Since you asked me, yes, my two cents is if you pay for insurance out of distributed profits, you should be treated exactly the same was as a W-2 employee with

Since you asked me, yes, my two cents is if you pay for insurance out of distributed profits, you should be treated exactly the same was as a W-2 employee with no health benefits buying insurance on his own would be (I'm stating it this way because I don't know the payroll tax situation for a W-2 employee w/o benefits buying them himself). If the benefits are provided by the S-corp to employees (i.e., to you), I don't think the question arises. The money used to buy the employees' insurance is removed from the profits, so it won't be part of distributed profits. Since tax is only on income, you won't pay taxes on insurance.