Congress Asks IRS to Clarify Policy on Use of HSAs with DPC

Members of Congress have asked the Commissioner of Internal Revenue for clarification on how the Internal Revenue Service (IRS) treats Direct Primary Care Medical Homes with regard to Health Savings Accounts (HSAs). 

Senator Maria Cantwell (D-WA), who authored ACA Sec. 1301 (a) (3), allowing DPC practices to participate in health exchanges with Qualified Health Plans, took the lead on the letter and was joined by Senate Budget Committee Chairman Patty Murray (D-WA) and Rep. Jim McDermott, MD (D-WA), ranking member of the Ways and Means Subcommittee on Health.  The three WA state lawmakers point out that The ACA rules on exchanges and Qualified Health Plans (CMS-9989-F) promulgated by HHS, clearly state that DPC is not health insurance, and that the law has its roots in a provision in WA state law (48.150RCW) defining DPC as a health benefit outside insurance.  

In subsequent meetings with officials at the IRS and the Department of the Treasury, as late as March of 2015, the administration continues to interpret DPC membership agreements as "health plans" under Sec. 223 (c) of the Internal Revenue Code (IRC)

This section says that HSA holders must be covered under a high deductible health plan while not covered under any health plan—which is not a high deductible health plan, and which provides coverage for any benefit which is covered under the high deductible health plan.

DPCC Continues to have dialogue with officials at Treasury to ask for a change in IRS guidance so that DPC fees are qualified medical expenses under Sec. 213 (d) of the IRC and can be offered as a benefit complimenting Health Savings Accounts (HSAs) paired with high deducible health plans. If the administration is unwilling to make such a change, legislation will be needed for practices to have clarity on the meaning of these regulations.