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FWIW... I called the IRS recently to get clarification on the phrase "established under business" because it threw me also. I thought because I had schedule C income and was self-employed for several months last year, I could claim the line 29 deduction for premiums paid during that time. The IRS person I spoke to said that what this means is that if your business goes away and the "plan" goes away too, then you can claim the deduction. Simply paying premiums out of pocket doesn't cut it with the IRS.

After speaking with the rep and some research on the net, I have come to following conclusions (other people correct me if I'm wrong):

- sole proprietors with schedule C income are screwed out of the deduction, unless they take active steps to setup a "plan" under their "business".

- a "plan" is not the same as an "insurance policy".

- one "plan" is to have the premiums paid by the business (better if the policy is issued to the business and paid by the business).

- or establish a company "plan" to reimburse the business owner for premiums.

- the "plan" should be in writing to defend it in case of audit.

- doesn't really matter if the company pays the premiums or the company reimburses the owner to take line 29 deduction.

- for s-corps, reimbursement to the owners is subject to federal tax withholding but not FICA, Medicare, and FUTA withholding, and is reported on W-2.

I found this link helpful on the IRS web site:,,id=107451,00.html

You should be able to itemize and deduct the premiums on sch. A, however.
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