This is really confusing. So do you pay your premiums out of your own pocket, or does your S Corp? If you pay them out of pocket then you can deduct them on Schedule A (below the line) with the 7.5% limitation.
If the S Corp pays your premiums (or even reimburses you for the premiums if you must, for instance, pay COBRA using a personal check) it is not deductible by the S Corp unless it includes the value of the premium in Box 1 of your W-2 wages. The premiums are not subject to any other federal employment taxes.
Still with me?
Once you add the value of the premiums in your gross wages, you can deduct the same amount as an adjustment to gross income. It would be as if you were paying the premiums personally, just paying them to the S Corp. The net effect is the S Corp deducts the value of the premiums as wages. You personally have income and deduction of the same amount so you end up fully deducting the premiums. The big assumption here is that neither you nor your spouse are eligible for coverage under another employer's subsidized health plan.
Also, since you are in essence adding the value of the premiums to your gross wages you are increasing the amount of money you can contribute to a retirement plan. And the increase in wages counts toward the "reasonable salary" that is required for S Corp employee-owners.
Health Insurance Premiums
If an S corporation pays accident and health insurance premiums for its more-than-2% shareholder-employees, it generally can deduct them, but must also include them in the Officer's Wages line, which subject to federal income tax. S Corp owners (and spouses and dependents) can deduct all of their premiums from their personal income tax as a special personal deduction (above the line). It isn't a business deduction so it doesn't reduce income for FICA.
Next up...[[Life Insurance Premiums]]