An LLC is a business set up under state law. For federal tax, the IRS doesn't have a separate LLC type. It treats an LLC as a sole proprietor, a partnership, or a corporation. That choice changes how your health insurance works for tax.
This guide covers the owner's own coverage. It explains each LLC type, then how the deduction and the premium tax credit fit together. For tax questions, talk with a tax professional.
How the IRS sees your LLC
Under current law, the IRS says a single-member LLC is "disregarded" for income tax unless it elects to be a corporation. That means it's treated as part of you. A multi-member LLC is a partnership unless it elects to be a corporation. An LLC can also elect to be an S corporation.
Single-member LLC: taxed like a sole proprietor
Most single-member LLC owners report business income on Schedule C. The IRS's 2025 Form 7206 instructions say that if you file Schedule C, the policy can be in the business's name or yours.
The premiums for your own coverage are not a Schedule C business expense. Instead, you may take the self-employed health insurance deduction on Schedule 1 (Form 1040), line 17. IRS Pub. 334 (for 2025 returns) points to the worksheet in the Form 1040 instructions, or to Form 7206 in some cases.
The deduction has limits. It can't be more than your business's net profit. You also can't use it for any month you could join a subsidized job plan, including a spouse's. Our guide to the self-employed health insurance deduction explains these.
Multi-member LLC: taxed as a partnership
If your LLC has two or more members, it's usually a partnership. IRS Pub. 541 (revised December 2025) says premiums a partnership pays for a partner, for services as a partner, are treated as guaranteed payments.
Here's how that works:
- The LLC pays the premiums, or pays you back if the policy is in your name.
- The LLC can deduct them as a business expense.
- It reports them on your Schedule K-1 (Form 1065) as guaranteed payments.
- You include them in your income.
- If you qualify, you may then take the self-employed health insurance deduction.
The Form 7206 instructions add a key rule. If the policy is in your name and you pay yourself, the LLC must pay you back and report it on your K-1. Otherwise, the plan isn't treated as set up under your business.
Pub. 541 also warns: if the LLC treats the premiums as a cut in your distributions instead, the LLC can't deduct them.
If your LLC elects S corp status
If your LLC elects to be taxed as an S corporation, different rules apply, so see our guide for S corp owners.
The premium tax credit and the deduction
If you buy a Marketplace plan and may get a premium tax credit, the two affect each other. IRS Pub. 974 says the deduction can change your credit, and the credit can change your deduction. Pub. 974 has special steps to figure both.
Under current law, Pub. 974 says the deduction plus the credit can't be more than the premiums. This math is tricky, so talk with a tax professional. To plan your income for the year, see how to estimate your income for Marketplace coverage.
Picking a plan as an LLC owner
Your LLC type doesn't change which plans you can buy. Most owners choose between a Marketplace plan and a private plan.
- A Marketplace plan. Under current law, you can't be turned down or charged more for a health problem. A tax credit may lower the price, based on your income.
- A private PPO. Some private plans ask health questions, and approval is not guaranteed. Some may not cover care for health problems you had before you enrolled. Under current law, private plans that ask health questions are not ACA plans, and the tax credit can't be used for them.
See our page for people who work for themselves. As of October 22, 2026, under current law, Open Enrollment for 2027 coverage runs November 1, 2026, to January 15, 2027. A court case about these dates, City of Columbus v. Kennedy, is still on appeal, with argument set for October 30, 2026, so check HealthCare.gov. See every date in our Florida open enrollment guide.
If your LLC hires workers later, there are other ways to help pay for their coverage. See ICHRA vs QSEHRA.