I believe you are entering health insurance of a more than 2% shareholder (an owner.) If so, the health insurance is supposed to be added to the shareholder's wages and reported on that individual's W-2 Form as wage income. So, instead of reporting it as health insurance on the S Corporation return, it gets reported as wages. In this instance, the owner health insurance would be excluded from the health insurance entry on the S corporation return.
The owner would then report the inflated wages on his or her individual tax return, and then deduct it as self-employed health insurance to the extent it is allowed on the owner's individual tax return. So, the insurance deduction appears on the individual tax return of the more than 2% shareholder of the S Corporation.
When you issue the W-2 form, the health insurance would be added to the wages in box 1, but not to taxable social security or Medicare wages in boxes 3 and 5. You can read more here: Deducting S Corp Health Ins premiums
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