diff --git a/packages/minimongo/minimongo.js b/packages/minimongo/minimongo.js
index c1f2a21771..59cd1be837 100644
--- a/packages/minimongo/minimongo.js
+++ b/packages/minimongo/minimongo.js
@@ -549,19 +549,12 @@ LocalCollection.prototype.remove = function (selector, callback) {
 // we rollback the whole operation, or what?
 LocalCollection.prototype.update = function (selector, mod, options, callback) {
   var self = this;
-  var newMod = _.clone(mod);
   if (! callback && options instanceof Function) {
     callback = options;
     options = null;
   }
   if (!options) options = {};
 
-  var setOnInsert;
-  if (newMod.$setOnInsert) {
-    setOnInsert = _.clone(newMod.$setOnInsert);
-    delete newMod.$setOnInsert;
-  }
-
   var selector_f = LocalCollection._compileSelector(selector);
 
   // Save the original results of any query that we might need to
@@ -583,7 +576,7 @@ LocalCollection.prototype.update = function (selector, mod, options, callback) {
     if (selector_f(doc)) {
       // XXX Should we save the original even if mod ends up being a no-op?
       self._saveOriginal(id, doc);
-      self._modifyAndNotify(doc, newMod, recomputeQids);
+      self._modifyAndNotify(doc, mod, recomputeQids);
       ++updateCount;
       if (!options.multi)
         break;
@@ -598,18 +591,10 @@ LocalCollection.prototype.update = function (selector, mod, options, callback) {
   });
   self._observeQueue.drain();
 
-  if (setOnInsert)
-    newMod.$setOnInsert = setOnInsert;
-
   var insertedId;
   if (updateCount === 0 && options.upsert) {
     var newDoc = _.clone(selector);
-    if (newMod.$setOnInsert) {
-      newMod.$set = _.extend(newMod.$set || {},
-                          _.clone(newMod.$setOnInsert));
-      delete newMod.$setOnInsert;
-    }
-    LocalCollection._modify(newDoc, newMod);
+    LocalCollection._modify(newDoc, mod, true);
     insertedId = self.insert(newDoc);
     updateCount = 1;
   }
diff --git a/packages/minimongo/modify.js b/packages/minimongo/modify.js
index 8413899eb1..0e404914dd 100644
--- a/packages/minimongo/modify.js
+++ b/packages/minimongo/modify.js
@@ -147,6 +147,9 @@ LocalCollection._modifiers = {
 
     target[field] = EJSON.clone(arg);
   },
+  $setOnInsert: function (target, field, arg) {
+    // converted to `$set` in `_modify`
+  },
   $unset: function (target, field, arg) {
     if (target !== undefined) {
       if (target instanceof Array) {