Sec 125 Health Plan

[Questionguy101]

A S-corp paid for the health premium for the sole owner (who is also the only full-time employee).

Is it considered a Sec 125 plan?

[DaveinTexas]

No

A S-corp paid for the health premium for the sole owner (who is also the only full-time employee).

Is it considered a Sec 125 plan?

See IRS Notice 2008-1. Here is the link: http://m.journalofaccountancy.com/CurrentIssue/Article/2008$7$may$7$ahealthydeductionfor2shareholders.jof a

The premiums are not tax free to more than 2% or greater shareholders. Premiums are taxable for FIT purposes only, no SS or Medicare, FUTA or SUTA.

[S T]

No on Sect 125 plan allowed for greater than 2% shareholder
Here is an excerpt on a CPA post

If your S-corporation currently offers or is considering offering a flexible spending arrangement (also called a cafeteria plan or Section 125 plan), please take note: Shareholders who own more than 2% of the stock of an S-corporation cannot have their medical or dental insurance premiums deducted from their paychecks pre-tax because they are not considered to be employees under Internal Revenue Code § 125; rather, they are treated the same as partners in partnerships for these purposes.

Scorp can pay for the Heath Insurance Premiums, but as DaveInTexas pointed out, they must be included in the W-2 wages and subject to certain payroll taxes.