S-Corp’s name, or the S-Corp should at least pay the premiums. Many S-Corp owners will have the company pay the insurance company directly. If the policy is in your name personally, the S-Corp can reimburse you for the premiums. The key is that the S-Corp must treat the premiums as an expense for the company – not just you paying out of pocket without telling the company.
2. Add Premiums to W-2: At the end of the year, the total premiums paid on behalf of each >2% owner must be added to that owner’s W-2 form as taxable wages. For example, if your S-Corp paid $5,000 in health premiums for you, your W-2 will show $5,000 higher in Box 1 (wages subject to income tax). Important: These premiums are not subject to Social Security or Medicare tax (so they would not increase Boxes 3 and 5, and not increase FICA tax). They’re only added to federal (and state) wages for income tax purposes. This is a crucial detail – it ensures you pay income tax initially on the premiums, which then allows you to take the personal deduction. (If you fail to put it on the W-2, the IRS might say the plan wasn’t established by the company properly.)
3. S-Corp deducts as compensation: Because you included the premium in your W-2 wages, the S-Corp can deduct that amount as part of employee compensation (wage expense) on the business return. So the company does get a deduction on its books for paying your premium (via your wages).
4. You take the personal deduction: Now, just like the previous scenarios, on your personal Form 1040 you claim the self-employed health insurance deduction for the premiums paid. Even though that $5,000 was added to your W-2 wages (and thus to your taxable income initially), you get to subtract the same $5,000 on Schedule 1 of your 1040. The result: you don’t pay income tax on those premiums ultimately. (You did pay it through withholding maybe, but you get it back via lower tax due.)
5. All normal conditions apply: You still need enough S-Corp salary/profit to cover the deduction, and you must not be eligible for other employer health coverage, etc. Typically, your deduction is limited to your salary from the S-Corp (since that’s your earned income from the business). For most owner-only S-Corps, that’s not an issue as long as your salary is at least as much as the premiums.

Example: John is the 100% owner and only employee of his consulting LLC, which is taxed as an S-Corp. The S-Corp pays $4,800 for John’s health insurance premiums this year. John’s payroll provider knows John is >2% owner, so they add $4,800 to Box 1 of his W-2. His W-2 shows, say, $60,000 in Box 1 wages instead of $55,200, because of the added premiums. Boxes 3 and 5 (Social Security and Medicare wages) remain at $55,200 (the amount not including premiums) – so John doesn’t pay FICA tax on that $4,800. The S-Corp will deduct the full $60,000 of wages on its corporate tax return. Meanwhile, John files his personal taxes, and on Schedule 1 of Form 1040 he takes a $4,800 self-employed health insurance deduction, which effectively removes that from taxable income. In the end, John has successfully deducted his health insurance cost. The only tax paid on that premium was indirectly Social Security/Medicare via the S-Corp wages? Actually, in this case he avoided even those taxes on the premium portion – a nice perk of the S-Corp route.

In John’s example, note how the S-Corp approach saved payroll taxes on the premium amount. Compare this to a sole proprietor who must pay self-employment tax on health premium cost (because it can’t be deducted on Schedule C). S-Corp owners don’t pay FICA on the premium addition to wages, which is a subtle tax advantage. C-Corps share this advantage too, as we’ll see next.

Important considerations for S-Corp LLC owners:

• Work with your payroll provider: Make sure whoever runs payroll is aware you’re an S-Corp owner and knows to include the health insurance in your W-2 properly. This often is done in a special category on the payroll system (sometimes called “S-Corp owner health insurance” fringe benefit).
• Timing: The premiums should be paid by the S-Corp in the tax year and included on that year’s W-2. If you forgot to do it by year-end, you can often fix it by issuing a corrected W-2 or including it in the final payroll of the year. Don’t wait until after the year is over without adjusting the W-2.
• Multiple owners: Each >2% owner needs the same treatment. If your LLC has, say, three owners all owning 33% and all are on the company health plan, each one’s W-2 must include their respective premium amounts.
• No double dipping or cafeteria plans: >2% S-Corp owners cannot participate in tax-free premium conversion plans (Section 125 cafeteria plans). So you can’t simply exclude your premium from your own paycheck pre-tax like a regular large employer might for employees – you have to use the include-and-deduct method as described. It’s a bit of paperwork, but it’s the only way to get the tax break.
• What if the S-Corp didn’t pay it? If you paid the policy personally and the S-Corp didn’t reimburse you, technically you wouldn’t qualify for the deduction. The remedy is to have the S-Corp reimburse you and include it in W-2 (even if late). Always run health costs through the business books in S-Corp situations.

Common mistake to avoid (S-Corp): The #1 mistake S-Corp owners make is failing to report health insurance on the W-2. If you just pay the premiums personally and don’t run it through payroll, you might not legally take the deduction. Many S-Corp owners have gotten unwelcome IRS surprises by deducting premiums on Form 1040 without that wage inclusion. It’s an easy audit flag. So, don’t skip that step! Another mistake is thinking the S-Corp can deduct it as an insurance expense without including in wages – that’s not allowed for >2% owners. Always route it through W-2 income. If done properly, it won’t cost you extra taxes and keeps everything IRS-compliant.

LLC Taxed as a C-Corp – The Simplest Route for Health Insurance Deductions

If your LLC has elected to be taxed as a C-Corporation (or you have an actual corporation entity), the landscape changes. In a C-Corp, the company is a completely separate taxpayer from you as the owner. The owner typically is an employee of the corporation (assuming you work in the business). Health insurance premiums in a C-Corp setup are usually the easiest to handle: the company can directly pay for health insurance as a business expense, and the owner-employee can receive that coverage tax-free, just like any other employee would.

How it works for C-Corp owners:

• The C-Corp can provide health insurance to its employees (including you as an owner-employee) and pay the premiums directly. Premiums paid by the corporation for employees are fully tax-deductible to the corporation as a business expense (just like salaries or rent).
• As an employee, you do not have to include the premium amount in your income. In other words, the health insurance is a tax-free fringe benefit. Unlike the S-Corp case, where owners had to add it to wages, a C-Corp owner-employee gets to exclude health insurance benefits from taxable income (the same way big companies’ employees do).
• There’s no need for an “above-the-line” deduction on your personal return because the benefit never hit your personal taxable income in the first place. The deduction effectively happened at the corporate level.
• Example: Sarah’s LLC is taxed as a C-Corp, and she is an employee (the company’s CEO). The C-Corp pays $10,000 in premiums for a health insurance policy covering Sarah and her family. The corporation treats this $10,000 as an employee benefit expense and deducts it on the corporate tax return. On Sarah’s W-2, nothing related to the health insurance appears in her taxable wages – it’s completely excluded. Sarah gets health coverage and effectively pays $0 in taxes on those premiums, and the company gets a write-off. Everyone’s happy (except maybe the IRS, but this is fully allowed by tax law).
• C-Corps can also opt to reimburse health insurance premiums rather than paying directly. For instance, a small C-Corp might not have a group plan but can set up a Health Reimbursement Arrangement (HRA) to repay you for premiums or other medical costs. Those reimbursements can also be tax-free to you and deductible to the company, if done according to IRS rules. (One example is an ICHRA – Individual Coverage HRA – which some small businesses use to reimburse individual policy premiums tax-free. That’s beyond our scope here, but it’s good to know such options exist for C-Corps.)

Things to watch in a C-Corp setup:

• Ownership and employees: If you’re the only person in the C-Corp, you essentially have a one-person group health plan. That’s fine – you can deduct your premiums. If you have additional employees, you typically need to offer them health benefits on a nondiscriminatory basis. You can’t just pay the owner’s insurance and exclude other full-time employees (at least not if you want to maintain the tax-free status of the benefit). There are nondiscrimination rules that say you can’t favor highly compensated employees (like an owner) in health plans. For very small companies, this usually isn’t an issue if only the owner and maybe a spouse are employees – but be mindful if you grow.
• No income limitation by profit: Unlike a sole prop or partnership, a C-Corp can actually deduct a health premium even if the company has a loss. (Of course, a new corporation with no profit still benefits from a deduction because it creates or increases a net operating loss, which can potentially offset future taxable income or be carried back, per tax rules.) The self-employed deduction rules limiting to profit don’t apply to corporations – they can have a business loss including the insurance expense. That said, for an owner-employee, if the company is consistently losing money, you might eventually be paying personally in a way that doesn’t immediately save personal tax. But strictly speaking, the corporation can deduct it regardless of its income situation.
• Simplicity: The C-Corp route is administratively simpler for health insurance. You just treat it as a normal business expense and you as an employee don’t worry about special reporting on your personal taxes. Many advisors say if health benefits are a big priority and you have a growing business with employees, the C-Corp structure offers the cleanest handling of fringe benefits like health insurance. Of course, C-Corps have other tax implications (like potential double taxation on profits), so this is just one factor.

Common mistake to avoid (C-Corp): The main mistake in a C-Corp scenario would be not properly setting up the health plan or failing to meet requirements – for example, reimbursing an owner’s premiums without a formal plan document if one is required, or discriminating by only covering the owner when you have other employees (which could risk the owner’s benefits becoming taxable compensation). Also, sometimes C-Corp owners forget to actually run the expense through the company books – if you pay personally and don’t reimburse through the company, you miss out on the corporate deduction. Always pay (or reimburse) health costs from the company account.

Comparison of Health Insurance Deduction Methods by LLC Type

To recap, LLC owners across all structures can usually deduct health insurance premiums, but the who/what/how differs. Here’s a quick comparison:

Reading the table: As you can see, sole proprietors and partners get their deduction on their personal taxes, whereas S-Corps and C-Corps handle a lot of it on the business side (with S-Corp owners still taking a personal deduction as well). For tax purposes, all roads lead to Rome: the owner’s health premiums end up reducing the owner’s taxable income one way or another. The main differences are administrative and whether payroll/self-employment taxes apply on those amounts.

• Sole proprietors & Partners: simpler filing (just your 1040), but you still pay Social Security/Medicare on those earnings.
• S-Corp owners: a bit more paperwork (W-2 inclusion), but you avoid payroll taxes on premiums.
• C-Corp owners: very straightforward and completely excludes the cost from your income, but you need a corporate structure in place (and watch out for other tax implications of a C-Corp).

Now that you know the rules, let’s highlight some pitfalls to avoid.

Common Mistakes LLC Owners Make with Health Insurance Deductions

Even with the rules spelled out, it’s easy to slip up when actually filing taxes or running payroll. Here are some common mistakes and misconceptions to watch out for, and how to avoid them:

• Putting the deduction on the wrong form: This is classic. Sole proprietors sometimes put their health insurance premiums on Schedule C as a business expense – wrong! It belongs on your 1040 as an adjustment to income. Similarly, partners might forget to add it to the K-1 and take it personally, or vice versa. Always follow the proper reporting: personal deduction for sole props/partners, W-2 inclusion + personal deduction for S-Corps, business expense for C-Corp.
• Not doing the S-Corp W-2 inclusion: As mentioned, S-Corp owners failing to include premiums on their W-2 is a frequent error. Without that, the IRS can deny the deduction. Fix: ensure your payroll reports it, or issue a corrected W-2 if missed. It’s a simple but crucial step.
• Deducting without profit: Trying to deduct premiums in a year your business had a loss or too little income. Remember, the self-employed health insurance deduction cannot exceed your business’s net profit or your S-Corp salary. For example, if your Schedule C showed a $0 or negative income, you can’t create a deduction for your premiums (at least not above the line – you might carry it to medical itemized deductions, but that often yields no benefit unless your total medical expenses are very high). The mistake is thinking “I paid $5k in premiums, I’ll deduct $5k” without checking your business income.
• Ignoring the “eligible for other coverage” rule: Some owners don’t realize that if you or your spouse could have hopped on an employer plan, you’re disqualified from taking the self-employed health insurance deduction for those months. For instance, if your spouse’s company offered family health coverage and you were eligible to enroll (even if you declined it), you cannot claim the deduction for the months you declined their coverage. A common scenario: an owner chooses an independent plan while their spouse has a job with insurance available – the IRS says no deduction in that case. Don’t overlook this rule; it’s an easy one to miss and could bite you if audited.
• Mixing up employee vs owner benefits: If your LLC also has non-owner employees, be careful to distinguish owner coverage from employee coverage. Health insurance premiums for non-owner employees are a normal business expense and not taxable to those employees (this is fine). But if you try to treat yourself (the owner) the same way in a partnership or S-Corp, it’s incorrect. Owners don’t get the tax-free exclusion up front except in C-Corp world. So a mistake would be paying the owner’s premiums and not accounting for them properly (like not counting as income in a partnership or S-Corp). On the flip side, some owners forget they can deduct their own premiums at all because they only see the company books (which may not show an expense if it wasn’t run through properly). Bottom line: handle owner premiums with the special rules, and handle employee premiums as usual, and don’t confuse the two.
• Forgetting to adjust for subsidies or Medicare: If you receive an Affordable Care Act premium tax credit that covers part of your insurance cost, you can only deduct the portion you paid. Similarly, if you’re on Medicare and your business is paying those premiums, those count as health insurance premiums you can deduct (yes, Medicare Part B, Part D, and MediGap premiums are deductible as self-employed health insurance if you otherwise qualify). Just be careful not to deduct any amount that was paid by someone else or a government subsidy.
• Lack of documentation: In any of these setups, keep records. If your partnership reimburses premiums, have a paper trail (an accounting entry or a check copy). If your S-Corp pays or reimburses, keep board minutes or a notation in payroll records. If your C-Corp has a plan, keep the plan documents. You rarely need to show these, but if a question arises, you want to demonstrate that the plan was properly established by the business.

Avoiding these mistakes ensures you actually get the tax benefit you’re entitled to and keeps you out of hot water with the IRS.

FAQs – Deductions for LLC Owners’ Health Insurance

Q: Can a single-member LLC deduct health insurance premiums?
A: Yes. As a single-member LLC owner (sole proprietor), you can deduct 100% of health insurance premiums for yourself and family on your personal tax return, up to your business profit.

Q: Can a multi-member LLC (partnership) deduct owners’ health insurance?
A: Yes. The partnership can pay or reimburse partner premiums and count them as a business expense, but must also include those amounts as income to the partners, who then deduct it personally.

Q: Can an LLC taxed as an S-Corp write off owner health insurance?
A: Yes. An S-Corp can deduct the premiums (as wages) and the >2% owner can take a personal deduction, but the premiums must be included on the owner’s W-2 first.

Q: Can an LLC (any type) pay for an owner’s health insurance directly?
A: Yes. Any LLC can pay an owner’s premiums. The difference is tax treatment: For a sole proprietor or partnership it becomes part of the owner’s income (then deducted). For an S-Corp it’s added to W-2 wages (then deducted). For a C-Corp, it remains a tax-free benefit.

Q: Are health insurance premiums a deductible business expense for an LLC?
A: It depends. If your LLC is taxed as a C-Corp, the company deducts them directly as a business expense. In all other cases, the deduction is taken on the owner’s personal taxes (not directly on the LLC’s income statement for tax purposes).

Q: What if my LLC has no profit this year – can I still deduct my health insurance?
A: No. The self-employed health insurance deduction can’t exceed your business’s net income. If you have zero or negative LLC profit (or no W-2 wages from your S-Corp), you generally can’t take the above-the-line deduction for premiums. (You might be able to include those premiums as an itemized medical expense, but that’s only if you itemize and your total medical costs are very high relative to your income.)

Q: If I’m eligible for my spouse’s employer health plan but choose my own LLC plan, can I deduct the premiums?
A: No. IRS rules disallow the deduction for any month you were eligible for a subsidized employer plan (even if you didn’t use it). In this case, you cannot claim the self-employed health insurance deduction for those premiums.

Q: Do I need to itemize deductions to write off health insurance as an LLC owner?
A: No. The health insurance deduction for self-employed LLC owners is an adjustment to income (above-the-line) on your 1040. It doesn’t require itemizing. It will reduce your taxable income even if you take the standard deduction.