A relative of mine will become a resident, both for tax and immigration purposes in the FY2013.

They won't be working, and so will have to pay for health insurance out of pocket (this likely will be around $10K per year given their health and age). I understand they need to itemize deductions in order to deduct health insurance costs, but do they also have to be "self-employed"? (some of the info I read online seemed to suggest that).

They have sizeable bank deposits, so most of their income will be from bank interest (mostly overseas). Would itemizing then likely make the most sense for them?

Can I pay the health insurance premiums for them, and they then reimburse me, or would that complicate the process of gaining the tax deduction?

As long as they reimburse you in 2013, they eventually will bear the cost of the medical insurance and thus qualify for the deduction.

HOW MUCH will they be earning in interest?

As long as they reimburse you in 2013, they eventually will bear the cost of the medical insurance and thus qualify for the deduction.

HOW MUCH will they be earning in interest??

Thanks
I don't know exactly, but if I was to guess, I think maybe $30-40K in yearly interest.
So they don't need to be "self-employed" to get this deduction?

No, they do not. The interest by itself will require that they file Form 1040 with Form 3983 to report the overseas accounts.

They will also need to file the FBAR.