(notice 2005-8) more than 2% shareholders are not eligible for pre-tax HSA contributions by their employer. Employer contributions to a more than 2% shareholder's HSA are treated as compensation and then deducted by the shareholder on his 1040. this would include HSA contributions for his spouse. the S-corp in effect gets a deduction for the HSA contributions because they are part of the shareholder's comp. now the question becomes did the S-Crop have a High Deductible Health Plan covering the shareholder and spouse (a family plan)? The premiums the S-corp paid for health insurance for the shareholder is also an addback on the W-2 as compensation and a deduction on the 1040. if it was not a family plan, there should have been no HSA contributions for the spouse.
