Thursday, November 29, 2018

Barely Missing Out on ACA Subsidies? This Unique Approach Might Work

I’ll say up front that the approach we’ll describe here doesn’t work for everyone but it’s worth sharing…especially if you are in a situation where you are just over the point of receiving a subsidy! If you’ve stumbled upon this blog you are likely in a situation similar to ours: self-employed and ineligible for ACA subsidies. There are two choices when you find yourself in this situation:

a)    Freak out and Google “self-employed health insurance alternatives” and end up on a blog like this, or

b)    If you are a personal finance nut like me, try to figure out how you might make adjustments to your tax deductions to actually start qualifying for a subsidy

Trust me, we spent a lot of time thinking about (b) before moving on to (a). In fact, prior to becoming self-employed we performed a lot of analysis based on different income situations. As part of this research, we submitted a question to Justin at the Root of Good Financial Independence Blog. It resulted in a much more detailed post on the subject than I’ll describe here. Don’t Fall Off the Affordable Care Act Subsidy Cliffs is a fantastic analysis of how you might control your Modified Adjusted Gross Income (MAGI) on your taxes to qualify for a subsidy (MAGI is the official income line item the subsidies are based on). I was the “Don” (name changed to protect the innocent) who submitted the question and it was because I was thinking of the strategy we’ll highlight here. If you find the summary I’ve posted here interesting please be sure to check out the more detailed post at Root of Good.

Some Basic Background

Your eligibility to achieve a subsidy under the Affordable Care Act (ACA) is based on your income…but what income? If you’ve ever looked at a 1040 tax form it can be complicated. There’s the gross income you received as a self-employed individual, then the income after your business deductions, then income after the standard deduction and other non-business deductions. For example, on the Health Insurance websites it will ask you, “What is your Income?” If you are entering your gross income you are entering too much. Your subsidy is based on your Modified Adjusted Gross Income (MAGI), which for most people is just your Adjusted Gross Income (AGI) – line 7 on the updated 2018 1040. Here’s the link from to learn more about AGI.

The other part of the subsidy formula is the number of individuals in your household. Simply put, the more individuals in your household the higher your income can be to qualify for a subsidy.

So What if My AGI is a Little Too High for a Subsidy?

The first thing you may be wondering after reading the above is, “Great, but how do I know what my AGI needs to be to qualify for a subsidy?” This comprehensive article at includes an updated table showing the levels of subsidy by income and size of household (it’s the same type of table referenced in the Root of Good blog post I mentioned above but it is updated for the current year).

If you find yourself teetering on the “ACA cliff” and need to reduce your AGI without actually reducing what you earn that’s where the Health Savings Account (HSA) and Self-Employed 401K can help! Both of these accounts allow you to contribute pre-tax dollars to pay for medical expenses (in the case of the HSA) or retirement (Self-Employed 401K). So let’s illustrate this in a simplified example:

Let’s say you and your wife are both self-employed and earn $85,000 (after business expenses). According to the chart I referenced at, subsidies officially phase out at an AGI of $65,840 for a household of two. Your initial reaction is to start Googling alternatives. But wait, let’s say you are a saver, open to getting creative and do the following: (a) contribute to an HSA and (b) contribute to a Self-Employed 401K enough to qualify for a subsidy. For clear demonstration purposes let’s assume you max out each of these contributions. Here’s what this looks like:
  • $85,000 Initial Adjusted Gross Income
  • Less: $6,900 Health Savings Account Contribution (this is the maximum 2018 contribution)
  • Less: $55,000 Self-Employed 401K Contribution (this is the maximum 2018 contribution per person)
  • $23,000 New Adjusted Gross Income for Calculating Subsidy

In this example we’ve gone to the extreme – we are now clearly in subsidy territory according to our chart. Of course, it might not be realistic for many people to make this type of contribution (on this level of income) but even if you just reduced AGI by $20,00 in this example your ACA plan would at least include some subsidy.

But This Just Isn’t Practical!

We’ll fully admit this might not be achievable for many people. However, if you spend less money than what you make (a practice we’d recommend!) you are a prime candidate. If you earn $85,000 and spend $85,000 then putting aside any money to reduce AGI is probably unrealistic. However, even if you earn close to what you spend, but have savings, you might be able to make this work. For example, if you reduce your AGI by $20,000 using these techniques you have $20,000 tied up in a retirement account or HSA (not bad places but not accessible for your daily expenses). If you had $20,000 in savings you could re-purpose those savings for your routine spending while the $20,000 you used to reduce AGI starts growing in an HSA or 401K account.

Of course, another reason this might not be practical is if you simply earn too much income. A nice problem to have and it’s possible even maxing out these deductions to AGI wouldn’t get you into the subsidy threshold.

In Closing

Our purpose in posting this is to make sure you are considering all options during annual enrollment. There are some fantastic calculators out there to estimate your subsidy under different levels of AGI. We understand it may not be practical for everyone but it’s an interesting approach for the savers out there! The links in the article should be great resources to get you started in your research!

The linked resources in this article are far more detailed than what we’ve provided here. Nonetheless, hopefully it helps a few people think more creatively (financial and tax planning pays off!). If you have any questions on this strategy, the accounts described, etc. please let us know!

Wednesday, November 28, 2018

The Case of the Missing Liberty Reimbursements

Well, we called Liberty again to check in on two checks that, according to our ShareBox, had been issued to us on November 1. We verified our address with the woman we spoke to and everything matched perfectly. At the time of our call, we were about 3 weeks out from when Liberty (according to their own records) issued the check. Naturally, the US Postal Service was blamed for the delay. It must’ve gotten lost in the mail is becoming the equivalent of the dog ate my homework. The good news is it looks like our call on November 20 triggered activity on a third payment, which was sent on November 21, per our ShareBox. Thus, we’re set up for an interesting experiment – which reimbursement will arrive first? Will either arrive at all? These are the same payments we had to call about just to get processed (so it took a while to just get the checks issued…assuming they actually were).

When we asked if they could just cancel the checks and re-issue new checks we were told that the policy is to wait 60 days before new checks could be issued. Naturally, that policy couldn’t be adjusted in this situation (it is, after all, a “policy”) so we continue our wait. If they weren’t issued, and it’s a way to conserve cash, we were hoping our call might have triggered some action.

On a side note, according to Google Maps, we are exactly 50 miles from Liberty Healthshare’s HQ’s – these aren’t being sent cross country. Of course, we pride ourselves on trying to be balanced…it’s possible the checks did get lost in the mail so we’ll keep you updated.

Tuesday, November 27, 2018

Our 2019 Liberty Option

Despite the fact we started with Liberty Healthshare, and most of our earliest posts provide a tremendous amount of detail on Liberty, it’s worth rehashing the highlights as we head into 2019 (as a formality at least!). The main thing that’s changed is the cost so let’s compare last year to where things currently stand:

Monthly Share Amount
(Comparable to the Monthly Premium)
Annual Unshared Amount
(AUA – Comparable to the Deductible)
$450 for a family with parents 30-64 years old
$1,500 for a family
$529 for a family with parents 30-64 years old
$2,250 for a family

Note: There is a $75 annual renewal fee as well.

Beyond the change in price there aren’t many changes for 2019:

  • $1M per incident is eligible for sharing
  • Pre-existing conditions are not covered in the first year but coverage can be phased in over multiple years (see guidelines)
  • Prescription drug coverage is not included (although the SaveNet program offers a discount we found less competitive than programs already offered by name brand pharmacies and

This is a quick recap of the plan that we would go with from Liberty Healthshare. If you are an individual, couple, or interested in plans from Liberty you can find a lot more details by visiting Liberty’s website.

Are you considering Liberty in 2019? If so, do you have any questions or concerns you’d like feedback on? If so, leave a question and we’ll try to answer it (and if we can’t I’m sure someone else will)! 

Saturday, November 24, 2018

Are Short Term Insurance Premiums Deductible for the Self-Employed?

As we’ve mentioned, there were recent changes in the duration in which short term health insurance plans could cover individuals or families. Prior to these changes, they were meant to bridge participants between employment and were only available for 30-90 days. Thus, we never really considered these plans prior to this year and certainly never considered whether premiums for these plans would be deductible for self-employed individuals. Given we are self-employed and now considering these plans we figured it was a good time to answer this question and confirm premiums are deductible.

So let’s go to Publication 502, Medical and Dental Expenses (admittedly the 2017 version). Here is what it says regarding insurance premiums you can’t include in your deduction for the self-employed:

Insurance Premiums You Can't Include

You can't include premiums you pay for:
  • Life insurance policies,
  • Policies providing payment for loss of earnings,
  • Policies for loss of life, limb, sight, etc.,
  • Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury,
  • The part of your car insurance that provides medical insurance coverage for all persons injured in or by your car because the part of the premium providing insurance for you, your spouse, and your dependents isn't stated separately from the part of the premium providing insurance for medical care for others, or
  • Health or long-term care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan made directly to the insurance provider and these distributions would otherwise have been included in income.
  • Taxes imposed by any governmental unit, such as Medicare taxes, aren't insurance premiums.

Coverage for nondependents
Generally, you can't deduct any additional premium you pay as the result of including on your policy someone who isn't your spouse or dependent, even if that person is your child under age 27. However, you can deduct the additional premium if that person is:

Your child whom you don't claim as a dependent because of the rules for children of divorced or separated parents,

Any person you could have claimed as a dependent on your return except that person received $4,050 or more of gross income or filed a joint return, or

Any person you could have claimed as a dependent except that you, or your spouse if filing jointly, can be claimed as a dependent on someone else's 2017 return.

We see nothing in this publication regarding short term health insurance premiums. Of course, we see nothing about healthshares either but I think it’s clear that this is not insurance. We’ll continue to research but our initial research indicates we could make the deduction. Anyone out there finding anything different (or even caring)?

Thursday, November 15, 2018

Our Short Term Insurance Plan Options from United Healthcare

The short term health insurance plans we will describe below are all from United Healthcare ( Actually, they are from Golden Rule Insurance Company which is a United Healthcare subsidiary. We are also reviewing plans designed for Ohio, and as mentioned, your state may have different options available. We reviewed short term plans on and kept coming back to the plans from United Healthcare primarily because our health provider is in network, but also because their plans offered flexible options including deductibles and co-insurance. You can build a bit more robust plan than most short term plans we saw available.

Choosing a Maximum Benefit

The first choice is to consider the maximum benefit you’d like covered. United Healthcare offers two options: $600,000 per individual or $2,000,000 per individual. In our situation, we’d prefer more robust coverage so we’ve only looked at $2M benefit plans. This means that any costs about $2M (per person) would not be covered.

Selecting Coinsurance

The next thing you have the option of choosing is your coinsurance. Coinsurance is the amount of money you’ll pay out of pocket after your deductible. United Healthcare offers the following options:

Plan Name
Coinsurance out-of-pocket maximum
Value Select
30% or 40%
$5,000 or $10,000
Plus Select
20% or 40%
$2,000 or $5,000 or $10,000
Copay Select
Plus Elite

The coinsurance out-of-pocket maximum is the max you could pay, per person, in co-insurance. Thus, if your per person deductible is $5,000, and your coinsurance out-of-pocket maximum is $5,000, the max you could pay is $10,000 per person (assuming you do not exceed the $2M maximum benefit). Obviously, the price of the plan is dependent on the coinsurance chosen. 0% coinsurance would be more expensive than a plan with the same deductible but 30% coinsurance.

We are leaning towards a 0% coinsurance plan. In theory, since we don’t think we’d even use our deductible we should gravitate towards a higher coinsurance (since you don’t pay it until you hit your deductible). However, we’d also like to maintain some conservatism and we love the simplicity of not having to deal with coinsurance once we hit our deductible.


Plans have the following deductible options per person:  $1,000, $2,500, $5,000, $10,000, $12,000. Since these are per person we’d need to multiply our deductible times 5 to determine our total out-of-pocket cost assuming we had 0% coinsurance. You can mix and match these deductibles with the coinsurance options described above. If we compare these deductible amounts to what we paid for medical costs in the current year we would not even reach the $1,000 deductible per person. Assuming that’s the case again in 2019 (you know what happens when you make assumptions though...) you could argue that we should just choose the $12,000 per person deductible since it’s unlikely we’d hit any deductible amount. We are still uncertain what deductible we’d choose so we’ll run the costs for multiple options in this post and understand whether the savings is worth the risk.


Copays are popular in many insurance plans for routine doctor visits. Some plans cover “preventative wellness visits” for free while others might charge a copay. The United Healthcare Copay Select Plan offers 3 $50 copays for “history and exam” visits. Thus, we could take each of our boys for their annual check-ups and pay just $50. The copay plans require 20% coinsurance and a $2,000 out-of-pocket coinsurance maximum. This plan is best for families who would need multiple wellness visits and are comfortable assuming the coinsurance. This is an option we’ll include in our analysis.

Comparing the Cost of the Plans we are Considering

Below are the plans we are considering, all have a $2M maximum benefit per person and 360-day duration (maximum allowed in state of Ohio):

Annual / Monthly Cost
$2,382 / $198
$3,545 / $295
$4,459 / $372
40%, $10,000 out of pocket max
$1,648 / $137
40%, $10,000 out of pocket max
$2,455 / $205
40%, $10,000 out of pocket max
$3,085 / $257
20%, $5,000 out of pocket max
3 Exam and History Only
$2,097 / $175
20%, $5,000 out of pocket max
3 Exam and History Only
$3,122 / $260
20%, $5,000 out of pocket max
3 Exam and History Only
$3,925 / $327

You can see there is a wide variety of plans available (we’ve only considered a small subset above). We evaluate the following when thinking through a deductible amount: (a) out of pocket cost we could afford in a worst-case scenario (and by “afford” we mean pay for and not have a panic attack) (b) likelihood that a severe illness or injury would occur given our history.

We haven’t made a choice for 2019 yet but we will share the short term plan(s) that made our final evaluation when we unveil our final decision!

NOTE: All of the annual costs listed above are based on making a single annual payment. The monthly costs are based on dividing that number by 12. There is a nice cost savings if you make a single annual payment as opposed to paying monthly. Thus, your monthly costs will be a bit higher if you don’t make the annual single payment as we’ve represented. 

Saturday, November 10, 2018

Our ACA Compliant Options for 2019 (and the benefits of an HSA illustrated!)

Although it is unlikely we will purchase insurance through the ACA exchange this year (, we still like to understand the options available there. Over the next few posts we’ll explain each of our options for 2019, a cost comparison of those options, then ultimately the choice we are making and why. 

A key criteria for any option is that it provides coverage for our primary providers. Thus, the plans from Oscar Health ( and the Cleveland Clinic are the best ACA options for us. Without the subsidy our cheapest available plan is as follows:

To provide perspective, our mortgage, plus property taxes, was about $768/month. Of course, that’s not a luxury home but health insurance that is roughly the cost of two mortgages is not an appealing option. Our cheapest option, however, did not include a Health Savings Account (HSA) so we next looked for the cheapest option that would also include an HSA:

So for an extra $90 a month you get a lower deductible and the option to contribute to an HSA plan. It is highly frustrating that more high deductible plans do not have the HSA option. We can pay $1,316 a month for health insurance and still not have access to save in an HSA! This is a problem.

In 2019, HSAs allow you to contribute up to $7,000 for a family (up $100 from 2018) or $3,500 for an individual (up $50 from 2018). You are permitted to make these contributions “before taxes” meaning the $7,000 a family might contribute won’t be taxed. This means $7,000 less of your income will be taxed. To illustrate the point let’s compare the cost of these two options:

Monthly Cost
Yearly Cash 
Actual Yearly 
Oscar with no HSA
Oscar with HSA

Wait, if I contribute the max to an HSA I can actually get a plan with a much lower deductible for a lower yearly cost? Yes, because of the tax savings. To understand the tax savings you’ll need to understand two deductions:

Self-employment insurance premium deductible – Since my wife and I are self-employed we are permitted to deduct the cost of our yearly premiums from our income. This makes up the majority of the deduction.

Health Savings Account (HSA) – As mentioned, we would also be able to deduct the full $7,000 HSA from our income.

If you have greater deductions then you have less income to report…and if you have less income to report you will pay less tax! So, although we likely won’t be purchasing one of these plans, hopefully this lesson in the benefits of an HSA was valuable!

Please note the Tax Savings column was calculated based on our specific tax situation (i.e. self-employed, certain income tax rate based on income, etc.). Your tax rate and situation will be different than ours and the tax savings may not be high enough to justify the higher premium! Please consult a tax professional if you have uncertainty.

Wednesday, November 7, 2018

The Latest Status of our Liberty Reimbursements

As we mentioned in our October updates we are still waiting for reimbursement for a few medical bills that were related to wellness visits. Liberty reimburses these visits up to $400, per person, per year. Just a quick update to let you know as of November 7 we are still waiting for reimbursement (the physical check). When we called Liberty they were surprised our bills were still sitting there without movement and promised to move quickly. For at least one of the bills, they indicated a check for reimbursement was sent on October 25. The problem is we haven’t even received that reimbursement.

We did receive a couple more ambiguous e-mails indicating bills are being “processed” but, as mentioned before, the status of bills in your ShareBox don’t tell you much. Coincidentally, during our last call our representative seemed to indicate that the official “clock” for reimbursement begins once your bill is “Processed”. Thus, the status Liberty shares may be a bit misleading because, at least in our case, it took a long time to even get to the “Processed” state. Hopefully we’ll receive our checks soon but to give you a sense of how long you may have to wait, these were for Summer visits and we are approaching Thanksgiving!

Liberty has made it clear they are working hard to improve their reimbursement turnaround and everyone we spoke to was very nice! We don’t doubt they are working hard, but trying is different than making it happen. Of course, this is our unique experience, others may have had better luck! We are hopeful Liberty turns their hard work into reality soon!

Thursday, November 1, 2018

Understanding Short Term Health Plans

We provided a little introduction to short term health plans in our last post but we wanted to dive a little deeper. If I reference specific language from a plan it’s likely from the short term plans we are considering from United Healthcare. We’ve researched these plans because they are accepted by our current healthcare provider, which is obviously a critical point based on our experience this year. However, providers, and even different plans within the same provider, have varying rules and coverages. Here are some of the key we've learned about short term plans:

Pre-Existing Conditions

The first thing you should know, and one of the elements that make these plans much cheaper, is that they do not cover pre-existing conditions. It may seem obvious but to be clear here’s the definition of a pre-existing condition per the plans we are reviewing:

“A condition: (1) for which medical advice, diagnosis, care, or treatment was recommended or received within the 24 months immediately preceding the date the covered person became insured under the policy/certificate; or (2) that had manifested itself in such a manner that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care, or treatment within the 12 months immediately preceding the date the covered person became insured under the policy/certificate.”

Those individuals or families with a costly pre-existing condition needing coverage can immediately skip short term health plans. If you are pregnant at the time of plan initiation this is also considered a pre-existing condition so this isn’t the right plan for you if pregnant! However, if you are reading this it means you are considering Liberty, which also excludes coverage for pre-existing conditions (at least to start).

Maximum Benefits

Another key difference that keeps the price of short term health insurance plans down is that there is a maximum benefit that can be provided to each participant. With a traditional ACA approved long-term planned there is no maximum benefit. For example, the United Healthcare offers plans with two different lifetime plan maximums - $600,000 or $2,000,000. This means that with a short term plan, if you have medical costs that exceed $2,000,000, you will be on your own for those costs. There are certainly situations where costs could exceed that benefit. It’s a risk that needs to be weighed just like any other. These maximums are “per individual” so in theory each individual in your family could hit that maximum.

Prescription Drugs

Most of the plans we have reviewed from United Healthcare include prescription drug coverage, however, there are certainly options of the plans that do not. Under the plans we’ve been most interested in from United Healthcare you pay for your prescriptions up front with a discount card they provide (or you get a better deal from GoodRx as we’ve mentioned in past posts) and then submit the expense to United Healthcare. This cost would go against your deductible then would be eligible for reimbursement after the deductible is hit (subject to any co-insurance just as you may have in a traditional plan). 

Deductibles and Out of Pocket Maximums

Deductibles for the short term plans operate pretty similarly to traditional insurance plans, however, for the plans we’ve reviewed, there is no family deductible. A number of the long term ACA plans would include an individual deductible, say $2,500, then a family deductible of $10,500 for example. Thus, if you have a family of 5 like us, one person in your family could have $10,500 in charges and, even if someone hadn’t hit their individual deductible, all future charges would be covered (or subject to co-insurance). This is because the family deductible of $10,500 would have been met. The short term insurance plans we’ve reviewed have only individual deductibles. In the scenario just described, each individual’s deductible would still apply, even if one individual had significantly exceeded their deductible. There are, however, out of pocket maximums for families when co-insurance is used just like in a traditional plan. If you have no co-insurance your out of pocket maximum would be your deductible amount times the number of people in your family. For example, if we chose a short term plan from United Healthcare with a $5,000 individual deductible, and 0% co-insurance, our out of pocket maximum would be $25,000 (plus any medical costs over the $2M maximum benefit per person). If you choose a plan with co-insurance you are able to select the out of pocket maximum for co-insurance you are comfortable with.

Length of Plans

The length for short term health insurance plans varies by state. In Ohio these plans can be offered for 360 days. This makes it feasible to utilize short term plans for coverage. Previously these plans expired every 30-90 days which made it inefficient to use (expiring, then renewing, etc.). In some states short term plans may not even be an option (California, Massachusetts, New York and New Jersey look like they’ve effectively banned them). Thus, it’s important to review the allowed length of the plan in your state.

What Else isn’t Covered?

We have to admit, there are two pages of items that aren’t covered as part of short term plans and I can understand how someone wouldn’t read it all. That said, it’s important you have full knowledge and understanding of this before choosing a plan.

Below are some of the key items we’ve seen highlighted as not covered in the short term plans we’ve reviewed (beyond what we’ve already mentioned). Please, please, please do your own research because exclusions vary by insurance provider and plan!


For hospital room and board and nursing services if admitted on a Friday or Saturday, unless for an emergency, or for medically necessary surgery that is scheduled for the next day.


For injuries sustained during or due to participating, instructing, demonstrating, guiding, or accompanying others in any of the following: sports (professional, or semi-professional, or intercollegiate except for intramural), parachute jumping, hang-gliding, racing or speed testing any motorized vehicle or conveyance, scuba/skin diving (when diving 60 or more feet in depth), skydiving, bungee jumping, or rodeo sports.

I called about this one. We are a sports family but we don’t do the more extreme sports. I was assured the point of this exclusion was that you aren’t covered for injuries from professional, semi-professional or collegiate sports. It did not mean if my kids get hurt playing baseball or basketball they are not covered. 

For injuries sustained during or due to participating, instructing, demonstrating, guiding, or accompanying others in any of the following if the covered person is paid to participate or to instruct: operating or riding on a motorcycle, racing or speed testing any non-motorized vehicle or conveyance, horseback riding, rock or mountain climbing, or skiing.

Sorry risk takers or wealthy equestrians!

For non-emergency treatment of tonsils, adenoids, hemorrhoids or hernia.

Non-emergency treatment isn't allowed so do I just make sure it’s an emergency? Wouldn’t trust it for these to be covered.

Resulting from intoxication, as defined by state law where the illness or injury occurred, or while under the influence of illegal narcotics or controlled substances, unless administered or prescribed by a doctor.

Don’t do anything stupid when under the influence. A good rule regardless of your health insurance options.

For treatment of mental disorders or substance abuse including court-ordered treatment for programs, except as provided in the policy/certificate.

This has been a highly publicized exclusion.

Due to pregnancy (except complications), except as provided in the policy/certificate.

I don’t know what “except as provided in the policy/certificate” means but I’d be wary if planning a pregnancy.

So Who are these Plans Right For?  

Clearly these plans make most sense for younger, healthy individuals and families. If you are a healthy 26-year-old freelancer, who doesn’t have a subsidy for an ACA plan, this option will look great. Likewise, if you have already been considering Liberty, which has its own set of exclusions, and are blessed with relatively good health you might also consider these plans.

We understand the concern that the availability of these plans may cause the younger and healthy to exit the ACA disrupting the market (making it far more expensive for individuals with serious pre-existing conditions to buy insurance – a bad thing!). However, since roughly 80% of individuals/families buying insurance on the ACA exchange receive subsidies there may be little incentive for many to leave the exchange keeping short term insurance a niche product (that could be helpful to many).

Hopefully this overview provides some insight into short term insurance plans. If you are considering Liberty it means you are open minded about your insurance options and weighing risk to cost. Thus, short term insurance could a viable option (especially when coupled with the right level of research!).