For years, direct primary care (DPC) sat in an awkward spot for benefits planning. Employees loved the model — a flat monthly fee for unlimited access to a primary care doctor, longer visits, same-day appointments, no copays. But under IRS rules, enrolling in a DPC arrangement counted as “other health coverage,” which meant it could disqualify someone from contributing to an HSA. Employers who liked the idea of pairing DPC with a high-deductible health plan (HDHP) had to thread a compliance needle to make it work.
That obstacle is gone. Starting January 1, 2026, the One Big Beautiful Bill Act (OBBBA) changed the rules, and the IRS spelled out how in Notice 2026-5, issued December 9, 2025. DPC and HSAs can now work together by design — which opens up a genuinely useful cost-management option for small employers watching premiums climb.
What actually changed
Two things, specifically:
DPC no longer disqualifies HSA eligibility. An employee enrolled in a qualifying DPC arrangement can still contribute to (or receive employer contributions to) an HSA, as long as the arrangement meets the IRS’s definition: a fixed, periodic fee covering primary care services only, from primary care practitioners, with no separate billing for services and nothing beyond primary care bundled in.
DPC fees are now an HSA-qualified expense. Employees can pay their DPC membership fees directly out of HSA funds, tax-free — something that was murky at best before.
There’s a dollar cap on the arrangement: the fee has to stay at or below $150/month for individual coverage or $300/month for family coverage, adjusted annually for inflation (that’s up to $1,800/year for individual coverage in 2026 if billed less frequently than monthly). Go above that and the arrangement no longer qualifies.
One compliance wrinkle worth flagging to anyone building this out: the HDHP itself still can’t pay for or provide DPC access before the plan’s minimum deductible is met, aside from the usual preventive-care and telehealth carve-outs. In practice, that means DPC needs to sit alongside the HDHP as a separate benefit — not baked into the health plan design — to stay clean.
Why this matters for a 20–200 employee company
Group health premiums keep outpacing inflation, and for small employers, there’s limited room to negotiate on the plan side. DPC plus an HSA-qualified HDHP gives you a different lever:
- Predictable primary care costs. A flat per-employee monthly fee is easy to budget, versus the variable cost of copays, coinsurance, and claims.
- Fewer downstream claims. Employees with real access to a primary care doctor — same-day visits, actual time with the physician, phone or text access — tend to route fewer routine issues to urgent care and the ER, which is where costs spike on a high-deductible plan.
- A benefit employees notice. In a tight labor market, “you can actually get an appointment with your doctor” is a differentiator that a lot of larger competitors’ plans don’t offer.
- Tax-advantaged funding. Because DPC fees now qualify as an HSA expense, employers can fund part or all of the membership through HSA contributions instead of a separate line item, keeping it inside the pre-tax benefits structure employees already understand.
How it typically gets structured
The common approach emerging since the OBBBA change: pair a qualifying HDHP (HSA-eligible) with an employer-facilitated DPC membership, funded by an employer HSA contribution, a wellness stipend, or employee payroll deduction — kept separate from the HDHP’s claims administration to avoid the pre-deductible payment issue above. Some employers are also pairing DPC with lower-cost coverage options like ACA catastrophic or bronze plans, which are now automatically treated as HSA-compatible as of 2026, though the HDHP-plus-DPC pairing is the more common starting point for employer-sponsored plans.
The caveat
This is a genuinely new option, not a settled playbook — Notice 2026-5 is only a few months old, and plan documents, payroll systems, and HSA administrators are all still catching up. Before rolling this into a plan design or open enrollment materials, it’s worth a conversation with your benefits broker or ERISA counsel to confirm the specific DPC arrangement you’re considering actually meets the IRS’s narrow definition, and that plan documents are written to keep the HDHP and DPC benefit properly separated. Get that part right, and this is one of the more practical cost-management tools to land in small group benefits in a while.
Sources: IRS Notice 2026-5 guidance on HSA tax benefits under OBBBA; RSM US on the expanded HDHP definition; Groom Law Group on the OBBBA HSA provisions.