S-corp Owners Health Insurance is a fringe benefit that allows an S-corporation to pay or reimburse health insurance premiums on behalf of an owner who holds more than 2% of the company. Because it's processed through payroll, the benefit is taxed and reported correctly on the owner's annual tax forms.

S-corp Owners Health Insurance is a non-cash benefit, meaning it increases the owner's taxable income but does not increase their net pay. Common examples of premiums that qualify include:

Unlike health insurance benefits for regular employees, the value of this coverage is considered taxable compensation for the owner, even when the employer pays the premiums. For this reason, the amount must be run through payroll to ensure it is taxed and reported correctly.

The total amount is subject to federal and state income tax withholding only. It is not subject to Social Security or Medicare taxes. The amount is reported on the owner's W-2 in Box 1 (Federal Wages), Box 16 (State Wages), and Box 14.

Since this benefit is exclusive to owners, you do not need to add it directly to the employer profile or create a policy. Instead, it is added at the Employee Profile level.

Once the benefit has been added to the Employee Profile, S-corp can be processed through payroll. You can include it with regular payroll runs throughout the year, or you can process the total amount as a lump sum prior to the end of the calendar year.