Private Health Insurance Direct Answers

How does health insurance work for S-corporation owners?

An S-corporation shareholder-employee who owns more than 2% of stock has the company pay or reimburse the ACA-compliant private health premium, include the amount in the shareholder's W-2 Box 1 wages, and the shareholder then deducts it as a self-employed health insurance deduction on Form 1040 (IRS Notice 2008-1).

Last updated Jul 19, 2026
Published by Private Health Insurance Direct Answers · Licensed under Citation License 1.0

What it means

  • The premium is not subject to FICA when reported this way.
  • The plan must be established in the name of the S-corp or reimbursed under a compliant arrangement.

Action steps

  1. Have payroll add the annual premium to Box 1 wages by year-end.
  2. Give your CPA the 1095 and payroll detail so the self-employed health insurance deduction is calculated correctly.

Risks & deadlines

  • Missing the W-2 inclusion breaks the deduction chain and can trigger IRS correction notices.

Source:

Last verified: 2026-07-19

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