Also note that to be eligible for this exclusion from income, the payment for health or long-term care insurance must be made directly from the plan to the insurance provider.
Note that the IRS sometimes misses the "PSO" indication on Form 1040 line 16 or Form 1040A line 12 when transcribing a mailed tax return. If the IRS is generally questioning the reduction of the taxable amount, rather than explicitly questioning whether or not the amount paid for insurance payment qualifies for the exclusion from income, this could be the reason.
