The IRS releases Information Letter 2016-0021 discussing the deductibility of Health insurance premiums by subchapter S shareholders.
Document Excerpt
To date, the IRS has not issued any other guidance, so, as stated in Question and Answer 5, taxpayers may continue to rely on Notice 2008-1, 2008-2 IRB 1, for the tax treatment of the health coverage provided to a 2-percent shareholder-Employee.
Related Articles
Code § 9831(a)(2) provides that the Market Reforms do not apply to a Group Health Plan that has fewer than two participants who are current employees on the first day of the plan year. Accordingly, an arrangement covering only a single employee (whether or not that employee is a 2-percent shareholder-employee) generally is not subject to the market reforms whether or not such a reimbursement arrangement otherwise constitutes a group health plan. If an S corporation maintains more than one such arrangement for different employees (whether or not 2-percent shareholder-employees), however, all such arrangements are treated as a single arrangement covering more than one employee so that the exception in Code § 9831(a)(2) does not apply.
Link
https://www.irs.gov/pub/irs-wd/16-0021.pdf
