HSA (Health Savings Account) payments by an s-corp for a 2% shareholder employee is treated just like health insurance premiums. There’s two cases to consider for proper tax and reporting treatment.
Case 1: If the requirements for the exclusion under section 3121(a)(2)(B) are satisfied, the S corporation’s contributions to an HSA of a 2-percent shareholder-employee are not wages subject to FICA tax, even though the amounts must be included in wages for income tax withholding purposes on the 2-percent shareholder-employee’s Form W-2 Box1. This amount should be included in Box 14 with S-corp Med.
Check out: https://www.irs.gov/irb/2005-04_IRB#NOT-2005-8
Case 2: If case #1 above doesn’t apply (ie s-corp shareholder pays himself the HSA but not everyone else in an acceptable class a comparable amount), then it wages subject to all payroll taxes.
Section 3121(a)(2) speaks to paying everyone a comparable amount in an acceptable class. Read down to the red arrow.
https://bradfordtaxinstitute.com/…/IRC_Section_3121a2B.pdf
