Can You Deduct COBRA Insurance Premiums on Taxes?
Yes. COBRA premiums count as a medical expense and can be deducted on your federal income tax if you itemize deductions. There is no special “COBRA tax deduction.” Instead, the cost is treated like other medical expenses and can only be deducted to the extent that your total medical expenses exceed 7.5% of your adjusted gross income.
How Much Does COBRA Really Cost?
When you choose COBRA to continue your job-based health plan, you are responsible for the full premium, both your share and the part your employer had been paying. A third-party administrator may also add up to a 2% fee for managing enrollment and billing. In practice, this means COBRA coverage often costs more than what you were paying while employed.
One possible offset is that COBRA premiums can be deducted as a medical expense if you itemize on your federal income taxes.