PlansFor1099

Health insurance for an S-corporation owner

The more-than-2% S-corp shareholder's route: the corporation pays, the premium goes in Box 1, the owner deducts it, the credit is measured on W-2 wages plus K-1 income, and HRAs are off the table for the owner.

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The S-corp owner is a 1099 worker who became their own employer. The premium is still deductible, but only if the payroll paperwork is right, and the credit is measured on a wage you set yourself.

Start with your ZIP and your income, not with a plan name

Premiums are set county by county and the credit is set by income, so no table can give a 1099 worker a final number. Enter your ZIP and a licensed agent prices every plan filed where you live against what you actually expect to earn.

Takes about 30 seconds. No account, and you choose how you are reached.

“I run my own business and my time is valuable. Daniel handled everything — compared the private options, explained what I was actually getting, and had me covered fast. Way better experience than trying to navigate it myself.”
Mark T., client

The three steps

  1. The corporation pays the premium, or reimburses you for a policy in your name.
  2. The amount is added to Box 1 of your W-2 for the year (not to Social Security or Medicare wages; not subject to FICA).
  3. You take the self-employed health insurance deduction on your personal return.

Step 2 is the one that is missed when a bookkeeper expenses the premium and nobody tells payroll. Check it before the first January payroll: the December 31 checklist.

What counts as income for the credit

Your W-2 wages (including the Box 1 premium) plus your share of the corporation’s profit on the K-1, plus a spouse’s income, less adjustments. A reasonable salary is required; the split between salary and distribution changes self-employment and payroll tax, not the household MAGI the credit is measured on.

What an S-corp owner cannot do

Take an ICHRA or QSEHRA reimbursement tax-free (more-than-2%% shareholders and their spouses and children are excluded), or run a cafeteria plan for themselves. A group plan for the staff can include the owner, with the premium handled through Box 1 as above.

Owner plus employees

Once the corporation has W-2 staff, the owner’s own coverage and the team’s coverage are two decisions. Plans For Small Business covers the team side: group plan, ICHRA, QSEHRA and the Form 8941 credit.