Primary Care Enhancement Act of 2025
The Primary Care Enhancement Act of 2025 would treat direct primary care (DPC) service arrangements as medical care for tax purposes, define DPC arrangements more clearly, and set specific limits on the deductibility of DPC fees. It also clarifies that DPC arrangements are not to be treated as health plans or insurance for Health Savings Account (HSA) purposes, and it adds a new reporting requirement related to DPC fees on employee wages. The bill is designed to encourage direct primary care by providing tax treatment that supports DPC payments while maintaining protections and limitations for HSAs and employer reporting. The effective date is for months beginning after December 31, 2025 (tax years ending after that date). Sponsors include Senators Cassidy, Shaheen, Scott (SC), Kelly, and Lankford. The measure was introduced in the Senate in May 2025.
Key Points
- 1Treatment of DPC arrangements as medical care under §213(d)(1): DPC fees can be treated as medical care, with only eligible fee amounts (defined below) counted for purposes of medical expense deductions. This expands how payments to DPC practices can be treated for tax purposes.
- 2Definition of direct primary care service arrangement and eligible fee amount: A DPC arrangement is a primary care arrangement where a fixed periodic fee covers primary care services provided by primary care practitioners (as defined by the Social Security Act). Excluded are services requiring general anesthesia and certain laboratory services not typically provided in ambulatory primary care. The eligible fee amount is the monthly fixed fee paid for DPC services, capped at $150 per individual per month (or $300 if the arrangement covers more than one individual). The cap is indexed for inflation beginning in years after 2026.
- 3Health Savings Accounts (HSAs) treatment: DPC arrangements shall not be treated as health plans or as insurance for purposes of HSA eligibility. This means amounts paid for DPC services can be treated separately from traditional health plans for HSA purposes, preserving eligibility to contribute to HSAs.
- 4W-2 reporting requirement: For DPC arrangements provided in connection with employment, employers must report the aggregate fees paid for the DPC arrangement for each employee on IRS Form W-2 (as added to 6051(a)).
- 5Effective date: The amendments apply to months beginning after December 31, 2025, and to taxable years ending after that date.