Dear flynmudd,
"Sub-S employees that own more than 2% of the company already pay Federal and State taxes on health insurance coverage."
That was once true, but I don't think it is anymore.
During the late 1990s and early 2000s, deductibility of health insurance premiums for folks who own their own businesses was phased in. I remember when I didn't receive any deduction for my premiums, but I remember that over the years, I received increasingly higher percentages of deductibility, until now, it's either 80% or 100% (I don't remember off the top of my head).
However, we just started a plan with an HSA component, and as the owner, I don't get the deduction for contributions to my own Health Savings Account (although, of course, my business gets a deduction for contributions to my workers' accounts).
sitetest
"That was once true, but I don't think it is anymore."
True. That is old law.
The Sub-S stuff was new for 2006. My boss was pissed. The $10K that we paid in premiums was taxable this year. Not FICA taxable, just federal and state.
"However, we just started a plan with an HSA component, and as the owner, I don't get the deduction for contributions to my own Health Savings Account (although, of course, my business gets a deduction for contributions to my workers' accounts)."
Here's some good news for a Saturday. I could double check when I'm back in the office but you get the deduction on your return. The company will pass it on to you as income and then you get the full deduction on your return. In the end it's semantics. Not many folks understand these things yet but I believe all you miss is the instant gratification.