Deducting Obamacare Premiums as a Medical Expense

If you originally purchased health insurance on your own through a healthcare marketplace and you paid for this insurance with after-tax dollars, the money you paid toward your monthly premiums could be taken as a tax deduction on your Schedule A.  Of course, like all medical expenses the ability to deduct health insurance is subject to the 10% AGI limitation (7.5% for individual's 65 or older). 

If you are self-employed, any additional health insurance payments (premium tax credits)(PTC) you incur would be treated as you treated your original self-employment health insurance payments, subject to the same rules. Realize that these amounts are not paid in the same year as the original premiums were paid. They are paid at the time the return is filed or in teh year following the year the original premiums were incurred. 

So you would only be able to claim any extra health insurance payments as deductible, if your original insurance payments were deductible to you on your tax return. If you took a standard deduction. for example, you would not be able to claim the extra amounts in the following year. If you could not deduct your original health insurance premiums on your tax return then any pay backs on your tax return would not be deductible.

So if you underpaid for your insurance and you had to pay more towards your health insurance (by paying back a portion of your premium tax credit (PTC) ) then that payback could be considered additional health insurance premium payments and you can included that amount as a medical expense in the year actually paid.  So as an example, if the repayment is on your 2016 tax return, you could include this additional insurance payment on your 2017 tax return.