The funds that went to pay your health insurance is considered taxable income.
They will include it in Box 5 as part of a scholarship, but not include it in Box 1 as an education expense.
According to the IRS Pub 970:
Qualified education expenses don't include amounts paid
for:
• Insurance;
• Medical expenses (including student health fees);
• Room and board;
• Transportation; or
• Similar personal, living, or family expenses.
This is true even if the amount must be paid to the institution as a condition of enrollment or attendance.
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