Health insurance when you're self-employed
If you work for yourself, the marketplace counts your net profit, not your gross receipts, after a few specific deductions. Get those right and you can often stay in a better part of the credit table. Get the estimate wrong in a good year, and since 2026 you repay every dollar of excess credit with no cap.
What counts as your income
Start with net profit from Schedule C (or your share from a partnership or S corporation), then the deductions that come before adjusted gross income:
- half of your self-employment tax
- contributions to a SEP-IRA, SIMPLE IRA or solo 401(k) (traditional, not Roth)
- the self-employed health insurance deduction
- HSA contributions, if your plan is HSA-eligible (every bronze marketplace plan is, starting in 2026)
Add any other household income, then untaxed Social Security, tax-exempt interest and excluded foreign income. What doesn’t help: the qualified business income deduction, the standard deduction and itemized deductions all come after adjusted gross income and don’t change the figure the marketplace uses.
How much a good year can cost
A 34-year-old freelancer in Harris County, Texas, shows what’s at stake. With the 2027 credit rules and 2026 county prices:
| Counted income | % of poverty line | Monthly credit | Cheapest gold after credit |
|---|---|---|---|
| $30,000 | 188% | about $408 | about $69 |
| $48,000 | 301% | about $154 | about $323 |
Each extra dollar of counted income in that range costs about 17 cents of credit, on top of income and self-employment tax. A $10,000 solo 401(k) contribution in the second case brings counted income to $38,000 and recovers part of the credit as well as the tax.
The deduction and the credit depend on each other
The self-employed health insurance deduction lowers your income, which raises your credit, which lowers the premium you paid and so the deduction. The IRS lets you solve this loop with an iterative or a simplified method, both in Publication 974. Tax software handles it; if you do it by hand, use the publication’s worksheets rather than guessing.
Estimating income you can’t predict
The marketplace asks for your expected income for the whole year. For uneven income:
- Start from last year’s Schedule C and adjust for contracts you know about.
- Leave a margin. Underestimating means repaying the excess at tax time; overestimating means you get the difference back as a refund.
- Update the marketplace within 30 days if a big contract lands. The advance credit adjusts for the rest of the year.
- Watch the 400% line: $63,840 for one person in 2027. Above it, all advance credit is repaid.
Run your numbers in the 2027 subsidy calculator, and check last year’s with the repayment calculator before you file.
Sources: 26 U.S.C. 36B and 162(l); IRS Publication 974; IRS Rev. Proc. 2026-26; Pub. L. 119-21, sections 71305 and 71307; HHS 2026 poverty guidelines; CMS individual market plan file on data.healthcare.gov, plan year 2026.
Questions people ask
Can I deduct marketplace premiums if I'm self-employed?
Yes, the part you pay yourself, as the self-employed health insurance deduction on Schedule 1, limited to your net self-employment profit and not for any month you could have joined an employer plan, including a spouse's. Premiums paid by the tax credit can't be deducted.
Does the QBI deduction lower my income for ACA purposes?
No. The qualified business income deduction is taken after adjusted gross income, so it doesn't reduce the income the marketplace counts. Retirement contributions, half of self-employment tax and the self-employed health insurance deduction do.