A question I hear from business owners all the time is whether their company can pay for their health coverage. It comes down to the way the business is structured. Your CPA takes care of the tax questions, and I take care of the coverage.
Hi, I'm Sam Jaber, a licensed health insurance broker. A lot of the people I help run their own businesses. After they find out they can purchase their own coverage, they usually ask me one thing: "Can the company simply pay for it?"
Here's the straightforward answer. Whether your LLC or S-corp can pay for coverage, and how that payment appears on your tax return, comes down to your business structure. I'm not your accountant. Your CPA takes care of the tax questions. I focus on your coverage: finding a plan for your household, checking which doctors are included, and setting up the application so the paperwork has the details your CPA needs.
You don't have to wait for a group plan just because you own a business. You can apply as an individual for a nationwide PPO through me in all 36 states where I'm licensed. Your business structure affects how the premium gets paid and reported, but it doesn't determine whether you can get a PPO.
When your business shows a net profit on Schedule C, the self-employed health insurance deduction generally goes on your personal tax return. A single-member LLC is often reported the same way, but your CPA can confirm how your entity is treated. The deduction appears on Schedule 1 (Form 1040), line 17. It only applies to months when you weren't eligible for a subsidized employer plan, including coverage through your spouse.
Next step: Call me first so we can choose your coverage. After that, share the premium information with your CPA so the deduction is reported correctly on your return.
If you own more than 2% of an S corporation, the policy may be held in your name or the company's name. When the company pays the premium, it gets reported as wages on your Form W-2. For fringe benefit purposes, the IRS treats shareholders with more than 2% ownership like partners, and the deduction goes on your personal return. Before the company pays, your CPA needs to arrange the payroll and reporting details.
Next step: Send me your business entity type and tell me who needs coverage in your household. I'll put the coverage together, and your CPA can confirm how the company should pay and report the premium.
Straight answers, no sales pitch.
The answer comes down to your business entity and whose name appears on the policy. If you're a more-than-2% S corporation shareholder, the company may pay the premium and report it as wages. Your CPA should confirm the arrangement before any money is paid. Getting the coverage and deciding its tax treatment are two different jobs. I handle the coverage, while your CPA takes care of the tax side.
According to the IRS instructions for Form 7206, the deduction may include coverage for you, your spouse and your dependents. That includes a child who had not yet reached age 27 by the end of the year. Your CPA can confirm which members of your household qualify on your return.
You cannot claim the deduction for months when you were eligible to participate in an employer-subsidized plan, including a plan offered through your spouse's employer. Review each month separately. What counts is whether you were eligible, not whether you actually enrolled. Even if you passed on the coverage, a month when you could have joined still counts.
Choosing your coverage and deciding how it's treated for taxes are two separate things. Before your business pays the premium, check with your CPA about how it should be reported. That way, it goes on the proper form and line when your return is prepared.
Tell me how your business is structured and who owns it. I'll take care of finding the coverage. Share the premium details with your CPA so the tax treatment is handled before the year ends.
Guides by line of work and by state