Direct Primary Care (DPC) continues to be an innovative approach to help reinvigorate primary care for doctors and patients. A direct primary care plan is a contract between an individual and one or more primary care physicians to provide medical care for a fixed fee without billing a third party. Inevitably, an alternate course of action brings about new rules and regulations.
On June 10, 2020, the Internal Revenue Service (IRS) issued proposed regulations on how it may treat amounts paid for DPC arrangements, healthcare sharing ministries, and certain other medical care arrangements under Internal Revenue Code Section 213. The proposed regulations provide that:
- Payments made for a direct primary care arrangement could be considered payments for medical care expenses or medical insurance (depending on certain factors) and would therefore be reimbursable by a health reimbursement arrangement (HRA);
- Payments made for a membership in a healthcare sharing ministry — an organization whose members have common ethical or religious beliefs and share medical expenses among themselves based on those beliefs — would be treated as payments for medical insurance that could be reimbursed by an HRA, but membership would preclude an individual from contributing to a health savings account (HSA); and
- Payments made for membership in a health maintenance organization (HMO) or for coverage under certain government-sponsored healthcare programs, such as Medicare, would be considered payments for medical insurance, but payments to an HMO for coinsurance, copayments or deductibles would be considered payments for medical care.
It’s important to note that if an employer pays the fees for a DPC arrangement, the payment arrangement may be considered a group health plan that could disqualify an individual from making HSA contributions. Additionally, the payment arrangement would be subject to the Employee Retirement Income Security Act (ERISA), which is determined by the U.S. Department of Labor (DOL).
For services that are not covered under the DPC membership fee, such as more extensive management of a chronic disease, the patient’s insurance (if they have it) must be billed to pay for the service or, in some cases, the physician or practice will charge the patient extra fees to cover those services.
For more information regarding DPC rules, click here.
Should you have any questions surrounding this information, contact the Creative Benefits team at 866-306-0200 or solutions@creativebenefitsinc.com.