Can I get insurance through my LLC/Sole Proprietorship?
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What premiums are Deductible?
Health/Dental/Vision/Long Term Care Policies
Who can your premium cover?
This can include you, your spouse, and any children under 27.
How does this work?
If you are an LLC that has elected to be taxed as an S-Corporation, this does not pertain to you. You must follow different rules found here [Can I get health insurance through my S-Corporation]
Getting health insurance as an LLC or Sole Proprietor can be a bit of a maze to navigate. It's important to understand the specific rules and options available to you. If you've chosen to structure your business as an LLC taxed as an S-Corporation, you have different considerations, which we won't delve into here. You should look into the rules applicable to S-Corporations for health insurance.
For those of you who are single-member LLCs without employees, the path to health insurance generally leads to individual plans rather than group coverage. Sole proprietorships, on the other hand, may have access to group health insurance if they employ at least one person besides the owner.
How do I pay premiums?
As an LLC owner or Sole Proprietor, you typically pay your health insurance premiums out of your pocket. These expenses are personal and not reimbursed by the business.
How do the deductions work?
Personal deduction
The deduction is on your personal return under the Self-Employed insurance deduction line on Schedule 1.
no profit, no deduction
You must have profit and can only deduct up to your profit.
Health plan eligibility
If either you or your spouse is eligible to enroll in an employer's health plan at any point during the tax year, even if you decide not to enroll and decline the coverage, any month meeting this condition will result in the loss of your tax deduction for that month. If you were eligible for the whole tax year, then you will completely lose the deduction.
What about hiring my spouse?
There is a lot out there indicating the benefits of hiring your spouse into your LLC/Sole Proprietorship to utilize the insurance and/or the Health Reimbursement Arrangement strategy. That can begin to get more intricate and, in many cases, is not the best strategy. However, you can learn more about that by checking out this article [ Five things to know about employing your spouse]
Remember that health insurance for LLC owners and Sole Proprietors can be a complex area with legal and tax implications. It's advisable to consult with a tax professional or legal advisor who can provide tailored guidance based on your specific situation.
References
IRS Publication 535 Business Expenses
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