The Primary Care Enhancement Act is a bipartisan bill which clarifies outdated provisions of the U.S. Internal Revenue Code (tax code) that make Health Savings Accounts (HSAs) tied to High Deductible Health Plans (HDHP) incompatible with direct primary care (DPC) arrangements.  The bill creates a specific exception in the tax code which clarifies that a DPC arrangement will not be treated as a health plan or insurance, and individuals with HSAs may also have a DPC arrangement, and that pre-tax HSA funds may be used to pay for DPC fees.

The Problem:

• Current HSA Eligibility Rules: Individuals eligible for HSAs must be covered by a high deductible health plan and no other health plan that (1) is not a high deductible health plan or (2) provides coverage for any benefit which is covered under the high deductible health plan. 

• Treatment of DPC Arrangements: Under present law the IRS views DPC arrangements as “other” coverage or health insurance.  As such, a person with a DPC arrangement is not eligible to contribute to an HSA.  This is the most significant Federal policy hurdle preventing many employers from using DPC and it bars individuals with HSAs from receiving high quality primary care services from the DPC doctor of their choice.

The Solution: Pass the Primary Care Enhancement Act

Bipartisan Bills – S. 628  Introduced by Sen. Bill Cassidy, MD (R-LA), and H.R. 3029 by Rep. Earl Blumenauer (D-OR):

• Create a specific exception for DPC arrangements  in the tax code that permits HSA holders to participate in a DPC Arrangement:

  • Clarifies that DPC is not a health plan or insurance, and;

  • DPC is a qualified health expense 

  • Allows individuals with HSAs to pay for DPC services with HSAs

  • Covers all agreements - both virtual services and in-person visits

  • Applies only to affordable DPC agreements costing under $150 per month individual, $300 for family plans. (indexed for inflation) 

  • Services covered in DPC agreements shall be limited to primary care* and shall not include:

    • procedures that require the use of general anesthesia,

    • laboratory services not typically administered in an ambulatory primary care setting.

  • These limitations are only applied to HSA holders.