JUNE 8, 2014 – Section 223(c) of the Internal Revenue Code (IRC) prohibits individuals with high deductible health plans (HDHPs) paired with HSAs from having a second health plan. Although the ACA regulations correctly define DPC as a primary care service and not a health insurance plan, current IRS policy treats DPC monthly fee arrangements just like another health plan. Under the current IRS interpretation, individuals with HSAs are effectively barred from having a relationship with a DPC plan and employers who cover their employees in HDHPs paired with HSAs may not offer DPC as a health benefit.
Furthermore, since payments to physicians practicing under the DPC model are not considered a “qualified medical expense,” under Sec. 213(d) of the IRC, employees cannot use their HSA funds to pay their DPC physicians. Clearly, when the regulations for HSAs were developed, DPC was not contemplated. IRS definitions have not kept up and should be modernized so that the tax code keeps up with other relevant state and federal laws. Legislation introduced in Congress would correct that inequity and allow HSAs, HRAs and FSAs to work in conjunction with DPC. Combined with a high deductible insurance plan DPC creates a powerful and seamless healthcare benefit with comprehensive primary care coverage—a benefit far better than is currently available even with insurance that offers first dollar coverage.