DPC + HSA: What Plan Sponsors Need to Know

May 20, 2026 | Legislative + Regulatory Updates

A significant regulatory shift is reshaping how employers can design consumer-directed health strategies. Starting January 1 of this year, employees were able to enroll in Direct Primary Care (DPC) arrangements alongside a High Deductible Health Plan (HDHP) and still maintain Health Savings Account (HSA) eligibility—provided specific IRS criteria are met.

For benefits professionals, this change opens new opportunities to enhance primary care access while preserving tax-advantaged savings strategies. However, compliance hinges on careful plan design.

 

What Changed and Why It Matters

Historically, DPC arrangements disqualified individuals from contributing to HSAs because they were treated as “other health coverage” that provided first-dollar benefits before the HDHP deductible was satisfied.

Federal legislation passed in July 2025, followed by IRS guidance, updated this interpretation. As of January 1, 2026, employees can now:

  • Enroll in a qualified HDHP
  • Participate in a qualifying Direct Primary Care Service Arrangement (DPCSA)
  • Retain full HSA eligibility
  • Use HSA funds to pay for DPC membership fees (within prescribed limits)

This alignment removes a long-standing barrier and allows employers to integrate DPC into HDHP-based benefit strategies.

 

Defining an HSA-Compatible DPC Arrangement

The IRS created a narrowly tailored definition of what constitutes a compliant DPC model. Employers evaluating vendors or considering benefit integration should ensure the arrangement meets all required criteria.

Required Features
Disqualifying Features
A qualifying DPC arrangement must:

  • Cover primary care services only
  • Be funded through a fixed periodic fee (monthly, quarterly, or annual)
  • Be delivered by qualified primary care providers, including:
    • Family medicine physicians
    • Internal medicine physicians
    • Pediatricians
    • Geriatricians
    • Nurse practitioners (NPs)
    • Physician assistants (PAs)
  • Not bill insurance for services included within the membership fee

These guardrails ensure DPC functions as a supplemental access model rather than duplicative or comprehensive medical coverage.

 If a DPC arrangement includes any of the following, it will invalidate HSA eligibility:

  • Procedures requiring general anesthesia
  • Prescription drugs (except for vaccines)
  • Advanced lab services not typical to primary care settings
  • Per-service charges layered on top of the membership fee

For employers, this means vendor contracts must be tightly scoped. Even minor deviations can create compliance risks affecting employee HSA contributions.

 

 

 

 

Fee Caps: A Critical Compliance Threshold

To maintain HSA compatibility, DPC fees are subject to strict limits:

  • $150 per month (individual coverage)
  • $300 per month (family coverage)

Key considerations:

  • The cap applies in aggregate across all DPC arrangements
  • Limits are expected to be indexed for inflation after 2026
  • Exceeding these thresholds disqualifies the arrangement for HSA purposes

Employers offering DPC as a subsidized or voluntary benefit should monitor pricing structures carefully, especially as vendor offerings evolve.

 

HDHP Requirements Still Apply

It is important to emphasize that this change does not alter the fundamental rules governing HSAs. Employees must still:

  • Be enrolled in a qualified HDHP
  • Avoid disqualifying coverage outside permitted exceptions
  • Meet annual minimum deductibles and out-of-pocket limits under Internal Revenue Code §223

DPC is now treated as a permissible adjunct, not a replacement for compliant plan design.

 

Compatibility Scenarios

HSA-Compatible Structure
Non-Compliant Structure
  • HDHP with a $3,200 deductible
  • DPC membership priced at $85/month
  • Services limited to:
    • Office visits
    • Preventive care
    • Chronic disease management
    • Vaccines
  • Employee contributes to and uses HSA

RESULT: Fully compliant; HSA eligibility preserved.
  • HDHP enrollment remains in place
  • DPC arrangement includes:
    • Bundled specialist consultations
    • MRI or advanced imaging services
    • Surgical coordination beyond primary care
  • OR monthly fee of $225 (individual coverage)

RESULT: Disqualifies HSA eligibility due to expanded scope or fee cap violation.

 

Strategic Implications for Employers

This policy shift creates a viable pathway for employers to combine:

  • Consumer-directed health plans (HDHPs)
  • Enhanced primary care access through DPC
  • Tax-advantaged savings via HSAs

Potential benefits include:

  • Improved employee engagement with primary care
  • Reduced downstream costs through early intervention and chronic care management
  • Enhanced recruitment and retention through differentiated benefits

However, execution risk is real. Employers must:

  • Conduct rigorous vendor due diligence
  • Ensure contractual alignment with IRS definitions
  • Coordinate with legal, compliance, and benefits advisors
  • Educate employees on how DPC interacts with their HDHP and HSA
  • Develop a methodology for reimbursing the cost of DPC services and/or reducing payroll contributions
  • Account for potential issues from limited or variable availability of DPCs by geography for a widespread workforce

 

Bottom Line

As of 2026, Direct Primary Care can now be successfully integrated into HSA-qualified benefit offerings—but only under tightly defined conditions.

For benefit leaders, this represents a meaningful opportunity to modernize plan design. The combination of HDHP + DPC + HSA is poised to gain traction, but success depends on disciplined implementation and ongoing compliance oversight.

In this evolving landscape, the details aren’t just important, they’re determinative.

Interested in introducing a DPC coverage component into your medical plan options? Let us know and we would be happy to help with the related design, pricing, administration, compliance, and communications to optimize the new offering.