Under current tax law, you cannot use the funds in your Health Savings Account (HSA) to pay your direct primary care (DPC) membership fees, but you can use HSA funds to pay for incidental charges, such as those for lab tests and imaging. When deciding whether DPC is right for you, the tax treatment of your membership fees is just one factor that you might consider. Read on to find out why.
What Is the Purpose of an HSA?
Like many people, you may have opted for a high-deductible health insurance plan (HDHP) to reduce your monthly premium cost. If you’re enrolled in an HDHP, you are automatically eligible to participate in an HSA, an attractive benefit that allows you to set money aside for health care expenses on a pre-tax basis.
In essence, an HSA is a tax-advantaged personal savings account that is specifically designed to offset some of the expenses of an HDHP, such as deductibles and copayments. While the HSA provides funds that can be used to pay day-to-day health care expenses, the HDHP provides catastrophic coverage for major medical expenses, if needed.
Aren’t DPC Membership Fees Day-to-Day Health Care Expenses?
A DPC membership can complement an HDHP by making primary health care services more affordable. However, the Internal Revenue Service (IRS) currently views a DPC membership as a “health plan,” much like an HDHP or another traditional health plan. Therefore, because you must have an HDHP – a “primary” health plan – in order to have an HSA, the IRS considers a DPC membership to be a “secondary” health plan. So, under this view, a DPC monthly membership fee is a nonqualified HSA expense.
With that said, HSA reform could be on the horizon. For instance, a proposed bill that is currently under consideration would allow DPC members to contribute to an HSA and use those funds to pay their DPC membership fees.
DPC Is Still an Attractive Alternative to Fee-for-Service Health Care
Many people choose DPC because they are seeking personalized health care similar to that experienced by their parents or grandparents many years ago, when doctors knew and developed strong relationships with their patients. If that’s what you’re looking for, you will find it at Optimum Direct Care, a DPC practice in Orlando, FL.
As a member of Optimum Direct Care, you’ll get to know our board-certified family practice physician, Dr. Toni “Muzzi” Muzzonigro. You’ll have access to Dr. Muzzi whenever you choose and for whatever amount of time is appropriate. By going back to basics, we’re taking primary health care to the next level, providing our patients with value that extends beyond the tax savings on qualified health care expenses.
To learn more, contact Optimum Direct Care today.