Attention! If you’re self-employed, you can get a big break on your taxable income if you know this little secret.

Are you self employed and buying your own health insurance? Did you know that you can deduct your monthly premiums from your taxable income as a business expense? This is an important benefit! And if you have few other large deductible expenses, such as building rent or employees , this one can make a difference.

Here’s the secret. When choosing your plan, Don’t pick one with a zero or minimal monthly premium. Choose the highest one that you can afford. This is because you can deduct 100% of your premiums, as long as it’s not more than your income .

it’s actually better not to get the zero premium plan on marketplace because those plans usually have higher out of pocket medical expenses and medical expenses are not tax deductible unless they exceed 7.5% of your income AND they can only be deducted if you itemize, which few people do since the standard deduction was increased .

For example: A zero monthly premium plan might not pay for any medical expenses until you meet your deductible which could be thousands of dollars. But most people won’t be able to deduct those bills unless they are very high. On a more expensive plan you’d normally have a lower deductible and lower out of pocket maximum which protects your bank account from being drained by an accident or illness. If your max out of pocket was $10,000 , you’d have to pay that much before your insurance would pay 100%.

However, If your premium was $200 a month, you’d pay $2400 a year, but you’d be able to count it as a business expense. And you’d pay less for any health care expenses you might have. So you have to decide which is best for you: risking the expense of a non deductible hospital bill or paying a higher deductible monthly premium.

A zero dollar monthly premium is nice if you expect to have zero medical expenses, but it’s hard to know what might happen. The monthly premiums can help reduce your taxable income while providing something you need anyway.

Tip: pay attention to the out of pocket maximum! Click on it to see the breakdown. If it says $18,000, and you have two people on the policy, that would be $9,000 per person. So one person could meet their maximum before the other. If one person spends up to maximum of $18,000, both people will be covered at 100%. Try to get a lower out of pocket if you expect to need to go to the doctor for tests or surgery.

Remember: Open enrollment ends December 15th for healthcare.gov and other insurance plans !

Don’t miss your chance to get coverage and a tax deduction . When looking at the plans on Marketplace, take your time, click on each plan and inspect the details by going to plan documents on the Medical Expenses tab for each plan. It is worth not rushing and making a bad choice. You can also call their 800 number if you need help.

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