We’ve already established that a company’s share of employee medical insurance premiums can be considered a tax deduction but let’s consider medical insurance coverage in general.

Health insurance is a hot topic these days. Having enough when you need it but not paying through the nose is the goal of anyone, regardless of whether you own your own company or work for someone else.

There are some tax breaks with regard to healthcare even for those who choose not to go the traditional corporation route. If you are self-employed, or own more than 2% of an S-corp, newer IRS regulations allow you to deduct 100% of your health insurance premiums, provided you show a net profit for the year.

It’s important to note that you cannot take any deduction for months where you were eligible for a group plan such as with a former employer or under your spouse’s employer’s health plan.

Self-employed businesspeople are eligible for several kinds of individual medical plans. If you leave your employer to start your own company, you are allowed to continue your former employer’s health coverage at your own expense for at least 18 months.

This is courtesy of a regulation known as COBRA (Consolidated Omnibus Budget Reconciliation Act). Unfortunately, what you’ll often find – especially if your former employer was paying a fair portion of your health insurance premiums – is that the cost of coverage under COBRA is outrageous.

The self-employed are also targets for ill conceived self-employed insurance packages or individual healthcare coverage. You’ll get lots of offers from insurance brokers and agents which run the gamut from “too good to be true” to “my COBRA plan looks cheap compared to this.”

“To good to be true” self-employed insurance plans generally work like this: you pay a relatively low premium but have a high deductible. Buyer beware – be sure to read the policy!

Deductibles, the amount that must come out of your pocket before the plan pays for anything, for these plans can range from $1,000 to over $4,000. Some plans will even impose this deductible on a “per covered individual” basis.

This means if you are insuring a family of four under a policy with a $4,000 individual deducible, you could be looking at upwards of sixteen thousand dollars in out of pocket expenses before the plan pays for anything.