This is such an ongoing mess of a developing topic with the inclusion now of ACA, I will provide just a bit of perspective that might be helpful.

"health insurance premium is included in W2 wage as taxable income but except FICA taxes. it also need to be included on sch1 line 17 Part two. (Does it mean health insurance premium under S corp not allow deduction)?"

Only for the >2% shareholder. On your topic here: https://accountants.intuit.com/community/proconnect-tax-discussions/discussion/is-it-allowed-that-11...

I stated: "Any shareholder working for the company is an employee; there are many rules for this as a way to avoid special treatment and avoid allowing the shareholder to shift personal costs to the business. That's why you'll see ">2%" or "10% or more" limitations and requirements."

Also, as you see, there are businesses that can take a deduction as business expense for their employee benefits. To provide parity, the Sole Proprietorship and other "self-employed" persons who don't get payroll also might qualify for the health insurance premium as a deduction against their personal income, when circumstances create a self-paid scenario. The same benefit as should exist as when an employee with employer coverage might be offered a pre-tax payroll deduction, for example.

What that provision does is turn the health coverage premium paid by the company into a taxable fringe benefit to an S Corp >2% shareholder-employee, which is why it then qualifies to be passed through as if that is a self-employed person paying it personally (and it goes on Sched 1).

And that's a simplified answer.