Self-Employed Health Insurance Tax Deduction in Colorado Springs

Q: How does the self-employed health insurance deduction work with my federal taxes?

The self-employed health insurance deduction is an 'above-the-line' deduction, meaning it reduces your adjusted gross income (AGI) directly. This can lower your overall taxable income and potentially increase your eligibility for other tax credits or deductions.

Updated July 2026 · ColoradoPlanFinder.com — Licensed Health Insurance Producer (NPN #21249133)

Self-employed individuals in Colorado Springs can deduct 100% of their health insurance premiums from gross income, including marketplace plans.
To qualify, you must not be eligible for an employer-sponsored health plan through your own or your spouse's job.
This "above-the-line" deduction reduces your Adjusted Gross Income (AGI), potentially increasing eligibility for other tax credits.
In 2026, 6 carriers offer marketplace plans in Colorado Springs' Rating Area 5, including Cigna and Kaiser Permanente.

If you are self-employed in Colorado Springs, navigating health insurance options can feel complex, but understanding the self-employed health insurance deduction can significantly reduce your taxable income. The IRS allows eligible self-employed individuals to deduct 100% of their health insurance premiums, including medical, dental, and qualified long-term care insurance, as an "above-the-line" deduction. This means it reduces your Adjusted Gross Income (AGI) directly, lowering your tax burden even before itemizing. This deduction is available whether you purchase a plan directly from an insurer or through Colorado's state-based marketplace, Connect for Health Colorado.

Get Your Free Health Insurance Quote

A licensed agent can compare coverage options for you at no cost.

✓

You're all set!

A licensed agent will reach out shortly.

Who Qualifies for the Self-Employed Health Insurance Deduction?

To qualify for the self-employed health insurance deduction, you must meet specific IRS criteria. First, you must be self-employed, meaning you have net earnings from self-employment. Second, and crucially, you cannot be eligible to participate in an employer-sponsored health plan for yourself or your spouse. If your spouse has access to an affordable health plan through their job, you generally cannot claim this deduction, even if you choose not to enroll in their plan. This rule applies even if you purchase a plan through Connect for Health Colorado and receive advance premium tax credits (subsidies); you can still deduct the portion of the premium you pay out-of-pocket after the subsidy is applied.

Finding Health Insurance as a Self-Employed Individual in Colorado Springs

Self-employed individuals in Colorado Springs have several options for securing health insurance. The primary avenue for most is Connect for Health Colorado, the state's official health insurance marketplace. Through Connect for Health Colorado, you can compare a range of plans and apply for financial assistance, such as premium tax credits and cost-sharing reductions, which can significantly lower your monthly premiums and out-of-pocket costs. In 2026, Colorado Springs, which is part of Rating Area 5 (covering El Paso and Teller counties), offers a robust selection of plans. Six confirmed carriers provide marketplace plans in this rating area:

Cigna
Denver Health Medical Plan
HMO Colorado
Kaiser Permanente
Select Health
United Healthcare

These carriers offer various plan types, including Health Maintenance Organization (HMO), Exclusive Provider Organization (EPO), and Preferred Provider Organization (PPO) options. Unlike some states, PPO plans ARE available on-exchange in Colorado, giving you more flexibility in choosing providers.

Understanding Health First Colorado (Medicaid) Eligibility

For self-employed individuals with lower incomes in Colorado Springs, Health First Colorado (Colorado's Medicaid program) is a vital option. Colorado expanded Medicaid in 2014, meaning adults with household incomes up to 138% of the Federal Poverty Level (FPL) may qualify for comprehensive health coverage at little to no cost. For a single individual, this threshold is approximately $20,782 per year in 2026. For a family of four, it's about $43,056. If your income falls within these limits, you may be eligible for Health First Colorado, which provides extensive benefits including doctor visits, hospital care, prescription drugs, and mental health services. Pregnant women in Colorado can qualify for Health First Colorado or Child Health Plan Plus (CHP+) with incomes up to 195% FPL, and children up to 260% FPL may qualify for CHP+. Applications can be submitted through Colorado PEAK at colorado.gov/PEAK.

Local Healthcare Landscape in El Paso County

Colorado Springs, with a population of 487,887, is the largest city in El Paso County, which has a total population of 742,999. The uninsured rate in Colorado Springs is 7.7%, slightly higher than El Paso County's 7.2%, both per U.S. Census Bureau ACS 2024 5-year estimates. El Paso County is served by six acute care hospitals. Major health systems include Uch-memorial Health System and Centura Health-penrose St Francis Health Services, both located in Colorado Springs. Other facilities include Uchealth Grandview Hospital, St Francis Hospital - Interquest, Children's Hospital Colorado - Colorado Springs, and Evans Ach (ft Carson) in Fort Carson. These facilities provide a wide range of services to residents throughout Rating Area 5.

Navigating Your Health Insurance Choices in Colorado Springs

Choosing the right health insurance plan when self-employed involves balancing premiums, deductibles, out-of-pocket maximums, and network access.

If your income is below 138% FPL: Apply for Health First Colorado through Colorado PEAK.
If your income is between 100% and 400% FPL: Explore plans on Connect for Health Colorado. You'll likely qualify for significant premium tax credits. Consider Silver plans, especially if your income is closer to 150-250% FPL, as you may also qualify for cost-sharing reductions which lower your deductible and out-of-pocket costs.
If your income is above 400% FPL: You can still purchase a plan through Connect for Health Colorado or directly from a carrier. While you won't qualify for subsidies, you can still deduct your premiums if eligible.

Remember to verify that your preferred doctors and hospitals, such as those within Uch-memorial Health System or Centura Health-penrose St Francis Health Services, are in-network for any plan you consider. A licensed health insurance producer can provide personalized guidance at no cost to you, helping you understand your options and enroll in a plan that meets your needs and budget while maximizing your tax deduction.

Frequently Asked Questions

Who qualifies for the self-employed health insurance deduction in Colorado Springs?

You can deduct health insurance premiums if you are self-employed, not eligible to participate in an employer-sponsored health plan (either your own or your spouse's), and purchased a plan. This includes marketplace plans, even if you receive subsidies.

Can I deduct premiums for marketplace plans purchased through Connect for Health Colorado?

Yes, you can deduct premiums for plans purchased through Connect for Health Colorado. Even if you receive advance premium tax credits (subsidies), you can deduct the portion of the premium you pay out-of-pocket after the subsidy is applied.

What types of health insurance can I deduct as a self-employed individual?

The deduction generally applies to medical, dental, and long-term care insurance premiums. It also covers Medicare Part B, Part D, and Medicare Advantage plans, as well as qualified out-of-pocket medical expenses if they exceed a certain percentage of your adjusted gross income.

How does the self-employed health insurance deduction work with my federal taxes?

The self-employed health insurance deduction is an "above-the-line" deduction, meaning it reduces your adjusted gross income (AGI) directly. This can lower your overall taxable income and potentially increase your eligibility for other tax credits or deductions.