Can my S-Corp pay for my Marketplace Health Insurance Premiums?

This is a great question about S-Corp health insurance, and there are some specific rules you need to follow to get the tax benefits. For S-Corporation owners, health insurance premiums can be deductible, but you need to follow the right process. The S-Corp should pay the health insurance premiums either directly to the insurance company or reimburse you if you paid them. This premium payment needs to be included as wages on your W-2 (in Box 1, but not subject to FICA taxes in Boxes 3 and 5). Then you can take a self-employed health insurance deduction on your personal tax return (Form 1040, line 17). This gives you the deduction, but the process is important to get right. The important thing to note with your 1095-A Marketplace plan: at your income level (around $270k), you likely won't qualify for Premium Tax Credits, so that's less of a concern. If you were getting advance premium tax credits, having your S-Corp pay for health insurance would mean you need to report this properly to avoid having to pay back those credits.

I went through the EXACT same situation last year when I set up my S-Corp! What a headache trying to figure this out. After endless googling and talking to multiple accountants, I finally found a solution using taxr.ai (https://taxr.ai). You can upload your 1095-A form and it walks you through the proper way to handle health insurance premiums through your S-Corp. I was so confused about whether to pay it personally or through the business, and the tool explained that I needed to have my S-Corp reimburse my health premiums and include them on my W-2, then take the self-employed health insurance deduction. It also calculated how this would affect my tax situation based on my specific numbers.

Just wanted to come back and say I tried taxr.ai after seeing it mentioned here and it was super helpful! I uploaded my current 1095-A and ran a few scenarios based on my projected S-Corp income. Now I understand exactly how to handle my health insurance through my business for next year. The most valuable thing was seeing how the Premium Tax Credit would be affected when I have my S-Corp pay for health insurance vs. paying personally. The analysis showed me that having the company reimburse me and adding it to my W-2 was definitely the way to go. It even showed me the exact forms where these transactions would appear on my 2025 filing. Thanks for the recommendation!

Let me share something that saved me a ton of hassle with the IRS over this exact issue last year. After setting up my S-Corp and dealing with this health insurance premium situation, I had questions the IRS needed to answer. Tried calling them for THREE WEEKS straight - always got the "call volume too high" message. Finally discovered Claimyr (https://claimyr.com) - they got me through to an actual IRS agent in about 20 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly how to document my Marketplace health insurance premiums through my S-Corp, and explained how it needed to appear on my W-2. Saved me from making a costly mistake that would have triggered an audit.

Ok I have to eat my words. I was the skeptic above who doubted Claimyr would work. After another frustrating morning trying to get through to the IRS about my health insurance premium reporting for my S-Corp, I gave in and tried it. I got through to an IRS agent in about 15 minutes! The agent confirmed that my S-Corp should pay my health insurance premiums, include them on my W-2, and then I can take the self-employed health insurance deduction on my personal return. She also explained that because my MAGI is over the threshold for Premium Tax Credits with my 1095-A plan, I don't need to worry about that part. Saved me from making a mistake on my tax setup and potentially triggering an audit. Can't believe I wasted so many hours trying to call them directly.

Just to add another data point - I've been handling my S-Corp health insurance this way for 3 years: 1. S-Corp pays my marketplace premiums directly 2. Those premiums get added to my W-2 Box 1 wages (but not boxes 3 & 5) 3. I take the self-employed health insurance deduction on my personal return 4. Since my income is too high for Premium Tax Credits, I don't have to deal with that complication My accountant said the key is making sure there's proper documentation that the S-Corp is paying or reimbursing the premiums as part of your compensation package.

One thing nobody mentioned yet - if your spouse is on your health insurance plan too, and they also work in the S-Corp, it can get more complicated. Is your spouse involved in the business too?

This is exactly the situation I was in last year! At your income level ($270k projected), you're definitely above the Premium Tax Credit threshold, so that simplifies things quite a bit. The process everyone outlined is correct - have your S-Corp pay the premiums (either directly or reimburse you), add them to your W-2 Box 1 wages, then take the self-employed health insurance deduction on your personal return. The net effect is that the premiums become tax-deductible. One thing I'd add - make sure you establish this policy formally before the end of 2024 if you want to implement it for this tax year. Your S-Corp needs to have a clear policy in place about reimbursing health insurance as part of your compensation package. A simple corporate resolution or memo in your company records will suffice. Also, since you mentioned this is your first year as an S-Corp, double-check that your $110k salary meets the "reasonable compensation" requirement for your industry and role. The health insurance premiums don't count toward this requirement, so you'll want to make sure your base salary alone is defensible if the IRS ever questions it. Good luck with your first year as an S-Corp - it's definitely worth getting these details right from the start!

This thread has been incredibly helpful! I'm in a similar situation - first year S-Corp owner with marketplace insurance. One thing I want to emphasize that I learned the hard way: make sure your S-Corp actually has the cash flow to handle paying these premiums throughout the year. I initially set up the reimbursement structure but didn't plan well for the timing. My business has seasonal cash flow, so I ended up having to pay premiums personally for a few months when cash was tight, then reimburse myself later. This created some messy bookkeeping. My advice: if you're going to have your S-Corp pay the premiums directly (which is cleaner), make sure you have a business bank account with enough buffer to handle the monthly premium payments even during slower periods. The tax benefits are definitely worth it, but the cash flow management aspect caught me off guard in my first year. Also, a quick tip for anyone using QuickBooks - set up the health insurance as a separate payroll item so it automatically flows to the right boxes on your W-2. Saves a lot of headache at year-end!