S-Corp Health Insurance Reimbursement - ACA

[wshbne]

We are a LLC filing as a S-Corp (1120S) - "Company A". My business partner has never had health insurance, so I was thinking it's important he and his wife has it especially now during Corona.

My family's current health insurance is tied to a different LLC filing as a S-Corp (1120S) - "Company B".

He did prefer / feel more comfortable that I moved mine over to Company A from Company B in 2020 so that our business would be handling both of our healthcare.

1. Can we have two S-Corp 2%+ owners having health insurance paid by Company A?

2. He saw he was eligible for an ACA plan. Is it ok for Company A to pay his ACA premium? Or does it have to be private insurance?

[ThomasM125]

You can pay the premiums for two owners from company A. Also, you can provide your partner's insurance through an ACA  plan.

You should pay the premiums from the company. You will add each owner's premium payment to their federal wages (not social security or medicare wages) on their W-2 form. You will deduct the insurance premiums on the S corporation tax return as "employee benefits." You only deduct the social security and medicare wages as a payroll deduction.

Each shareholder will deduct their premiums as self-employed health insurance on their personal tax return. So, the company deducts the insurance, which the owners pics up as income on their tax return, but then it is deducted back off by virtue of the self-employed health insurance deduction. So, there are two deductions and one addition to income.

You have to pay wages of an amount at least equal to the insurance premiums for them to be deductible.

The partner with the ACA plan will have to integrate the self-employed health insurance deduction in with his or her insurance premium credit if any.

[wshbne]

Thanks so much for your help. You've totally answered my question.