S-Corp health insurance

For S-Corp owners (anyone who owns more than 2% of the stock, and includes their family members), the corporation is not allowed to take a deduction for the health insurance premiums it paid unless the amount is included on the owner’s W-2.

You’ll need to work with your payroll provider to make sure the amount is documented correctly on your W-2s. ADP has an option called “S-corp 2% medical plan”, and other providers probably have something similar. The important thing is that the health insurance amount needs to be included in Box 1 of the W-2, but not boxes 3 or 5. And it should also be in Box 14.

It’s preferable to have the company actually pay for the insurance directly throughout the year. If not, at least have the company reimburse the owners for the amount of insurance paid.


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