Why this matters
The corporation must establish the plan in the required manner and coordinate payroll reporting. The wage amount generally is subject to income tax withholding but may be excluded from Social Security and Medicare wages when the applicable conditions are met.
Example
A 100% owner pays personal premiums and asks the company to reimburse them. Before year-end, the company should review payment evidence and W-2 treatment, rather than booking the amount as an ordinary employee benefit without analysis.
What to review
Check the shareholder percentage, policy payment or reimbursement, W-2 boxes, other health coverage and the individual deduction requirements.
Official source: www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues