Long Term Care Premiums as a S/E Health Deduction

[Ephesians3-14]

I have a client who owns 100% of an S Corp. The company can reimburse him for health insurance premiums as well as his LT Care premiums. The company can then deduct the insurance on the 1120S and include it in his W-2. He would then be able to claim those premiums as a S/E health deduction on his 1040.

My question is whether he can claim the actual amount that his company reimburses him (actual LT Care premiums were $6,100 in 2023)...OR....can the company only reimburse him for the amount of LT Care premiums that would otherwise be deductible (in 2023, the LT Care premium deduction was limited to $4,770)?

[Terry53029 · Accepted solution]

He can only deduct the eligible amount which is age dependent. 

For 2023, the maximum amount of qualified long-term care premiums includible as medical expenses has increased. Qualified long-term care premiums up to the amounts shown below can be included as medical expenses on Schedule A (Form 1040), Itemized Deductions, or in calculating the self-employed health insurance deduction.

• Age 40 or under: $480
• Age 41 to 50: $890
• Age 51 to 60: $1,790
• Age 61 to 70: $4,770
• Age 71 and over: $5,960

[BobKamman]

@Terry53029  That really doesn't answer the question, but if @Ephesians3-14 is happy with the answer who am I to complain?  I would have had to do some research to figure out if the company can pay $6,100 in premiums and add that amount to the W-2.  Then the shareholder/employee can deduct the $4,770 limit either as an adjustment to income or on Schedule A.  Without looking it up, I would say no, because the effect is to give the company a larger deduction that then flows through to the shareholder/employee.  But when the company writes that check for $6,100 is it for LTC insurance, or is it for wages?  Are there limits on how much a company can pay in wages?  I don't think so.  And deducting it as wages makes the ratio of wages to dividends look better.  

[Terry53029]

@BobKamman I believe his question was how much can his client deduct of the LTC premium for the self employed health insurance, Which is what I answered. Did not think he was asking about the 1120S. I am not sure about that would have to research. 

[Ephesians3-14]

@Terry53029 - yes, that's all I was asking. Wasn't necessarily concerned about the amount the company deducted (and included in Box 1 of the client's W-2). Thanks.

[BobKamman]

@Terry53029  He asked two questions.  You answered one of them (the easy one)  You did not answer the interesting one, "...can the company only reimburse him for the amount of LT Care premiums that would otherwise be deductible."

[Terry53029]

@BobKamman Why don't you answer the "hard one" for us, being you seem to be the only one interested