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Purchase Health insurance through S-Corp?

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  • Purchase Health insurance through S-Corp?

    Area of Practice: CA

    Age: 33

    Marital Status: Single

    Years in Practice: 5

    Employment type: Independent Contractor

     

    Hello WCI Community,

    I have recently lost my benefits, as I am no longer a W2 employee and now working as an independent contractor through my S-Corp.  My question is- do you recommend purchasing health insurance through my S-Corp or individually?  I will be applying for health insurance through Covered California.  I am a healthy individual- no pre-existing or chronic conditions and I do not smoke.  Thanks!

     

  • #2
    also interested in this topic

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    • #3
      For federal tax purposes it does not matter whether you purchase health insurance though the S-Corp or personally and the S-Corp reimburses you. I would be very surprised if an S-Corp can purchase health insurance through an exchange. I would just purchase it personally and have the S-Corp reimburse you.

      Are you aware of the convoluted way that an S-Corp treats a shareholder-employee's health insurance. You include and deduct the cost of the insurance premiums on Form 1120S Line 7 Compensation of Officers. Then enter the cost of the insurance premiums on Form 1040 Line 29 Self-employed health insurance deduction, subject to the restrictions.

      The cost of the insurance premiums will be included in your W-2 Box 1 wages, but not Box 3 Medicare Wages or Box 5 Social Security wages. This will also be reported on W-2 Box 14 as an informational item.

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