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The certification must have been made by a li- censed health care practitioner within the previ- ous 12 months. Benefits received. For information on ex- cluding benefits you receive from a long-term care contract from gross income, see Pub. 525. Other coverage. You can’t take the deduction for any month you were eligible to participate in any employer (including your spouse's) subsi- dized health plan at any time during that month, even if you didn’t actually participate. In addi- tion, if you were eligible for any month or part of a month to participate in any subsidized health plan maintained by the employer of either your dependent or your child who was under age 27 at the end of 2018, don’t use amounts paid for coverage for that month to figure the deduction. These rules are applied separately to plans that provide long-term care insurance and plans that don’t provide long-term care insurance. However, any medical insurance payments not deductible on Schedule 1 (Form 1040), line 29, can be included as medical expenses on Schedule A (Form 1040), if you itemize deduc- tions. Effect on itemized deductions. Subtract the health insurance deduction from your medical insurance when figuring medical expenses on Schedule A (Form 1040) if you itemize deduc- tions. Effect on self-employment tax. For tax years beginning before or after 2010, you can’t sub- tract the self-employed health insurance deduc- tion when figuring net earnings for your self-em- ployment tax from the business under which the insurance plan is established, or considered to be established, as discussed earlier. For more information, see Schedule SE (Form 1040). How to figure the deduction. Generally, you can use the worksheet in the Form 1040 in- structions to figure your deduction. However, if any of the following apply, you must use Work- sheet 6-A in this chapter. • You had more than one source of income subject to self-employment tax. • You file Form 2555 or Form 2555-EZ. • You are using amounts paid for qualified long-term care insurance to figure the de- duction. If you are claiming the HCTC, complete Form 8885 before you figure this deduction. Health coverage tax credit. You elect to take this credit only if you were an eligible trade adjustment assistance (TAA) recipient, alterna- tive TAA (ATAA) recipient, reemployment trade adjustment assistance (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient. Use Form 8885 to figure the amount, if any, of this credit. When figuring the amount to enter on line 1 of Worksheet 6-A, don’t include any amounts you included on Form 8885, line 4. There is coordination of tax benefits be- tween advance monthly payments of the HCTC and the HCTC. In general, you can’t claim the HCTC for a payment you made for qualifying health insurance when you file your tax return if you previously received the benefit of the advance monthly payment program for that cov- erage month. If you benefited from the advance monthly payment program, you will receive a Form 1099-H that reports the amount of the payments that were forwarded directly to your health plan administrator for each coverage month. Don’t report these amounts on Form 8885. More than one health plan and business. If you have more than one health plan during the year and each plan is established under a different business, you must use separate work- sheets (Worksheet 6-A) to figure each plan's net earnings limit. Include the premium you paid under each plan on line 1 or line 2 of that sepa- rate worksheet and your net profit (or wages) from that business on line 4 (or line 11). For a plan that provides long-term care insurance, the total of the amounts entered for each person on line 2 of all worksheets can’t be more than the appropriate limit shown on line 2 for that per- son. Nondeductible Premiums You can’t deduct premiums on the following kinds of insurance. 1. Self-insurance reserve funds. You can’t deduct amounts credited to a reserve set up for self-insurance. This applies even if you can’t get business insurance cover- age for certain business risks. However, your actual losses may be deductible. See Pub. 547. 2. Loss of earnings. You can’t deduct premi- ums for a policy that pays for lost earnings due to sickness or disability. However, see the discussion on overhead insurance, item (8), under Deductible Premiums, ear- lier. 3. Certain life insurance and annuities. a. For contracts issued before June 9, 1997, you can’t deduct the premiums on a life insurance policy covering you, an employee, or any person with a financial interest in your business if you are directly or indirectly a benefi- ciary of the policy. You are included among possible beneficiaries of the policy if the policy owner is obligated to repay a loan from you using the proceeds of the policy. A person has a financial interest in your business if the person is an owner or part owner of the business or has lent money to the business. b. For contracts issued after June 8, 1997, you generally can’t deduct the premiums on any life insurance policy, endowment contract, or annuity con- tract if you are directly or indirectly a beneficiary. The disallowance applies without regard to whom the policy covers. c. Partners. If, as a partner in a partner- ship, you take out an insurance policy on your own life and name your part- ners as beneficiaries to induce them to retain their investments in the part- nership, you are considered a benefi- ciary. You can't deduct the insurance premiums. 4. Insurance to secure a loan. If you take out a policy on your life or on the life of an- other person with a financial interest in your business to get or protect a business loan, you can't deduct the premiums as a business expense. Nor can you deduct the premiums as interest on business loans or as an expense of financing loans. In the event of death, the proceeds of the policy are generally not taxed as income even if they are used to liquidate the debt. Capitalized Premiums Under the uniform capitalization rules, you must capitalize the direct costs and part of the indi- rect costs for certain production or resale activi- ties. Include these costs in the basis of property you produce or acquire for resale, rather than claiming them as a current deduction. You re- cover the costs through depreciation, amortiza- tion, or cost of goods sold when you use, sell, or otherwise dispose of the property. Indirect costs include premiums for insur- ance on your plant or facility, machinery, equip- ment, materials, property produced, or property acquired for resale. Uniform capitalization rules. You may be subject to the uniform capitalization rules if you do any of the following, unless the property is produced for your use other than in a business or an activity carried on for profit. 1. Produce real property or tangible personal property. For this purpose, tangible per- sonal property includes a film, sound re- cording, video tape, book, or similar prop- erty. 2. Acquire property for resale. However, these rules don't apply to the follow- ing property. 1. Personal property you acquire for resale if your average annual gross receipts are $25 million or less for the 3 prior tax years. 2. Property you produce if you meet either of the following conditions. a. Your indirect costs of producing the property are $200,000 or less. b. You use the cash method of account- ing and don't account for inventories. More information. For more information on these rules, see Uniform Capitalization Rules in Pub. 538 and the regulations under section 263A. When To Deduct Premiums You can usually deduct insurance premiums in the tax year to which they apply. Chapter 6 Insurance Page 23