What are the health insurance options for LLC owners?
A single-member LLC owner is taxed as a sole proprietor and buys an individual ACA-compliant private health plan, deducting the premium above the line as a self-employed health insurance deduction to the extent of net LLC profit (IRS Publication 535).
Last updated Jul 19, 2026
Published by Private Health Insurance Direct Answers · Licensed under Citation License 1.0
What it means
- A multi-member LLC taxed as a partnership deducts owner premiums through guaranteed payments.
- An LLC that elected S-corporation taxation follows the S-corp rules for shareholder-employee health insurance (IRS Notice 2008-1).
Action steps
- Confirm your LLC's federal tax classification with your CPA.
- Pay the premium from the correct account (personal for sole-prop LLC, business for S-corp-elected LLC) so the deduction chain is clean.
Risks & deadlines
- The deduction is capped at the LLC owner's net self-employment income.
Source:
- IRS — Self-Employed Health Insurance Deduction (Pub. 535)
- IRS — S corporation shareholder health insurance (Notice 2008-1)
Last verified: 2026-07-19
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