Tax-Advantaged Funds & Direct Primary Care

You can now use your HSA, FSA, or leftover ICHRA funds to pay for your DPC membership.

Direct Primary Care: Tax Eligibility Under Recent U.S. Law

Direct Primary Care (DPC) provides primary care services through monthly fees, independent of traditional insurance. The One Big Beautiful Bill Act (OBBBA), enacted in 2025, amends the Internal Revenue Code to make DPC fees eligible for tax-advantaged payment options without disqualifying Health Savings Account (HSA) contributions. Effective for arrangements beginning after December 31, 2025.

Key Legislative Changes

OBBBA builds on the CARES Act (2020), which designated DPC fees as qualified medical expenses under IRC Section 213(d). It clarifies DPC as "excepted coverage" not treated as a health plan.

  • HSA Compatibility: DPC fees are qualified medical expenses reimbursable from HSAs (tax-advantaged accounts for those with high-deductible health plans - HDHPs, insurance with higher deductibles and lower premiums). Arrangements do not disqualify HSA eligibility if fees ≤ $150/month (individual) or $300/month (family), inflation-adjusted. Must involve only primary care by practitioners; excludes general anesthesia, most prescription drugs, and certain labs.
  • FSA Integration: Health FSAs (employer-sponsored accounts for pre-tax medical expense reimbursements) can cover DPC fees as qualified expenses. OBBBA allows HSA contributions even if a spouse has an FSA.
  • Pre-Tax Employer Funds: Under IRC Section 125 cafeteria plans (pre-tax salary reduction programs), employees may deduct DPC fees pre-tax. Employers can convert FSA or HRA (health reimbursement arrangement - employer-funded medical accounts) balances to HSA contributions upon HDHP enrollment.
Direct Primary Care Doctor

Implications for You

Direct Primary Care Doctor

You can use HSA funds for DPC without losing contribution eligibility, provided the arrangement meets limits. FSAs offer reimbursement options if not HSA-eligible. Pre-tax deductions reduce taxable income for DPC payments. Consult IRS Publication 969 (irs.gov/publications/p969) and a tax advisor for your situation.

Implications for Employers

Update plans to integrate DPC with HDHPs for HSA compatibility. Offer pre-tax options via cafeteria plans or convert balances to HSAs. Review compliance with fee limits and state laws.

References

Below are some helpful links to the legislation and analysis: