Four tax treatments, four different answers · 23 states
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“LLC” is a legal structure, not a tax status, and health insurance follows the tax status. Two LLC owners with identical businesses can have completely different answers here, purely because of an election one of them filed.
Enter a ZIP and your rough income and a licensed agent will tell you which side of the line you are on, and what it is worth doing about it.
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| If your LLC is… | You are taxed as | And the premium is handled |
|---|---|---|
| Single-member, no election | Taxed as a sole proprietorship; profit on Schedule C | Deduct premiums on Schedule 1, limited to net self-employment income |
| Multi-member, no election | Taxed as a partnership; guaranteed payments on your K-1 | Partnership pays or reimburses, reports as guaranteed payments, you deduct |
| Election to be taxed as an S-corp | You become a W-2 employee of your own company | Premium must run through payroll onto the W-2 first |
| Election to be taxed as a C-corp | The company is a separate taxpayer | Premiums are generally a company expense, not a personal deduction |
Most owner-run LLCs are in the first two rows. If you filed an S-corp election, read the S-corp page instead — the payroll step is not optional.
Whatever the treatment, the deduction reduces the income your premium tax credit is measured against, and the credit is measured against a hard line at $63,840 for a single filer in 2027. Retirement contributions move that income. So does the timing of an invoice or a large purchase in December. What you cannot do is fix it in April.
One limit worth knowing on the first two rows: the self-employed health insurance deduction cannot exceed your net self-employment income. A year with a thin profit caps the deduction whatever you paid in premiums.
It varies more than most people expect. At 40 the cost of crossing $63,840 runs from $3,244 a year in Mississippi to nothing at all in two states. Here is the table.
It depends on the tax treatment. A single-member LLC deducts on Schedule 1, limited to net self-employment income. A multi-member LLC generally routes premiums through guaranteed payments on the K-1. An LLC that elected S-corp treatment must put the premium on the owner's W-2 first.
Yes, on household income, the same as anyone else self-employed. The entity does not change eligibility; it changes how the premium is deducted, which changes the income the subsidy is measured against.
With no employees you generally cannot form a group of one, so a marketplace plan is the route. With employees, a small group plan or a reimbursement arrangement both become options and are worth pricing against each other.
Benchmark premiums: the second-lowest-cost Silver plan for a 40-year-old, weighted by county enrollment, from the CMS PY2027 Landscape file, the same figures used across this site. Cliff: 400% of the 2026 HHS poverty guideline (91 FR 1797), $63,840 for a single-adult household. Applicable percentage: 10.22% for 2027 (Rev. Proc. 2026-26). Nothing here is tax advice — the arithmetic is public, the decision is yours and your CPA’s.