- How to Report Health Insurance on W-2s for S-Corp Owners
- The Rules for 2026
- The "Double Win"
How to Report Health Insurance on W-2s for S-Corp Owners
One of the most common mistakes generalist accountants make is failing to correctly report health insurance premiums for 2% (or greater) shareholders. If this isn't handled correctly on your W-2, you could lose the ability to deduct those premiums on your personal return.
The Rules for 2026
To claim the Self-Employed Health Insurance Deduction (an "above-the-line" deduction on Form 1040), the following must happen:
1. Company Paid: The S-Corp must pay the premiums directly or reimburse the shareholder (with proof of payment).
2. Reported as Wages: The amount of the premiums must be included in Box 1 (Federal Wages) on the shareholder's W-2.
3. Excluded from FICA: Generally, these premiums are not subject to Social Security or Medicare taxes if the plan is set up correctly.
The "Double Win"
When done right:
- **The Business:** Deducts the premiums as wage expense.
- **The Owner:** Deducts the premiums on their personal 1040, offsetting the income addition.
- **Result:** The benefit is effectively tax-free for income tax purposes, and exempt from FICA.
Is Your W-2 Wrong?
Check your 2025 W-2. Look at Box 14 for a code like "SCORP HEALTH." If your health insurance premiums aren't reflected there or in Box 1, your CPA might be missing a critical compliance step.
Don't leave money on the table. We review S-Corp W-2s to ensure you're maximizing every deduction available to you.
About the Author
Jason Astwood, Fractional CFO & Tax Strategist
As an IRS Enrolled Agent* and Financial Services Certified Professional®, Jason is a trusted authority in taxation, financial strategy, and business growth. He is the author of The S-Corp Playbook and the Director of Union National Tax, bringing over two decades of expertise in proactive tax planning, financial management, and compliance. Jason specializes in helping business owners minimize tax liability, optimize cash flow, and build long-term financial success. His combined expertise as a tax strategist, financial advisor, and Fractional CFO empowers entrepreneurs to scale their businesses with confidence.