If you are self-employed with no employees, you can meet your health insurance requirement by choosing an insurance plan in the individual Marketplace set up under the Affordable Care Act. When you use the Marketplace you can also see whether you qualify for tax credits that reduce the cost of your insurance premiums. Your eligibility for the premium credit and the amount of the credit depend on your level of income.
If you currently have an individual health care plan, the plan meets the requirements, and your health insurer continues to offer the plan, you can keep your plan. Or, depending on the cost and your health insurance preferences, you could choose another plan from among the options available in the Marketplace.
According to HealthCare.gov, if you have employees you can get coverage for you and your employees through the SHOP Marketplace. For 2014, the Small Business Health Options Program (SHOP) is available to employers with 50 or fewer full-time equivalent employees. Full-time equivalent employees are those who work 30 or more hours per week on average. Starting in 2016 the SHOP Marketplace will be available to employers with up to 100 full-time equivalent employees.
On the SHOP Marketplace you can compare health plans and costs and choose the plan that best fits your business. According to HealthCare.gov, in order to use SHOP you must offer coverage to all your full-time-equivalent employees. And in many states at least 70% of your employees must enroll in the SHOP plan.
If you have fewer than 25 full-time equivalent employees who earn an average of $50,000 or less, you may qualify for the small business health care tax credit. This credit is only available if you get health coverage through SHOP. The credit is up to 50% of the amount you pay for your employees’ premium costs. The credit is higher the smaller the employer.
In addition to the credit, you can claim a tax deduction for the portion of your premium costs not covered by the credit. According to the IRS, if you are self-employed you can claim a tax deduction for medical and dental insurance premiums and qualified long-term care insurance for yourself, your spouse and your dependents. You can also include your child under age 27, even if you do not claim the child as your dependent.
To qualify for the self-employed health insurance tax deduction, you must be self-employed and had a net profit for the year. You could also qualify if you were a partner with net earnings from self-employment, or you received wages from an S corporation and were a shareholder with more than a 2% interest in the corporation. The insurance plan must be established under your business. You can claim the self-employed health insurance deduction on a separate line for calculating adjusted gross income on Form 1040, without having to itemize deductions.
Don’t Miss the Health Insurance Deduction if You’re Self-Employed, IRS
Publication 535, Business Expenses, IRS
What if I’m self-employed? HealthCare.gov
What is the SHOP Marketplace? HealthCare.gov