If you operate your business as an S corporation, you continue to enjoy good news in 2026 when it comes to your health insurance.
The rules that have governed the deduction for years remain in place, and the One Big Beautiful Bill Act of 2025 did not disturb them.
This update walks you through everything you need to do with your S corporation to lock in your health insurance deductions and steer clear of the $100-a-day penalties under the Affordable Care Act (ACA). It also covers the following two traps that quietly cost owners their deductions every year:
1.
The box 5 “earned income” rule
2.
The family member attribution rule
The Good News: The Old Rules Still Apply
Nothing in the 2026 tax code changes the basic deal.
Your S corporation can cover you, your spouse, your dependents, and your children under age 27, and you can deduct the cost—provided you run the premiums through the three-step process described below.
Step 1. Get the Insurance on the S Corporation’s Books
You can do this in one of two ways:
1.
Direct payment. The S corporation pays the premiums directly to the insurance company for the accident and health policy that covers the owner-employee who owns more than 2 percent of the stock (and his or her spouse and dependents, if applicable).
2.
Reimbursement. The owner-employee pays the premiums and submits proof to the S corporation, which then reimburses ... Log in to view full article.
