COBRA Premiums and Self-Employed Health Insurance

COBRA premiums can qualify for the self-employed health insurance deduction, provided the taxpayer meets the general eligibility requirements and is not eligible to participate in a subsidized employer health plan [1].

Key requirements:

• Must have net profit from self-employment [1]
• Cannot be eligible for a subsidized health plan from an employer or spouse's employer during the months claiming the deduction [1]

The deduction is limited to the lesser of:

• The eligible health insurance premiums paid, or
• Net profit from the business reduced by the deductible portion of self-employment tax and any self-employed retirement plan contributions [2]

Yes, COBRA coverage is considered participation in an employer health plan. COBRA allows former employees to continue their group health benefits from their previous employer's plan for a limited time after certain qualifying events like job loss or reduction in hours [1].

While participants typically must pay up to 102% of the premium cost, the benefits received under COBRA are still considered employer-provided health coverage and are excluded from income [1].