Thanks @ThomasM125 and @dmertz Yes, this is supposed to be the benefit of it. However, the IRS worksheet only allows you to deduct the health insurance if you have Medicare wages from the S-corp that exceed the health insurance premiums that were paid by the S-corp (and created box 1 wages on your W-2 form). The only way to get the deduction and "break even" on the added W-2 wages reported is for the S-corp to have made enough to also pay you social security/medical wages that match the health insurance premiums. Otherwise you net nothing from having the S-corp pay the premiums and take the wages. Without being able to deduct the premiums, the S-corp shareholder loses the health insurance benefit of being a tax free benefit as it is for non 2% shareholders.
I'd love someone to point out my error, but Turbo Tax does the calculation as I've described above and matches what I've researched through IRS instructions.
