@netgreen Medical insurance premiums for a more than 2% S corporation shareholder are not deductible as such, that is why they don't show as a medical premiums deduction on your 1120-S tax return. They are considered compensation to the shareholder if paid by the company, as they are a benefit.
The more than 2% shareholder can deduct the premiums as self-employed health insurance on their personal form 1040, but only if included in the shareholder's wages.
Thus, the corporation deducts the premiums as wages, the shareholder picks the wages up as income, then deducts the premiums through self-employed health insurance deduction.
Also, the wages reported on the W-2 in box 1 for 2% shareholder health insurance premiums are not included in box 3 or 5 and are not subject to social security tax.
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