How are Health Insurance Premiums treated by a Partnership on behalf of a Partner?
The premiums for health insurance paid by a partnership on behalf of a partner, for services as a partner, are treated as guaranteed payments.
Per the IRS. "the partnership can deduct the payments as a business expense, and the partner must include them in gross income. However, if the partnership accounts for insurance paid for a partner as a reduction in distributions to the partner, the partnership cannot deduct the premiums. A partner who qualifies can deduct 100% of the health insurance premiums paid by the partnership on his or her behalf as an adjustment to income."