Direct Primary Care and HSAs: What Changed in 2026

A 2026 rule change lets employees keep contributing to an HSA while paying for a direct primary care membership, as long as the fee stays under set limits. Here is what changed and what it means for your business.

Quick Answer (as of 2026): Direct primary care no longer disqualifies someone from contributing to an HSA. Under a rule that took effect January 1, 2026, a direct primary care membership is allowed alongside HSA eligibility as long as the fee stays at or below $150 a month for one person or $300 a month for a family. Before this change, any DPC membership blocked HSA contributions entirely.

Direct primary care is a membership model where a patient pays a flat monthly fee directly to a doctor's office instead of billing insurance for each visit. Until 2026, signing up for direct primary care meant giving up the ability to contribute to a health savings account, even if the person also carried a qualifying high-deductible health plan. That rule changed this year, and it opens a new option for small businesses that want to offer real primary care access without the cost of a full group health plan.

This guide explains what direct primary care is, why the old HSA rule blocked it, what changed under the new law, and how an employer might structure it alongside a <a href="/blog/section-125-cafeteria-plan-2026-guide">Section 125 plan</a>.

What Is Direct Primary Care?

Direct primary care is a payment model where a patient or employer pays a doctor's office a fixed monthly fee, typically between $50 and $150 a month, for unlimited or near-unlimited primary care visits. The doctor does not bill insurance for these visits. The membership fee covers routine checkups, sick visits, basic labs, and ongoing management of conditions like diabetes or high blood pressure.

Direct primary care is not health insurance. It does not cover hospital stays, surgery, specialist care, or emergency room visits. Most direct primary care patients still carry a separate health insurance plan or a high-deductible health plan for those larger costs. According to DPC Frontier's 2026 practice mapper, more than 3,150 direct primary care practices now operate across all 50 states, up from a much smaller base a decade earlier.

Why Couldn't You Use an HSA With Direct Primary Care Before 2026?

The IRS previously treated a direct primary care membership as a form of health coverage on its own, separate from an employee's high-deductible health plan. Under IRS rules, a health savings account holder cannot have other health coverage beyond a qualifying high-deductible health plan and a short list of exceptions like dental and vision. Because a DPC membership covers primary care services outside that exception list, it counted as disqualifying coverage. Anyone enrolled in direct primary care lost the ability to contribute to an HSA for as long as the membership was active, even if their only other coverage was a qualifying high-deductible plan.

This created an odd result. An employee could pay for expensive specialist visits and hospital stays with pre-tax HSA dollars, but could not use those same pre-tax dollars, or keep contributing to the account at all, once they signed up for a $75-a-month primary care membership.

What Changed Under the New 2026 Rule?

The One Big Beautiful Bill Act, signed into law July 4, 2025, changed how the IRS treats direct primary care under Internal Revenue Code Section 223, the section that governs HSA eligibility. Starting January 1, 2026, a direct primary care membership no longer counts as disqualifying health coverage, as long as the arrangement meets two conditions. First, the fee must be a fixed periodic payment with no per-visit billing. Second, the total monthly fee cannot exceed $150 for an individual or $300 for a family, per Treasury and IRS guidance in Notice 2026-05.

An employee can now carry a qualifying high-deductible health plan, pay for a direct primary care membership within those dollar limits, and keep contributing to an HSA at the full annual limit. HSA funds can also be used tax-free to pay the DPC membership fee itself, the same way they already pay for other qualified medical expenses.

Summit Health Benefits helps small employers sort out where direct primary care fits. If you are weighing a DPC membership benefit alongside a high-deductible plan and a Section 125 arrangement, we will walk through the math with you before you commit to anything. Talk to a Summit specialist.

How Much Can a Direct Primary Care Membership Cost and Still Qualify?

The cap is $150 a month for a membership covering one person and $300 a month for a membership that covers more than one person, such as a family plan. According to a 2026 pricing survey from SigmaMD, most direct primary care practices charge between $75 and $150 a month per member, with a national average around $85 a month, so the large majority of existing DPC memberships already fall comfortably under the new cap. A practice charging above the cap does not automatically disqualify the patient from HSA eligibility for other reasons, but the portion of the fee that exceeds the cap is not treated the same way under the new HSA rule.

Can a Small Business Offer Direct Primary Care as an Employee Benefit?

Yes. A small business can pay for or subsidize a direct primary care membership for employees, either as a standalone benefit or layered alongside a high-deductible health plan and HSA. Employers who want employees to have fast, direct access to a primary care doctor, without the wait times that come with a typical insurance network, have used this model to fill a real gap, especially in areas where finding a primary care doctor taking new patients is difficult. Since DPC membership fees are relatively low and predictable, a small employer can budget for this benefit with more certainty than it can budget for rising group health premiums, a trend documented in <a href="/blog/health-insurance-premium-increase-2026-by-state">Summit's state-by-state premium data</a>.

How Does Direct Primary Care Work With a Section 125 Plan?

A direct primary care membership can be offered as a benefit inside a Section 125 cafeteria plan, letting employees pay their portion of the fee with pre-tax payroll dollars. This is separate from the new HSA eligibility rule, which governs whether the membership blocks HSA contributions, not how the fee is paid. When an employer runs the DPC membership through a Section 125 plan, both the employer and employee reduce their FICA tax bill on every pre-tax dollar, the same <a href="/blog/maximizing-fica-tax-savings">FICA savings mechanics that apply to any Section 125 election</a>. For a small business already running a Section 125 plan for other pre-tax benefits, adding a DPC membership as a line item is usually a simple plan amendment rather than a new program.

What Should Employers Do Before Adding Direct Primary Care in 2026?

Confirm the DPC arrangement's monthly fee falls at or under the $150 individual or $300 family cap before assuming it will not interfere with employee HSA contributions. Confirm which employees also carry a qualifying high-deductible health plan, since HSA eligibility still depends on that separately. And decide whether the membership will run through payroll pre-tax under a Section 125 plan or be paid directly by the employer outside the cafeteria plan, since that decision affects how it shows up on an employee's paycheck and W-2. Businesses exploring lower-cost paths to real coverage should also review <a href="/blog/small-business-health-insurance-alternatives-2026">Summit's guide to small business health insurance alternatives</a> and how direct primary care compares to an <a href="/blog/how-does-ichra-work">ICHRA arrangement</a>.

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Frequently Asked Questions

Can I contribute to an HSA if I have a direct primary care membership?
Yes, as of January 1, 2026. A direct primary care membership no longer blocks HSA contributions as long as the monthly fee is $150 or less for an individual or $300 or less for a family, and the person also carries a qualifying high-deductible health plan. Before 2026, any DPC membership disqualified HSA eligibility regardless of cost.
What law changed the HSA rule for direct primary care?
The One Big Beautiful Bill Act, signed into law July 4, 2025, amended Internal Revenue Code Section 223 to stop treating direct primary care as disqualifying health coverage. The IRS and Treasury Department issued Notice 2026-05 with guidance on how the new rule applies, effective for months beginning after December 31, 2025.
Can I pay my direct primary care membership fee with HSA funds?
Yes. Starting in 2026, a direct primary care membership fee that meets the monthly dollar caps is treated as a qualified medical expense, so HSA funds can be used tax-free to pay it, the same way HSA funds already pay for doctor visits, prescriptions, and other qualified care.
What happens if my direct primary care membership costs more than $150 a month?
A membership priced above $150 a month for an individual or $300 a month for a family does not fit inside the new HSA safe harbor, so it can still be treated as disqualifying coverage for HSA eligibility purposes. Most direct primary care practices charge between $75 and $150 a month per person, according to 2026 industry pricing data, so this affects a minority of higher-cost memberships.
Is direct primary care the same as health insurance?
No. A direct primary care membership only covers primary care services like checkups, sick visits, and basic labs. It does not cover hospital stays, surgery, specialist care, or emergency room visits. Most direct primary care patients keep a separate high-deductible health plan or other insurance to cover those larger costs.
Can a small business offer direct primary care to employees?
Yes. A small business can pay for or subsidize a direct primary care membership as a standalone benefit or run it through a Section 125 cafeteria plan so employees pay their share with pre-tax payroll dollars. Either approach can sit alongside an existing group health plan or a high-deductible plan paired with an HSA.
Does adding direct primary care affect a Section 125 plan's FICA savings?
Running a direct primary care membership through a Section 125 plan works the same way as any other pre-tax election. The employer recaptures a share of FICA tax on the pre-tax dollars employees elect for the membership, on top of any FICA savings already generated by other benefits in the plan.

Summit Health Benefits works with small employers to structure pre-tax benefits, including Section 125 plans, around real coverage options like direct primary care. If your team wants zero-cost virtual care and prescription access alongside a primary care membership, WoW Health is one option worth reviewing.

See Employer Benefit Options

Sources: Internal Revenue Service, Notice 2026-05 and Internal Revenue Code Section 223; One Big Beautiful Bill Act (H.R. 1), signed July 4, 2025; DPC Frontier 2026 practice mapper; SigmaMD 2026 direct primary care pricing survey.