The thing is, ACA Open Enrollment isn’t just “pick a health plan and hope it works out.” It’s a tax decision, a financial decision, and—if we’re being honest—a “try not to make the IRS mad” decision.
And because the IRS has a special talent for making simple things complicated, let me see if I can explain this in non-accountant speak… with two quick stories that might sound a little too familiar.
Story #1: The S-Corp Attorney and the IRS’s Favorite Magic Trick (a.k.a. SEHI Rules)
If you’ve ever tried to understand the Self-Employed Health Insurance deduction (SEHI) for S- corporations, you probably wondered which IRS committee came up with this on a Friday at 4:57 p.m.
Here’s the short version of the rule:
You deduct the health insurance…
Then you add it back to your W-2 income…
And then, because why not, you deduct it again on your 1040.
Clear as mud, right?
Anyway, we had an attorney—smart, organized, good at what they do—who did not know this rule. And who can blame them? It reads like someone spilled coffee on the tax code and decided to leave it.
They had deducted the premiums at the S-corp level, but their W-2 didn’t include the add-back. Which meant they technically weren’t eligible for the deduction on their personal return.
So guess who spent January amending W-2s?
(If you guessed “us,” you win nothing but a deeper appreciation for payroll compliance.)
Once everything was corrected, they were able to take the deduction properly—and they were thrilled. Or as thrilled as an attorney can be about amending payroll.
Story #2: The HSA Power-User Who Turned Medical Receipts Into an $80,000 Tax-Free Vacation
Now, while we’re on the subject of things that seem too good to be true but aren’t… let’s talk HSAs.
If you have a High-Deductible Health Plan, you can contribute to an HSA. But here’s the part most people don’t realize:
You don’t have to spend the HSA money on medical expenses right now.
You can pay out of pocket, save your receipts, let the HSA grow tax-free, and reimburse yourself years later.
We had a client who did exactly this. For more than a decade, they maxed out their HSA, invested every dollar inside it, and kept meticulous records—spreadsheets, scanned receipts, the whole works.
Their HSA grew substantially because it was invested the entire time.
Then they had a cancer scare. A tumor was found and initially misdiagnosed as malignant. After further testing, it turned out to be benign—an enormous relief.
What did they do next?
They went back through years of saved medical expenses, totaled everything up, and reimbursed themselves for just over $80,000.
Tax. Free.
And what do you do when you suddenly receive $80,000 tax-free?
They took their family on a very nice vacation—also tax-free, courtesy of past medical bills.
Eye-opening? Yes.
Complicated? Not really.
Worth doing? Absolutely—if you’re organized.
So What Should You Be Doing During Open Enrollment?
For self-employed, medical-adjacent professionals, this is the moment to make sure:
- Your 2025 plan is HSA-compatible if that strategy makes sense for you
- Your S-corp is handling SEHI correctly (please don’t wait until December)
- Your estimated income is accurate enough to avoid subsidy repayment
- You know how your health plan affects your deductions, payroll, and tax strategy
- You’re selecting insurance with both coverage and tax consequences in mind
ACA choices aren’t just about healthcare.
They’re about keeping more money in your pocket.
If you want help choosing the right path…
Before you develop a stress rash trying to decode ACA rules, SEHI addbacks, and HSA strategies, just call me at 520-790-2738.
I’ll help you sort it out, save some tax, and maybe even avoid the joy of amending December W-2s.