Primary Care Enhancement Act of 2025
The Primary Care Enhancement Act of 2025 would change how direct primary care service arrangements (DPCSAs) are treated for health savings accounts (HSAs) and HDHPs. Specifically, it defines a direct primary care service arrangement and clarifies that such arrangements are not health plans for purposes of HSA eligibility. It also allows the fees paid for DPCSAs to be treated as medical expenses eligible for deduction/withdrawal under HSAs, imposes a monthly cap on DPCSA fees ($150 per individual, or $300 if the arrangement covers more than one person), and requires employers to report these DPCSA fees on employees’ W-2 forms. The bill also directs the government to issue regulations clarifying which services count as primary care under this framework and provides for inflation adjustments and an effective date of January 1, 2026 for most provisions. In short, this bill aims to promote direct primary care by permitting HSA-eligibility to continue for individuals using DPCSAs, allowing DPCSA fees to be treated as medical expenses, and mandating employer reporting to improve transparency and administration. It also sets limits to keep DPCSA arrangements from being treated like comprehensive health plans.
Key Points
- 1What a direct primary care service arrangement is: An arrangement where an individual receives primary care services from primary care practitioners for a fixed periodic fee, with services defined to include typical primary care but exclude certain procedures (e.g., those requiring general anesthesia, most prescription drugs, and non-typical lab services). The arrangement must be limited to primary care services as defined, and the definition is paired with a monthly fee cap.
- 2Not a health plan for HSA purposes: The bill adds a new DPCSA-specific subparagraph to the HSA eligibility rules, stating that a DPCSA shall not be treated as a health plan for purposes of the relevant HSA eligibility criteria.
- 3HSA medical-expense treatment: Fees paid for a DPCSA can be treated as medical expenses for purposes of HSAs, expanding how funds can be used tax-advantaged to cover DPCSA costs.
- 4Monthly fee caps: For any individual, aggregate DPCSA fees in a given month may not exceed $150; if the DPCSA covers more than one person, the cap is double ($300) per month.
- 5Inflation adjustment and regulatory guidance: The bill calls for inflation-adjusted treatment of the related dollar amounts in future years and directs the Secretaries to issue regulations/guidance on applying the primary-care services clause (including how to define and apply the excluded services).
- 6Reporting by employers: If a DPCSA is provided in connection with employment, the total DPCSA fees paid for the employee must be reported on the employee’s W-2 form, adding an information-reporting requirement for employers.