A self-employed taxpayer may be eligible to deduct amounts paid for medical insurance for themselves and for their families. To claim this deduction, a qualifying taxpayer should: 1 Claim a nonrefundable tax credit based on the cost of the insurance. Deduct the cost of the health insurance premiums as a business expense on Schedule C. Include the costs as an adjustment to income on Schedule 1 (Form 1040), up to the amount of net business income. Only deduct the health insurance costs on Schedule A if they itemize their deductions.