Health insurance premiums paid by the corporation for owners with at least 2% ownership in an S-Corp where an employee “non-discriminatory” medical plan is offered is taxable and reportable, thus the employer paid contribution is Social Security, Medicare and FUTA exempt but taxable for federal, state and local purposes.

www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/S-Corporation-Compensation-and-Medical-Insurance-Issues

To Process S-Corp Adjustments in the HCM Payroll portal:

1. Under System Configuration > Business Rules, search “Earnings.”
2. Click on the earnings link to see if there is an SCORP earning code configured in your database
3. If there is, return to Business Rules, search “Earnings” and click on Earning Groups; ensure the earning code is available in the earning group assigned to your S-corp owners
4. If there is NOT, use the following SOP to add an earning code using the appropriate “S Corporation Fringe Benefits” tax category:   How to Setup An Earning Code
5. In order to collect applicable taxes, the earning code must be added to a regular payroll check containing sufficient earnings to cover the employee tax amounts.