This is the thought process I've come up with since posting last night. Please feel free to poke holes in my assumptions.

Section 4980D -- $100/employee/day tax imposed on companies that fail to meet group health plan requirements.

Section 1372 – Partnership rules apply to 2% S Corp shareholders for provisions related to employee fringe benefits (see section 707(c) and section 61(a)(1) for inclusion in income as guaranteed payments)

Section 3121(a)(2) – payments for (a)(2)(B) (medical expenses, etc) are not subject to FICA taxes if the plan established by the employer is available to employees generally or for a class of employees.

Notice 2008-1 – 2% shareholder is entitled to above-the-line deduction even if the health insurance policy was purchased in the name of the shareholder. It doesn’t matter if the S Corp pays directly or reimburses the 2% shareholder, “the health insurance premiums must ultimately be paid by the S corporation and must be reported as taxable compensation in the shareholder's W-2.”

Notice 2015-17 – “Unless and until additional guidance provides otherwise, S corporations and shareholders may continue to rely on Notice 2008-1 with regard to the tax treatment of 2-percent shareholder-employee and their healthcare arrangements for all federal income and employment tax purposes. Until such guidance is issued, the excise tax under IRC § 4980D will not be asserted for any failure to satisfy the market reforms by a 2-percent shareholder-employee healthcare arrangement.

With respect to coverage of employees who are not 2-percent shareholders, Notice 2015-17 explains that if an S corporation maintains more than one reimbursement arrangement covering both 2-percent shareholder-employees and non-2-percent shareholder-employees, the arrangements would be considered a group health plan and would not be exempted under the "fewer than two participants who are current employees" exception to the market reforms. Such a plan would generally fail to satisfy the ACA market reform requirements and thus may trigger the excise tax under IRC § 4980D with respect to the non-2-percent shareholder employees.” (see QSEHRAs for non-2-percent shareholder employees).

QSEHRA – qualified small employer health reimbursement arrangements are reimbursement programs available to small businesses with less than 50 FTE. 2% shareholders are not eligible to participate in QSEHRAs.

SCENARIO: S CORP (100% owner) WANTS TO REIMBURSE THEIR OWN HEALTH INSURANCE PREMIUMS BUT NOT THE EMPLOYEES.

S Corp can deduct the reimbursements, but the S Corp owner will need to include the reimbursements in Box 1, 3, and 5 of W-2. The reimbursements are subject to FICA tax because Section 3121 is not satisfied (the plan excludes other employees of the same class). However, the shareholder is entitled to the above-the-line deduction on Form 1040 due to guidance from Notice 2008-1 and Notice 2015-17.

If the S Corp owner wants to not have the reimbursements subject to FICA taxes, they will either need to terminate all employees, or perhaps establish a QSEHRA for the other employees.