No, you cannot exclude this and not always does your 1098-T help instead of harm.
Even though you did not get the money and use it for room and board, if it was used for expenses that are not qualified education expenses, it does become income and depending on how much other income you have, it can become taxable income.
Health insurance is specifically excluded from being a qualified education expense. Depending on the types of fees, you may be able to add them in with your other expenses in the spot after you enter other fees after you enter your 1098-T (including things like required laptops, books, activity fees, etc) to reduce your taxable scholarship amount.
Even if you pay the following expenses to enroll or attend the school, the following are not qualified education expenses:
- Room and board
- Insurance
- Medical expenses (including student health fees)
- Transportation
- Similar personal, living or family expenses
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