Revisit the Health Ins 2% Shareholder

[S T]

1120-S - greater than 2% shareholder - medical insurance paid by S Corp
Currently S Corp pays for greater than 2% shareholders own medical insurance and is reported through W-2 etc.

This is for 2011 - Considering S Corp to pay the greater than 2% shareholder's spouse health insurance, in addition to the shareholder's premium

Question, is the spouse's premium still treated the same - included on the W-2 for both the shareholder and the shareholder's spouse?

Then, does anyone know if there are any discrimantory rules for the S corp paying for the shareholders (spouse) and not paying for other employee's (spouses)?

Thanks,
Sandy

[JG EA]

I had this question before and here is the thread on it. Yes there are nondiscrimination rules on this.

http://www.thetaxbook.com/forums/showthread.php?t=7193&highlight=discrimination

One of the posts also comments on the company paying.

The only thing I am not clear on the the husband and wife thing.

[S T]

Unclear S Corp Med Premiums

Insurance provided is in S Corp name, (S Corp pays the greater than 2% shareholder premiums and 50% of all other employee premiums) We deduct from payroll the spouse or dependent premiums from net


So according to Bees post on that thread in Jan 2008, since the S Corp purchases the insurance in its name and provides coverage to all employees, there are no discrimantory rules regarding shareholder to other employees.

My two questions are

if S Corp plan decides to pay for the spouse coverage for the greater than 2% shareholder, is that included in W-2 income and then deducted on form 1040 and then the other question, which I think is answered due to the plan being in the Corp name, the Corp can pay for the shareholder's spouse premiums, but not necessarily have to pay for other employee's spouse/dependents.

Also trying to have the plan amended for 125 for the dependents coverage which I know does not apply to the S Corp shareholder, but might benefit the employees.

Thanks,

Sandy