Whether you get a tax refund for health insurance depends on what kind of insurance you have and how you paid for it

If you bought health insurance through your employer, you do not get a tax refund for those premiums—they are already deducted from your paycheck before taxes are calculated. If you bought insurance on your own through the Affordable Care Act (ACA) marketplace, you may have received a premium tax credit (a subsidy that lowered your monthly bill), and that credit could result in a refund or a bill when you file taxes. If you paid for insurance out of pocket with after-tax dollars and are self-employed, you may be able to deduct those premiums on your tax return. Medicare premiums are not tax-deductible for most people.

The key is whether the government already helped pay for your insurance during the year. If it did, you will need to reconcile that help when you file your return. If it did not, you may have a deduction available depending on your situation.

Key Takeaways

  • Employer-sponsored insurance premiums are pre-tax and do not result in a refund or deduction.
  • ACA marketplace insurance with a premium tax credit requires you to reconcile that credit on your tax return, which can result in a refund or a payment owed.
  • Self-employed people can deduct health insurance premiums paid with after-tax dollars, which may lower their tax bill.
  • Medicare premiums are not tax-deductible unless you are self-employed and paid them as a business expense.
  • You will need Form 1095-B (proof of coverage) or Form 1095-A (ACA marketplace details) to file your return correctly.

ACA marketplace insurance and premium tax credits

If you bought health insurance through the ACA marketplace (Healthcare.gov or your state's marketplace), you may have received a premium tax credit that reduced your monthly premium. The government estimates how much credit you should receive based on your expected income for the year, and that credit is paid directly to your insurance company each month.

When you file your tax return, you report your actual income for the year. If your actual income was lower than you estimated, you received more credit than you were may have access to to—and the IRS keeps the difference. If your actual income was higher than you estimated, you received less credit than you were may have access to to, and you may owe money back. This is called reconciliation.

You report this on Form 8962 (Premium Tax Credit) when you file. The form compares the credit you received to the credit you should have received based on your final income. The result is either added to your refund or subtracted from it. If you received significantly more credit than you should have, you could owe money instead of receiving a refund.

Self-employed health insurance deduction

If you are self-employed and pay for your own health insurance premiums with after-tax dollars, you can deduct those premiums on your tax return. This is called the self-employed health insurance deduction, and it reduces your taxable income.

You can deduct premiums you paid for yourself, your spouse, and your dependents, as long as you had net self-employment income for the year. You cannot deduct more than your net profit from self-employment. This deduction is taken on Form 1040 (line 17) and does not require itemizing deductions.

The deduction does not directly give you a refund, but it lowers your taxable income, which can result in a smaller tax bill or a larger refund if you are also may have access to to other refundable credits.

Employer-sponsored insurance and payroll deductions

If your employer offers health insurance and you enroll, your premiums are deducted from your paycheck before federal income tax is calculated. This means the premiums are already "pre-tax"—you do not pay income tax on that money, and you do not get a deduction or refund for it on your tax return.

Your employer reports this to the IRS on your W-2 form, and the amount is already factored into your withholding. You cannot claim an additional deduction for employer-sponsored premiums, and you will not receive a refund related to them.

Medicare premiums and tax deductions

Medicare Part B and Part D premiums are not tax-deductible for most people. If you are retired and receiving Medicare, you cannot deduct those premiums on your personal tax return.

The one exception is if you are self-employed and pay Medicare premiums as a business expense. In that case, you can deduct them as part of your self-employed health insurance deduction, following the same rules as other health insurance premiums.

Forms you need for your tax return

The forms required depend on what kind of insurance you had during the year. If you had ACA marketplace insurance, your insurance company will send you Form 1095-A by January 31. This form shows the premiums you were charged each month and the premium tax credit you received. You need this form to complete Form 8962 and reconcile your credit.

If you had any health insurance during the year—employer-sponsored, marketplace, or other—you should receive Form 1095-B from your insurance company or employer. This form proves you had coverage and is required to file your return. If you did not receive it by early February, contact your insurance company or employer to request it.

If you are self-employed, you will need records of all health insurance premiums you paid during the year to claim the self-employed deduction. Keep receipts, premium statements, or bank records showing the payments.

What happens if you received too much or too little credit

If you received more premium tax credit than you were may have access to to based on your final income, the IRS will reduce your refund or add to the amount you owe. The reduction is capped at certain amounts depending on your income and filing status, but you can still owe money.

If you received less credit than you were may have access to to, the IRS will add the difference to your refund. This is money you should have received during the year but did not, and it comes back to you when you file.

The reconciliation happens automatically when you file Form 8962. You do not have to contact the IRS or your insurance company—the form calculates the adjustment based on the information you provide about your actual income.

Frequently Asked Questions

Can I get a refund if I paid for health insurance out of pocket?

Not directly. If you are self-employed, you can deduct those premiums, which may lower your tax bill or increase your refund. If you are not self-employed and paid premiums with after-tax dollars, you cannot deduct them unless you bought the insurance through the ACA marketplace and received a premium tax credit.

What if I did not receive Form 1095-A from the marketplace?

Contact your state's health insurance marketplace or Healthcare.gov directly. You can also call the IRS at 1-800-829-1040. You need this form to file your return if you received a premium tax credit. If you cannot get it, you may still file, but the IRS may delay processing your return.

Do I owe money back if my income was higher than expected?

Possibly. If your actual income was higher than you estimated when you enrolled, you received more credit than you should have. Form 8962 will calculate how much you owe back. The amount is capped based on your income level, so you will not owe back the entire credit, but you could owe several hundred dollars.

Can I deduct Medicare premiums on my tax return?

Not unless you are self-employed. If you are self-employed and paid Medicare premiums as a business expense, you can include them in your self-employed health insurance deduction. Otherwise, Medicare premiums are not tax-deductible.

What if I had multiple types of insurance during the year?

You will receive a Form 1095-B from each insurance provider. Report all of them when you file. If you had ACA marketplace insurance at any point, you will also receive Form 1095-A for that coverage. Report the marketplace credit on Form 8962 even if you had other insurance for part of the year.