Are NY SDI payments deductible on Schedule A of the 1040 as health insurance payments?
They are paid by the employee with before-tax dollars and appear on the W2 in Box 14.
I think I read somewhere that the IRS does not accept them as a deductible item, but my
Tax preparer colleagues disagree. What's the answer?? :

NY SDI is a tax, and can be deducted as taxes paid. See "State and Local Income Taxes" on page A-2 of the instructions for schedule A:

http://www.irs.gov/pub/irs-pdf/i1040sa.pdf

I posed the question re: ny sdi and received an answer from elaine. Thanks, elaine, but I believe that the sdi withholding is an insurance payment not a tax. The employer has to pay disability insurance premiums to nys and the sdi on the w2 is the employee's share of that payment. I don't think it falls into the tax category, but I'm wondering if it falls into the medical insurance premium category. I've read conflicting information about this.

I state again - New York's SDI is a TAX, not a an insurance premium. The fact that the state uses the funds to reimburse disabled workers does not make it an insurance premium. Think of it this way - is it optional for you to pay it? No. Therefore, it's a tax.

Even though you obviously didn't bother to read the link to the IRS I gave you above, let me quote from a different IRS publication - this is from Pub 17, which deals with deducting tax payments - I trust this will satisfy you:

As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5.
Alaska Unemployment Compensation Fund.

California Nonoccupational Disability Benefit Fund.

New Jersey Nonoccupational Disability Benefit Fund.

New Jersey Unemployment Compensation Fund.

New York Nonoccupational Disability Benefit Fund.

Pennsylvania Unemployment Compensation Fund.

Rhode Island Temporary Disability Benefit Fund.

Washington State Supplemental Workmen's Compensation Fund.

By the way, it's generally better to deduct expenses as a tax paid, rather than a medical expense, as you can only deduct medical expenses that exceed 7.5% of your income.

Fyi elaine...

I did read the IRS link which you suggested but did not think sdi was a tax. No need to get snippy just because I didn't agree with you. I do know that it would be better to deduct as a tax vs medical expense due to the 7.5% rule.