You may have wondered why an S corporation can pay for or reimburse a solo owner-employee’s individually purchased health insurance without worrying about the $100-a-day penalty.
The answer is that the S corporation’s payments of the solo shareholder-employee’s individual health insurance premiums are exempt from the $100-a-day penalty.
The exemption does not apply to health coverage for the rank-and-file employees. For the rank and file, you need either
a qualified small-employer health reimbursement arrangement (QSEHRA), or
group health insurance.
If you would like me to review your health coverage for compliance with the tax rules, please call me on my direct line at 909-570-1103 by email at Carlos@HealthcareTaxadvisor.com
Carlos Samaniego, EA
Licensed by The Department of Treasury to represent taxpayers
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