Health reimbursement arrangement and HSA S Corp.

[caryn22359]

I am very confused. I have researched thisand cannot find an answer.

1. Can an greater than 2% shareholder in an s corporation participate in a HRA account?

If not is it treated the same way as accident and health insurance prem. Add to box 1 as taxable income not subject to FICA and Med. and then it is taken as an AGI deduction on the 1040.

2. Same question exception can the shareholder have a Health Savings Account.

[Guest morris]

1) Greater than 2% shareholders in an S-corp cannot participate in an HRA. I think the reason is because that, as a self employed filer, they are able to claim out of pocket medical expenses on their tax return. To receive a payment from their own company's HRA would result in double dipping.

2) Yes, an S-corp owner can have an HSA.