+2% Sub S owner health insurance

[cball1044]

Facts:
1. 100% Sub S owner reimburses himself for health insurance premiums, adds to W-2 and takes above line deduction on 1040.
2. The other two non-family employees are not provided health insurance.
Questions:
1. Is this a discrimination issue for fringe benefits and therefore not a deduction for the S Corp?
2. Is there an issue with ACA regarding the $100 excise tax?
3. Is there an update to Notice 2015-17 granting relief to the excise tax? I can't find one.

[TaxGuyBill]

1) Sort-of, not really. If discrimination exists, the reimbursement becomes taxable compensation (for income tax) to the employee and is added to box 1 of the W-2. That is done anyways, so it doesn't make a difference. Either way, it is deductible to the corporation. I can't find it now, but prior research showed me that discrimination ONLY added to box 1 (income tax), and does not affect boxes 3 and 5 (Social Security and Medicare).

2 & 3) Notice 2015-7 grants the no penalty 'until further notice' and no, there hasn't been an update to that yet. That means the ACA $100 excise tax does not come into play.

[cball1044]

Thanks TaxGuyBill