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Really? It's paid by the taxpayer, either by paying directly to the government for those not receiving SS benefits or by choice, or it is withheld from benefits. Either way, the taxpayer is paying premiums out of otherwise available resources. It hasn't been an issue in years and won't be challenged. IRS Chief Counsel issued its legal interpretation for use by IRS personnel back in 2012 that addressed this and stated that Medicare coverage for the self-employed person AND spouse are eligible. Chief Counsel Advice (CCA) 201228037 http://www.irs.gov/pub/irs-wd/1228037.pdf JoA article from 2012 in explanation. https://www.journalofaccountancy.com/news/2012/jul/20126051.html Also, it's now clearly addressed in the Form 1040 instructions for line 29 that this IS eligible for inclusion in the calculation of SEHI. IRS statement on use of CCAs from IRS website: If by second policy you mean that a TP has 2 (non-medicare, non-medigap) health policies, then there are specific rules and 2 separate worksheets need to be completed for the SEHI. If, by the above statement that you are referring to MediGAP as secondary coverage to Medicare, that is eligible for inclusion in the SEHI calculation, as are other policies for dental, vision, drugs, and long-term care.

The rock-ribbed, inpenetrable official interpretation would be the insurance policy has to be purchased in the name of the business itself. What's worse, I think they want it to be deducted as an "adjustment" rather than a business expense - the effect being the client has to pay self-employment tax rather than deducting as a business expense. Software companies have allowed a great deal of leeway on the official interpretation. Drake allows medicare deducted from SS checks to be designated as SEHI. Clearly, medicare is not "purchased" in the "name of the business." In fact, it is not purchased at all. I have been advised that Cobra qualifies, although it is not in the name of the business, but in the name of the prior employer. Simply put, I allow practically any kind of medical insurance to be deducted as SEHI, unless it is a second policy. As usual, I may hear howls of disagreement from purists, but I would need to be given clear-cut examples of disallowance from the IRS to stop. Sorry, Elrod, no pictures...